Our childcare schemes worth €340m wide open to fraud, Zappone told

CHILDREN’S Minister Katherine Zappone has been warned that childcare schemes across the country are wide open to the potential for fraud.

In a submission from a senior civil servant charged with overseeing the governance of early years services, Ms Zappone was told there were ‘serious concerns’ over her Department’s ability to monitor around €340m in annual spending.

The memo said the current system allowed services to make ‘over-claims’ and that it was impossible to be sure that funding was being used for the reasons it was provided.

Problems are ‘systemic in nature’

The five early years schemes run by the Department of Children take up nearly a third of the Department’s entire €1.1 billion annual budget.

They provide funding to crèches and playschool, and are designed to help disadvantaged parents return to employment or training with subsidised childcare.

They also fund the free preschool year that is available to all children, and which has now been expanded to include a second year.

More than 20 schemes were identified in which the number of children officially registered was much higher than the numbers actually attending. The memo pointed to five separate schemes benefiting more than 100,000 children annually being introduced in a ‘piecemeal fashion… at different times and when governance and compliance requirements were less clear’.

The submission was seen by Ms Zappone in April. The minister said she wanted a pragmatic approach to dealing with the problems raised.

Alarm bells had been set off in December 2014 when an audit of one childcare facility found over-claims of €500,000. It is currently the subject of a Garda investigation.

However, the internal memo warned that the problems identified were ‘systemic in nature’ and could only be dealt with by new law, strong rules, sanctions and new contractual requirements for service providers.

It said: ‘Various audit reports have found concerning levels of inadequacy with financial and compliance rules.’

The submission – obtained under FoI – said the so-called Community Childcare Subvention scheme was particularly problematic because the rules surrounding it were 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.’

The memo said that Pobal – the body that manages programmes for the Government and EU – was responsible for auditing childcare services, but its hands were sometimes tied by the lack of clear rules.

Ms Zappone was also told they needed to examine if Pobal was ‘adequately resourced to provide a robust compliance and audit function’.

In 2016, the Department commissioned an audit by accountancy firm Mazars to look at early years services, according to the records. While it did not find widespread fraud, it reported weaknesses in financial control and management.

In a statement, the Department said it was working to address the issues raised. It added that the schemes had been introduced quickly with limited resources to manage them but that tens of thousands of families had benefited.

‘Inadequacy with financial rules’