Audit report raises issues with company

Among its findings, an Internal Audit Report into Temple Bar Cultural Trust’s working practices, found that credit cards were used for personal expenses, then repaid through deductions in salary.

Also, the majority of the credit card expenditure sampled had no appropriate receipts or documentation to verify the business requirement for the expenditure.

The audit covers the period 2011-2012 and makes no allegation of wrong-doing. The CEO at that time was Dermot McLaughlin who was seconded to assist with Londonderry’s UK City of Culture project in October, when an acting CEO took over the role with the TBCT.

Of the 59 recommendations made within Dublin City Council’s Internal Audit Report into Temple Bar Cultural Trust’s (TBCT) working practices, 30 (just over 50 per cent) are rated at the highest rate of urgency for change as marked out by the audit team.

Designated by the letter ‘H’ in the report, the most pressing concerns are deemed to be: “Major control weakness or no system of control present. Management need to take urgent action in response to the recommendation.”

The audit report examines just one year of the governance of TBCT, 2011/12.

In section 4.2 on Board Direction and Control it states: “The Strategy/Business Plan was not approved by the Board for 2010/11. Board minutes and Board Papers were not available to show that loans of 2,000,000 Euros and overdraft facilities of 500,000 Euros provided by Ulster Bank were approved by the board. External auditors of TBCT have been in place for ten years in contravention of good corporate governance.”

The next section on financial reporting states: “Financial Procedures were not in place. A procedures manual is currently being drawn up by TBCT.”

With relation to tax payments the report says: “All six VAT Returns for 2011 were late and there was no segregation of duties in the preparations of these VAT returns.”

In the section relating to Expenditure it reads: “Contract (including CEO contract) or other documentation was unavailable in three out of four cases.”

The report goes on: “During the expenditure testing, salary advances to staff (including the CEO) of 5,857 in 2011 were noted. Company Credit Cards were used in 2011 for personal expenditure amounting to 2,550 Euros and later repaid through salary reductions.

“The majority of the credit card expenditure sampled did not have appropriate receipts or documentation to verify the business requirement for the expenditure.

“No back up documentation for 703 Euros out of 775 Euros cash withdrawals using company credit cards in 2011. TBCT have a cleaning truck and approximately 1,000 Euros petrol for this truck was charged to Employee No 3 (the person is not specified) credit card in Kildare in 2011. Subsequent to the issuing of the draft report TBCT informed Internal Audit of an informal arrangement which was in place in relation to this, the CEO provided a written confirmation that he had approved the arrangement. A personal legal expense of the CEO of 907 Euro was paid in September 2011 and repaid to TBCT between July and September 2012.”

Under the section relating to Banking/Investments Dublin City auditors noted that 24 per cent of bank payments sampled “breached the signatory requirements of the Bank Mandate” and that “a positive difference on a bank reconciliation of 4,708 Euros for 2011 was noted and should be investigated.”

In terms of personnel administration of TBCT the audit noted there were 10 TBCT Director resignations/appointments in 2011/12 and it states: “5 resignations/appointments were registered with the Company Registration Office (CRO) between 4 and 11 months late. The time frame laid out by CRO is “within 14 days of the change occurring.” 3 resignations/retirements have conflicting dates reported to the CRO and reported in the Company’s Financial Statements. Using the dates reported to the CRO, 2 out of 3 were filed on time. Using the dates reported in the Financial Statements, 3 out of 3 were filed late. 2 resignations were filed on time with the CRO.”

The auditors also honed in on the flagship Rainscreen Project at Meeting House Square.

The report states: “Board Minutes and Board papers were not available to show that the financing of the Meeting House Square Rainscreen Project was approved by the Board. This financing included a 1,320,000 Euro bridging finance loan, a 680,000 Euro term loan (over 20 years) and a 500,000 Euro overdraft. Board minutes and board papers were not available to show that the appointment of Ulster Bank to act as TBCT company bankers was approved by the Board.”

The report also notes that TBCT provided annual commuter rail tickets to 5 members of staff during 2011.

“These tickets were paid for in full by TBCT as part of a benefit package. The total value of the 5 tickets was 7,750 Euros. Application of income tax (Benefit in Kind) is a legal requirement for staff benefits. TBCT did not apply Income Tax to these staff benefits.”

The internal audit continues by noting that there was “no written procurement policy in place” (that is, number of quotes to obtain, tender route, tender thresholds).”

It also stated: “During the testing of salaries Internal Audit found that TBCT paid salary advances of 4,857 Euro to CEO (Dermot McLaughlin) in May 2011 and 1,000 Euro to Employee 3 in September 2011. Internal Audit queried this with Financial Controller and was advised that advances that have been provided to accommodate staff until next pay day.”

The auditors concluded that personal expenses of staff should not be paid for by TBCT and that salary advances should not be provided to staff except in exceptional circumstances with the written approval of the Chairman of the Board.”

Internal auditors also found that there was no written policy on bad debt in place, that banking reconciliations were sporadic, that eight properties owned by TBCT were not listed on the insurance documents, that maintenance records in relation to the properties owned by TBCT were poorly maintained and “there is no detailed I.T. Policy in place, just a brief document detailing correct use of email and the out of office function”