Mr. Seamus McCarthy:

The residential insitutions' fund board, better known as Caranua, was established, as the Chairman said, in March 2013 under the Residential Institutions Statutory Fund Act 2012. The board's financial statements before the committee in this session are for the financial years 2014 and 2015. Caranua is responsible under 2012 Act for managing and disbursing funds donated by religious congregations to support the needs of former residents of residential institutions. No Exchequer sourced funds are involved. The Act provides for the donated funds to be used to pay grants to former residents for certain approved services, that is, housing support services, health and well-being services and education, learning and development services.

Following the publication of the Ryan report in 2009, the religious congregations offered cash contributions that totalled a combined €110 million, in addition to cash contributions committed to and paid over under the terms of the 2002 indemnity agreement. By the end of December 2015, €85 million of the total of €110 million had been received into the special fund and some interest had also been earned on the balances held.

I issued a clear audit opinion in respect of Caranua's financial statements for 2014 and 2015. However, for both years, the audit report draws attention to the statement on internal financial control which discloses weaknesses in the board's controls over grant payments. The concern was that these weaknesses created a risk that grant expenditure might not have been used for the proposes intended in at least some cases. For example, for 2015, Caranua could not provide evidence that price quotations had been obtained in advance in about one third of a sample of grant applications examined in the audit. Claimants for housing related support grants had provided proof of property tenancy or ownership in only one third of a sample of cases examined in the audit and required follow up by Caranua such as the collection of receipts for grant funded work or purchases which had been completed for only around 15% of the grants paid. The statement on internal financial control sets out the steps being taken by the board to resolve the control weaknesses identified. The adequacy of the controls will be examined again in the audit of the 2016 financial statement.