Katherine Zappone, the children’s minister, has been warned that childcare schemes are vulnerable to fraud.
In a submission from one of her civil servants, Zappone was told of “serious concerns” over the ability of the Department of Children and Youth Affairs to monitor about €340m in annual spending.
The system allows service providers to make “over-claims”, according to the memo, and it is not possible to be sure funding is used for the specified purpose.
More than 20 schemes were identified in which the number of children officially registered was much higher than the number attending.
Five schemes benefiting more than 100,000 children had been introduced in a “piecemeal fashion . . . at different times and when governance requirements were less clear”.
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The memo was written by Laura Slevin, principal officer in the department’s Early Years governance section, and seen by Zappone in April.
Five schemes account for nearly a third of the department’s €1.1bn annual budget. They fund crèches and playschools, and help parents returning to employment or training.
Concern was first raised in December 2014 when an audit of one childcare facility discovered over-claims of about €500,000. It is currently the subject of a garda investigation.
The memo warned that the problems were “systemic” and could only be dealt with by strong rules, sanctions, and new requirements for service providers. The submission — obtained under Freedom of Information — said that the Community Childcare Subvention programme was particularly problematic as its rules are 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.”
In 2016, the department commissioned accountancy firm Mazars to carry out an audit of 30 early-years services. While no fraud was discovered, it found there were weaknesses in financial control and management.
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According to a report by Pobal, which manages programmes on behalf of the government and EU, 1,314 out of 3,000 services visited were “major[ly] non-compliant” with the terms of their scheme.
The department said it is working “intensively” to address the issues in the submission. It said the schemes were introduced quickly with limited management resources but tens of thousands of families had benefited over the years.