CHILDREN’S Minister Katherine Zappone has been warned that childcare schemes across the country are wide open to the potential for fraud.
In a submission, Ms Zappone was told there were “serious concerns” over the Department’s ability to monitor around €340 million in annual spending.
The memo said the current system allowed services to make “over-claims” and that it was impossible to be sure that funding was being used for the reasons it was provided.
More than twenty schemes were identified where the number of children officially registered was much higher than the numbers of kids actually attending.
Five separate schemes benefitting more than 100,000 children each year had been introduced in a “piecemeal fashion … at different times and when governance and compliance requirements were less clear”.
The submission was seen by Minister Katherine Zappone in April of this year who said she wanted a pragmatic approach to dealing with the problems raised.
Alarm bells had been set off in December 2014 when an audit of one childcare facility discovered over-claims of around €500,000. It is currently the subject of a garda investigation.
However, the internal memo warned that the problems identified were “systemic in nature” and could only be dealt with by new law, strong rules, sanctions, and new contractual requirements for service providers.
It said: “Various audit reports have found concerning levels of inadequacy with financial and compliance rules.”
The submission — obtained under FOI — said the so-called Community Childcare Subvention scheme was particularly problematic because the rules surrounding it were so ambiguous and inadequate.
It warned: “Fraud may be facilitated where the design of a scheme does not provide for a process to appraise the financial, administrative, and structural fitness of recipients of state funding.”
The memo said that Pobal — which manages programmes for the government and EU — was responsible for auditing the childcare services but that their hands were sometimes tied by the lack of clear rules.
Minister Zappone was also told that they also needed to examine whether Pobal was “adequately resourced to provide a robust compliance and audit function”.
In 2016, the Department had commissioned an audit by accountancy firm Mazars to look at early years services, according to the records.
Thirty different services had been looked at and while widespread fraud had not been discovered, the report says there were weaknesses in financial control and management.
The submission explained: “In some cases, Pobal … has been unable to satisfactorily complete audits due to lack of adequate records.
“Services themselves often report that they do not have sufficient resources to dedicate to the administrative burden of meeting governance requirements.”
According to a compliance report by Pobal, 1,314 out of 3,000 services visited were ‘major[ly] non-compliant’ with the terms of their childcare scheme.
They said weaknesses identified were not always evidence of fraud or the misappropriation of funding.
However, in many instances, the number of children recorded at the centres was inaccurate and created a situation where “the accuracy of subvention payments cannot be assessed”.
In almost two dozen cases, serious compliance issues were identified where the number of children registered was significantly higher than the numbers attending.
“At present there is no effective means to verify the scale of the problem,” the report said.
Minister Zappone was also warned that expansion of childcare funding — some of which was announced in last year’s budget — could leave the Department open to further problems.
It said: “Issuing new contracts and providing increased funding to existing or to new services without appropriate governance systems and structures to enable assurance of good practice regarding state funding could leave the Department unable to verify the proper use of money provided.”
In a statement, the Department said they were working “intensively” to address the issues raised in the submission.
They said the schemes had been introduced quickly with limited resources to manage them but that tens of thousands of families had benefitted over the years.
The statement said: “The Department has been working for some time to ensure appropriate financial and administrative compliance in this area, balanced with sufficient flexibility to enable small, local providers to meet important needs of young families.”
They said many of the governance and compliance issues would be addressed when the new Affordable Childcare Scheme is put in place.
Loading...
Reload document 
Open in new tab 
