High risk of fraud at airport: audit

The audit also reveals safety works at the local airport contributed to a sharp increase in unfunded capital expenditure by Derry City Council from £5.6m in 2008/9 to £11.6m in 2009/10.

Ms Mason’s report also reveals four internal audit reports at Derry City Council during that year were given either a limited or an unacceptable rating.

A limited rating means there was a considerable risk a system would fail to meet its objectives and prompt action was needed; and an unacceptable rating means a system had failed or there was a real and substantial risk it would fail to meet its objectives and urgent action was needed.

The reports related to Human Resources Policies and Procedures, Parks and Programming, Templemore Sports Complex and Corporate Health and Safety.

The audit states: “The Council continued to have unfunded capital expenditure and in 2009-10 this increased sharply to £11.6m from £5.6m in 2008-09.

“Some of this capital expenditure was covered on a temporary basis by borrowing of £7m from the Capital Fund to finance safety works at the City of Derry Airport.

“The safety works were the subject of an application to both governments for additional funding. The Council was advised of the urgent need to obtain permanent finance to reduce the unfunded capital expenditure by 31 March 2011 through the 2011-12 Rates Estimates.”

In reference to the risk of fraud at Eglinton airport the report states: “In the period between November 2009 and July 2010 there was a high risk of fraud occurring as a result of poor controls over cash lodgments at the City of Derry Airport.

“As a result of controls not operating effectively, there was a risk that income lodged may not be complete.”

Neighbouring Strabane District Council was also scrutinised and the report says the Northern Ireland Audit Office (NIAO) was concerned the local authority had breached EU regulations by receiving duplicate funding for the Heart Project - a joint venture with Donegal County Council.

The report states that the project “received a cocktail of funding from several sources including the Department of Agriculture and Rural Development (DARD), International Fund for Ireland (IFI) and the Councils.”

It adds: “DARD fully funded the administration costs of this project of 315,000 euro. However, IFI also funded 12.8 per cent of this expenditure and therefore we are concerned that the Council had received duplicate funding and as such, had breached EU regulations.”

Ms Mason’s report also expressed concern that EU regulations were breached over a lighting scheme at Castlederg Bridge.

“I also noted that under this scheme in 2007-08, the Council claimed £45,000 from DARD for a lighting scheme on Castlederg Bridge. This money was transferred to the Department for Regional Development (DRD) to carry out the works.

“However, due to planning constraints DRD returned the funds to the Council in April 2010. A revised plan had been completed and the works were due to be carried out by DRD in the next financial year.

“We are concerned that the Council had not incurred the expenditure it claimed from the EU and therefore was in breach of the EU regulations,” the report stated.