Review into CIT’s use of offshoot firms finds shortcomings

A review into the use of certain offshoot companies linked to Cork Institute of Technology has found errors in expenses claims and issues with the reporting of potential conflicts of interest.

Specialist advisory firm Mazars compiled a report into the relationship between the Cork Institute of Technology and a small number of spin-out companies. Mazars was appointed in March 2018 and a final report has recently been completed.

The review, which has been seen by The Irish Times, looked at the corporate and financial relationships between the institute and a number of joint venture companies.

One such company was set up to deliver and promote commercial training courses in the maritime areas of oil, gas, chemicals and traded commodities.

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Mazars obtained and reviewed details of payments received by staff of CIT from different entities during the period from September 2014 to August 2015.

It found that travel and expense claims were not always adequately supported by receipts and also noted errors in rates being applied.

The report says that from a governance and oversight perspective, the establishment of such joint ventures are allowed under current guidelines.

Lack of documents

Based on the records made available, the report says some CIT employees were paid for their part-time work in the companies in addition to their full-time employment with CIT. There were nine such employees across two companies.

“We noted that such staff were principally CIT lecturers, researchers and finance staff. Documented details of how employees worked full time in CIT and part time in the joint venture companies – for example, time sheets or work activity logs or schedules – was not provided or evident at the time of our review.

“CIT commented that at no time were staff working full time with CIT and full time with a joint venture at the same time.”

The report, however, found that two employees worked additional hours “in excess of the hours documented in their contracts of employment for part-time employment”.

Giving an example of one employee, the report states: “The hours worked per the monthly payslips provided for the period from September 2014 to August 2015 ranged between 30 hours per month and 125 hours per month. The contract, dated November 2012, states that the maximum working hours are limited to 15 hours per month.”

Missing receipts

One of the CIT staff members in question earned up to €50,000 from one of the companies and was in receipt of a CIT salary in the range of €70,001-€80,000.

The review also found “minor exceptions” where travel and expense claims were not always “adequately supported by receipts and we also noted errors in rates being applied.”

Of 20 expense claims examined, four were approved where no receipts were attached. Three did not clearly state the business purpose of the claim . One was made for clothing and a carrier bag, and the supporting receipt was illegible. “The rationale and justification for claiming this amount of €287.38 was not immediately evident from the documentation provided.”

One used the incorrect overnight rate for a night's stay in Southampton.

Mazars also reviewed the conflict-of-interest register provided by CIT and found that only one of the CIT employees who had taken up a position as a director in one of the joint venture entities was recorded on an “external work applicants” file.

“CIT advised that no other external work forms or other conflict-of-interest records were maintained or were completed for the CIT employees holding employment positions within the joint venture entities.”

Mazars has recommended that CIT ensure that every employee engaged in external work completes an “external work declaration with respect to the management of potential conflicts of interest”.