College with ‘bad finances’ funded by €100m

The Higher Education Authority has been criticised for failing to properly monitor the financial affairs of the National College of Art and Design to which it has given more than €100m in funds in the last eight years.

In a report on NCAD’s accountability and governance, the by the Comptroller and Auditor General said the most recently audited financial statements for the college related to the year ending September 30, 2010.

“The preparation and audit of financial statements is a key mechanism in ensuring accountability in respect of State funding,” the C&AG said. “The senior management and board have allowed a situation to develop whereby this basic requirement is effectively not being met.”

He said this failing came despite a C&AG report in 2012 which drew attention to delays in the finalisation of the audit of the financial statements of NCAD for the financial years ending in 2009 and 2010.

The report also criticised “deficiencies” in NCAD’s procurement practices, assessment of the adequacy of its statement on internal financial control, and the role of its audit committee.

The C&AG said that, in each year from 2009 to 2013, the college did submit annual governance statements to the HEA.

In 2011 and 2012, NCAD highlighted issues regarding its failure to comply with procurement guidelines and also disclosed that there was no review of the effectiveness of the system of internal financial control in 2009.

“HEA staff collate the information contained in the governance statements received and prepare a report annually for the Board of the Authority to consider,” the C&AG said. “Between 2009 and 2013, no issues were highlighted to the board in respect of NCAD’s governance. The HEA should have been more active in requiring NCAD to remedy the situation.

“It was only upon commencement of this examination that the HEA escalated this issue to the appropriate level with the college in February 2014.”

The audit formally sought the views of NCAD’s director for reasons for the delay in the preparation of the financial statements for the last two accounting years.

The director said NCAD had not had the resources to upgrade the functionality of its financial systems which were “less than fit for purpose or to up-skill a very small cohort of accounts staff” in line with increased pressures and demands. He said the current financial and student registration systems were perhaps a decade or so behind state-of-the-art systems.

The C&AG said NCAD management needed to eliminate delays in accounting for college activities and to address the deficiencies in administrative practices and oversight arrangements.

In response, the director’s said NCAD acknowledged there was work to be done to achieve compliance in a variety of areas and that was now being taken up “energetically, to be fully resolved within a reasonable timeframe”.

“We undertake to prepare 2011, 2012 and 2013 financial statements in sufficient time so that the audit of these statements can be completed in 2014,” he said.

The C&AG said the HEA should have been more active in requiring NCAD to remedy the situation.

“The HEA needs to put in place structures to identify problems within institutions and to actively engage with such bodies, to ensure timely accountability for State funds,” the C&AG said.