Dundalk IT: €1.2M deficit, bank accounts not previously reported & protected disclosures made

A more than €1.2 million deficit for the year ending 31 August 2022; the existence of six bank accounts, opened and operated “outside of the Institute’s normal control and reporting environment”; two investigations under the Confidential Disclosures process regarding disclosures that were made during 2022; and a severance payment of €69,393 made to a member of staff during the year, who had received gross salary payments totalling €205,405 whilst on extended administrative leave, were among the details revealed in the recently published financial statements of Dundalk Institute of Technology (DkIT).

Deficit lower than previously projected
In a statement from DkIT, it said that it is “reporting a deficit for the year ended 31 August 2022 of €1.237 million”, adding that “this compares favourably to a projected deficit of €2.408 million for the same period.”

In January of this year, the Dundalk Democrat published details seen from a review compiled by professional services firm, Mazar's, for the Higher Education Authority (HEA) in August 2022, after DkIT reported a draft deficit of €1m for 2020/21.

In the review it said that DkIT had projected a deficit of €2.6m for 2021/22 to the HEA, a deficit which was likely to increase further over the next two years with initial draft projections at the time, showing a deficit of €3.4m for 2022/23 and €5.5m for 2023/2024.

In the statement released last Friday by DkIT, it said that the variance in its deficit and its projected deficit of €2.408 million, “can be predominately attributed to an increase in income in relation to student enrolment versus that projected.

“The Governing Body and Executive Board would like to acknowledge the work carried out across the college to achieve this positive outcome.”

With regards the projected deficits for 2022/23 and 2023/2024, DkIT said that: “Current projections forecast the Institute will return to a break-even situation in 2024/25.

“The Institute engaged with the Higher Education Authority, and an independently appointed third party, when it became apparent the Institute’s financial performance had deteriorated.

“The Institute subsequently adopted the report of the independent party, and the 29 recommendations therein. From this report and recommendations, the Institute created a robust Sustainability Plan.

“In addition to oversight provided by the Finance, Audit & Risk Committee on the implementation of this plan the Institute as a whole are committed to a return to a break-even position.”

Six bank accounts not previously reported
In DkIT's Financial Statements 2022, published on the Institute's website last Friday 28 July, it said in its Statement on System of Internal Controls, that the “Executive Board and Governing Body became aware of six bank accounts (a cumulative balance of €29,187 at 31 August 2022) that were in existence across the Institute for a number of years in June 2022.

“These six bank accounts had been opened and operated by various Schools and Departments, outside of the Institute's normal control and reporting environment.
“None of the six bank accounts were previously recorded in Institute's financial records or financial statements.

“The six bank accounts were predominantly opened and operated to collect contributions from students and donors for financing a number of extra curriculum activities such as; the purchase of sportswear, payments to professional awarding bodies, educational trips, supporting international integration and inclusion etc.

“Four of the six accounts were opened between 1999 and 2002, one was opened in 2011 and one was opened at an unknown time, estimated to be in the early 2000's.”

It went on to say that the Finance, Audit and Risk Committee engaged a third party audit and assurance firm to complete an independent review of the accounts, with the scope including a review of the bank account activity, the quality of the books and records maintained, the controls that were in operation, how they aligned to the Institute's controls, and an opinion on the potential for fraud and/or misappropriation of funds.

The report produced by the third party, the Statement on System of Internal Controls said, detailed “a lack [of] adequate controls over the six identified bank accounts by the relevant Schools and Departments.

“The report noted that each bank account was opened and operated outside of the Institute's current normal operating procedures for bank accounts.

“The report also noted regular bank reconciliations were not maintained and the quality of books and records available for the identified bank accounts was inadequate.

“The report detailed, from what evidence was available for the various bank accounts, the activity therein was not inconsistent with the stated purpose of the accounts in question.”

The Statement added however that “this opinion was limited given the quality of books and records maintained. While the potential for fraud or misappropriation of funds was heightened for these accounts the third party found no evidence to indicate that fraud or misapproporation had occurred.”

The Statement on System of Internal Controls went on to say that the various Schools and Departments were only able to make “limited” books and records available in respect of all six identified bank accounts.

“These records”, it said, “ consisted of incomplete bank statements, limited sales invoices/receipts, partial confirmation for the receipt of contributions or donations, insufficient email correspondence and partial bank confirmations.

“Overall, the records maintained in respect of the six identified bank accounts was found to be incomplete. The records varied from bank account to bank account and did not constitute adequate books and records.”

The Statement on System of Internal Controls added that all the bank accounts “are in the process of being closed at the time of signing the financial statements” and that “the balance of funds in the bank accounts is now recorded on the Institute's Statement of Financial Position.”

Protected Disclosures
The Statement on System of Internal Controls also provided details in relation to Confidential Disclosure Reporting, which it added, is in line with the Protected Disclosures Act 2014.

It said that “there were two investigations under the Confidential Disclosures process regarding disclosures that were made during 2022.

“One investigation found, post year end, no relevant wrongdoing (as defined in the Protected Disclosures Act 2014 and the Institute's Protected Disclosure Policy) took place.

“The second disclosure is in relation to governance issues and the investigation is on-going at the time of preparing the financial statements.”

Severance payments
In the Notes to the Financial Statements published with the Financial Statements, there was included, some details on termination payments.

The Notes said that “the value of severance payments to staff during the year was €69,393.
“Prior to being paid a severance payment, the staff member received gross salary payments totalling €205,405 whilst on Administrative Leave.

“Administrative Leave is where an employee is temporarily removed from their position and all of their work duties. Employees are not allowed to attend their workplace for the duration of Administrative Leave and access to all facilities, including IT, is normally withdrawn.”

In its statement released on Friday, DkIT said in relation to this that, “The recently published financial statements also contains a severance payment, in line with the Institute’s relevant policies, as agreed with staff unions and the Department of Public Expenditure and Reform.

"Severance payment made to a member of staff during this period was €69,393. The person received gross salary payments totalling €205,405 whilst on extended administrative leave.”

Commenting on the Financial Statements, DkIT in its statement said that “The Comptroller and Auditor General concluded that the financial statements give a true and fair view of the assets, liabilities and financial position of Dundalk Institute of Technology.

“The Institute has also reduced the timelines associated in publishing financial statements. DkIT are committed to transparency and full disclosure of its financial performance.”

It added: “The Executive Board are continuing with the implementation of measures to return to a break-even situation and are working with both the staff and the Governing Body on rebalancing our financial state.”

DkIT recruiting External Members and Chairperson
DkIT has also announced that it is recruiting External Members and a Chairperson for its Governing Body. The current Governing Body was appointed on 4 June 2020 for a five year term ending on 31 March 2025. However, the provisions of the Higher Education Authority Act 2022 now alter that term of office to conclude on a date, not later than 9 November 2023.

The closing date for receipt of expressions of interest is 31 August 2023 at 12 noon. For more information on the process and to submit an expression of interest, go to www.dkit.ie/about-dkit/governance/governing-body/#vacancies

In the Financial Statements published by DkIT, it included a schedule of Governing Body expenses for the year ending 31 August 2022. The expenses for each Governing Body member are as follows:

Mr Patrick W.Malone
Interview Fees: €1,500
Employers PRSI: €132
Total Expenses Paid: €1,632

Cllr Clifford Kelly
Interview fees: €5,700
Expenses: €671
Employer PRSI: €32
Total Paid: €6,403

Ms Amanda-Jane Gainford
Interview fees: 900
Employer PRSI: €79
Total Paid: 979

Cllr Nick Killian
Interview fees: €1,800
Employer PRSI: €140
Total Paid: €1,940

Mr Alec McAllister
Interview fees: €1,500
Expenses: €27
Employer PRSI: €132
Total Paid: €1,659

Mr Aidan McKenna
Interview fees: €3,000
Employer PRSI: €278
Total Paid: €3,278

Mr Bill Sweeney
Interview fees: €7,200
Employer PRSI: €667
Total Paid: €7,867