Mr. Seamus McCarthy:

The group total income of the University of Limerick for the accounting year 2019-2020 was €288 million. Some €90 million of this is recurrent State grant and pension funding. Academic fees amounted to €113 million, with 28% of this received directly from the Higher Education Authority. Research income recognised in the year was €33 million, including more than €23 million from State sources. In the year, other income fell by €6 million, largely due to the impact of Covid-19 related restrictions. Total expenditure of the group in 2019-2020 was €285 million, representing an increase of €4 million. Pay and pension costs account for €196 million of this. The group surplus for the year 2019-2020 was €3.9 million, and this compared with a deficit of €2.1 million in the previous year.

I am satisfied that the financial statements give a true and fair view of the transactions for the year and of the financial position of the university at end of September 2020. Consequently, my audit opinion on the financial statements was unqualified. As is the case for other universities, the audit report includes an emphasis on matters relating to the deferred pension funding asset. The purpose of this is to draw attention to the assumptions that underpin that part of the pension asset for which there is no explicit funding guarantee.

My audit report also draws attention to four matters that are disclosed in the university’s annual statement of governance that accompanies the financial statements. The first matter is the significant expenditure incurred by the university on procurement that was not in compliance with the relevant procurement procedures. The second matter relates to the purchase of a property in Limerick in April 2019 for the development of a city centre campus. Arising from concerns raised by an employee, the university engaged a firm of consultants to conduct a review of the purchase. The review included an examination of the university’s due diligence procedures around the purchase as well as the accuracy of the information provided to the governing authority when its approval was sought for the purchase. Members will be aware from updates provided by the university that finalisation and dissemination of the report has been held up as a result of High Court proceedings.

The third matter I draw attention to arises from an investigation into a series of allegations made in 2017 and 2020 about the actions of a member of the university’s senior management. The investigator found the senior manager had breached the university’s recruitment and procurement policies and procedures and, in relation to one of the allegations, the senior manager’s actions were both inappropriate and unprofessional. The senior manager had left the university before the investigation report was completed in November 2020. The statement of governance sets out the progress in implementing the recommendations in the investigation report.

The final matter I draw attention to in my audit report relates to the arrangements entered into by the university relating to the resignation of the former president, effective from the end of August 2020. The contract of employment with the former president did not contain clauses dealing with early termination or a notice period, which are standard clauses in employment contracts. Following negotiations, the university paid an amount equivalent to four months’ salary, some €65,000, and just over €30,000 in respect of legal costs incurred by the former president. It also incurred legal costs of more than €15,000 on its own behalf.

Having reviewed the documentation relating to these payments, in my view, the agreement with the former president has the typical characteristics of a severance agreement. Therefore, before agreeing to the terms for ending the employment, the university should have consulted the Department of Further and Higher Education, Research, Innovation and Science about what was proposed and secured the prior approval of the Department of Public Expenditure and Reform. Those steps were not taken in this case. The statement of governance presents the university’s view that the arrangement with the former president around his departure was not a severance agreement and, therefore, did not require prior approval of the Departments.