Mr. Seamus McCarthy:

The Residential Institutions Statutory Fund Board, more usually known as Caranua, was established in March 2013 under specific legislation. The fund was established to receive and to hold voluntary contributions from certain religious congregations that in the past had run residential institutions for children. The value of the contributions that could be received into the fund from the congregations was limited in the legislation to €110 million, plus any interest accruing. The money was ring-fenced for use to provide grants and supports for the benefit only of persons who had formerly been resident in the institutions. Consequently, the support scheme was cash limited.

The types of approved support services for which grant funding was available were housing-related services, health and well-being services or education, learning and development services. The services and supports provided were not to be a substitute for services otherwise already available to the applicants under existing public service schemes. The Act also provided for the resources in the fund to be applied to pay the expenses necessarily incurred by Caranua in administering the scheme.

Contributions from the congregations were received in tranches, in parallel with the making of payments to applicants for support. It is useful, therefore, to consider the transactions cumulatively. The latest financial statements disclose that by 31 December 2019, Caranua had received the full €110 million contribution from the congregations. Accrued bank interest and investment returns totalling a further €1.7 million meant that a total of €111.7 million was available for use for the fund’s statutory purposes. A total of €92.8 million had been paid out by way of grants or direct supports for eligible applicants. A total of €12.1 million had been used to fund Caranua’s running costs, which average around €2 million per year. At 31 December 2019, there was a net balance of €6.7 million remaining in the fund.

The 2019 financial statements signalled that the board expected to wind down Caranua’s operations in an orderly way in 2020, having discharged almost all of its commitments to applicants and to creditors and having used almost all of the available funding. On dissolution, any residual liabilities and assets are to be transferred to the Department of Education for finalisation. This process has taken longer than expected and Caranua consequently continues in existence. The Caranua and Department representatives will be able to provide the committee with an update in that regard.

My audit opinion in respect of Caranua’s financial statements for 2019 draws attention to the disclosure in the statement on internal control that weaknesses in the operation of the board’s system of control over payments to applicants created a risk that grant expenditure in some cases may not have been used effectively for the purposes intended.

This is a concern to which I have also drawn attention in previous years.