Audit of Kerry youth services charity finds 'high risk' practices in some financial controls
The audit was carried out by Tusla to establish if funds it provided to Kerry Diocesan Youth Service were being spent appropriately and in compliance with service agreements.
An audit of a leading provider of youth services in Kerry has found the adequacy and effectiveness of internal controls at the charity is “unsatisfactory”.
The audit of the Kerry Diocesan Youth Service (KDYS) made 29 adverse findings against the Killarney-based voluntary youth work organisation, including five categorised as “high risk”.
The audit report criticised loose financial controls in relation to budgets, online banking and the counting and recording of cash and cheques by KDYS.
The audit was carried out by Tusla to establish if funds it provided to KDYS were being spent appropriately and in compliance with service agreements.
Last year, Tusla provided €647,709 to KDYS out of total funding of almost €4.2m received by the charity in 2022.
The audit reviewed the charity’s corporate governance policies, minutes of meetings, assets and audited annual financial statements.
The audit’s findings indicate there was a serious risk that the internal control system within KDYS was failing to meet its objectives, while urgent action was also required.
KDYS, which was established in 1971 and currently employs over 60 full- and part-time staff, provides support to over 2,000 young people every year.
It provides youth services in the Diocese of Kerry, which covers the entire county of Kerry as well as the Beara Peninsula and the North-West Cork region of Duhallow.
Among the most serious findings by Tusla auditors was that the charity had not prepared management accounts or financial reports last year. It also failed to prepare a budget for 2022.
Tusla called on KDYS to ensure procedures were in place to ensure management accounts were prepared on a regular basis as the absence of accounts reduced the ability of its board to effectively monitor spending in the organisation.
The charity claimed the position of finance manager with KDYS was vacant until September 2022 but financial reports and monitoring were undertaken by other management throughout the year.
It also maintained all Government-funded projects were monitored on a monthly basis by staff.
The auditors also expressed concern that all users of KDYS’ online banking system could create and authorise payments.
In addition, there was no evidence that cash and cheques received by the charity were counted and recorded by at least two individuals,
Invoices were paid in relation to three items before payment approval had been obtained, while there was no evidence that procurement was carried out in relation to expenditure of €5,624 on another item.
KDYS replied that its financial controls were under review and an improvement plan was being implemented. However, it stressed there was minimal risk of fraud as there was a limited number of credit card holders in the organisation while it claimed its cash and cheque receipts were “minimal and for low amounts.”
Auditors also found that KDYS’ Memorandum and Articles of Association did not specify the maximum number of terms a director could serve.
They noted four directors appointed before 2012 had not been rotated with one of the directors serving his 30th year in the role.
KDYS said it had hired consultants to work with it on reviewing and updating its constitution.
The charity said it was agreed in future that board members would serve a maximum of three three-year terms, with seven new directors to be recruited and existing board members moving on in a phased basis over 18 months.
Four new board members had been appointed by May 2023.
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