The board of the Abbey Theatre is to stand down in the coming months following an independent report which criticised members for failing to identify the full extent of the financial crisis facing the company.The report by consultants KPMG concluded that accounting errors, misreporting of revenues and poor financial controls led to significant under-recording of losses of €1.85 million in the centenary year of the theatre in 2004. It now faces accumulated losses of €3.4 million. Deirdre Falvey and Carl O'Brien report.
It also found that financial information relating to the first four months of this year were "incomplete and unreliable".
The losses had led to fears that the theatre could become insolvent by the end of this week. However, the Arts Council said last night it would be in a position to release further funds to the Abbey shortly and that staff wages would be paid this Friday,
Minister for Arts, Tourism and Sport, John O'Donoghue told The Irish Times yesterday it appeared there had been "gross incompetence" in the management of finances at the theatre.
He is planning to take steps to restructure the Abbey Theatre and appoint a new board. These steps are expected to be completed not later than September.
Following a lengthy meeting yesterday, the board, under the chairmanship of Eithne Healy, said it accepted the findings of the KPMG report and would stay on to pave the way for a restructuring of the company.
However, the board's finance and audit committee is to step down with immediate effect.
They include Eugene Downes, a board member, Jim McCaffrey, a former senior official at the Department of Finance and John Kavanagh, a former retired fellow of the Institute of Chartered Accountants.
The report did not uncover any indication of an act of theft or fraud, and there is no suggestion that any board member or member of the finance committee was guilty of misconduct.
Among the findings of the KPMG report were that:
The report also recommends sweeping changes to governance and management at the theatre.
Mr O'Donoghue is already understood to be examining plans for a restructuring of the Abbey Theatre which include a slimmed-down board, with representatives of the financial, legal and artistic communities.
It would also include a new company, limited by guarantee, under the stewardship of the new board which would seek to place a greater focus on generating revenue from commercial activities.
The Minister is understood to have ruled out providing full State funding for the theatre.
The Arts Council, meanwhile, said the situation at the Abbey was "critical and extremely serious" and that it would be seeking a full briefing on the report from the theatre, including losses for the first six months of this year. These were not detailed in the report.
Olive Braiden, chairwoman of the Arts Council, said: " With the completion of the investigation, the council will be in a position to release further funds to the Abbey. This will take place following the council meeting on Monday.
"In the interim, the council will ensure that there are adequate resources in place to pay staff wages this Friday."
Mr O'Donoghue said he appreciated the "continuing co-operation" of the board with the restructuring process which is already under way.
He said he hoped a new corporate governance structure could be presented for adoption by the Abbey's advisory council as quickly as possible.