County Cork VEC: Finally held to account

FOLLOWING two years of denials, the remnants of County Cork VEC has finally had to accept its house was not in order. While managing its €100m annual budget, it failed to keep proper accounts and, because of these shortcomings, it underpaid it taxes.

County Cork VEC: Finally held to account

Poor practices had first been uncovered in an internal audit of a Youthreach centre in Macroom in late 2011. The audit highlighted instances where PAYE and PRSI had not been properly deducted and tuition hours were incorrectly recorded.

However, after it began engaging with the tax authorities a year later, a more comprehensive review of its books was commissioned.

The VEC, which has been amalgamated into the Cork Education and Training Board, heard at its meeting yesterday that an initial agreement had been reached with the Revenue Commissioners.

This will see it have to find a six-figure sum from a budget which it has continually said is overstretched through cutbacks and recruitment freezes.

The organisation recently took a new direction, with new chief executive Ted Owens, but the settlement still represents the latest in a steady stream of embarrassments.

The first signs of a tax problem were confirmed last December when CCVEC admitted it had made an offer to Revenue. This was rejected and the figure had to be increased.

Originally, the focus had been on one problematic Youthreach facility in Macroom but after Revenue’s initial inquiries, it ordered CCVEC to audit all payments processed in 2010, 2011, and 2012. It was given a 60-day deadline to comply.

The organisation has been blighted by management problems in recent years and it is currently the subject of a comprehensive probe by the Comptroller & Auditor General.

Separately, the Public Accounts Committee has asked for full details on all outstanding scandals, given the volume of complaints it has got regarding CCVEC.

CCVEC also underwent an accountancy review by the Department of Education and has repeatedly been asked for detailed explanations of its activities.

Each of these have been informed by a series of revelations about an organisation which, until July’s amalgamation, was responsible for the education of more than 10,500 post-primary students in the county.

In early 2012, it appeared before the Public Accounts Committee to answer for extensive losses related to a collapsed computer deal in Glanmire which it did not have permission to sign up to.

Afterwards, the scandals kept coming.

In Macroom, Youthreach has already told the department it lost more than €115,000 in allowances paid to students who were ineligible to receive them.

CCVEC spent almost €50,000 in external advice in its response to the issues raised in Macroom.

An effort to engage solicitors to craft a defamation action against the Irish Examiner for reporting on these issues was blocked following the intervention of the department.

In Bantry, it invested in floating a vessel as the flagship for a sail training programme. The project operated under the radar and in a depleted capacity for years while the boat was in dry dock in Baltimore.

In Mallow, it negotiated a series of unauthorised borrowing facilities worth in excess of €500,000 from the local credit union to fund the construction of a childcare facility that is unfinished and is losing money.

Efforts have been made to secure private tenders to run the facility so that it can cut its losses.

Meanwhile, a site in Schull was supposedly donated but the department intervened when it learned CCVEC had agreed to fund a bursary award in lieu of payment.

Bank accounts in Ballincollig were frozen and an inquiry launched into the management of funds at the Youthreach centre and the adjoining childcare centre. This remains unresolved and the co-ordinator is on extended sick leave.

CCVEC has also been under fire for its legal bills after they dwarfed the costs incurred by its sister committees across the country.

The real effect these issues have had on its recent accounts is not known because CCVEC had not been able to publish up-to-date accounts, pending a review by the Comptroller & Auditor General&.

However, just before it joined up with the City of Cork VEC in July, it promised a more transparent regime, including greater access to the work of its internal audit function.

This happened after it was complained to the Department of Education for keeping its internal controls secret from committee members.

While external inquiries have continued, the settlement with the Revenue Commissioners is the first evidence of it being held to account.

However, this only happened when all attempts to provoke an internal inquiry failed.

Last year, following publicity of its controversies and evidence of bad management in the organisation, one of CCVEC’s elected members approached the Revenue Commissioner.

Cllr Humphrey Deegan of Clonakilty, who had already resigned as chairman of its audit committee in protest at its procedures, visited Revenue and made a complaint.

Eight months earlier, he had aired his concerns at a VEC meeting and told its chairman, Cllr Gerry Kelly, that the organisation’s accounts for 2010 could not be signed.

Mr Deegan said problems uncovered at Macroom had raised the spectre of a tax shortfall and said this should be considered before the accounts were signed.

Nine months later, Mr Kelly wrote his annual financial report to the department and said there were no problems that needed to be flagged.

“I can confirm, to the best of my knowledge and belief, all appropriate procedures for financial reporting, internal audit, procurement, and asset disposal are being carried out.”

Mr Deegan had already been told that the VEC had never had a tax problem and did not have one.

Previously, however, it did have a tax issue that had not been publicised.

In 2007, it made an extraordinary payment to Revenue Commissioners for €71,546.

That year, it was required to produce a tax clearance certificate to draw down a €1m grant from Pobal, and this certificate was produced in Apr 2007.

The 2006 financial statements also show CCVEC spent €82,266 on specialist accounting which was not replicated in any other year.

It has never disclosed what caused this additional tax bill to be generated.

Following this settlement, the circumstances that gave rise to it will now be investigated further by the Comptroller & Auditor General and the Public Accounts Committee.

Cork County Vocational Education Committee was consigned to history in July but its legacy will continue to be probed for the foreseeable future.

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