Mr. Seamus McCarthy:

The University of Limerick’s group financial statements for 2018-2019 show income totalling €279 million. Of this, income in respect of recurrent State grant and pension funding totalled €82 million. Academic fees accounted for €103 million, almost a third of which was received directly from the Higher Education Authority. Research income recognised in the year totalled €34 million, with almost €26 million of this coming from State sources. Other operating income of €43 million was derived from a range of sources, with 40% coming from rental of student accommodation.

The university group’s expenditure in the year totalled €281 million. Pay and pension costs accounted for two thirds of the expenditure total. Other operating costs were €75 million, while depreciation accounted for just under €20 million. Overall, the group incurred a deficit of €2.1 million in the year. However, this must be considered against the group’s accumulated revenue reserves of almost €252 million at the end of September 2019.

My audit opinion on the financial statements was unqualified. However, I draw attention to the recognition in the financial statements of a deferred pension funding asset. In effect, the university is assuming that State funding will be available in the future to meet the pension entitlements already accrued by current and former staff. This is a standard practice for Irish universities in compiling their financial statements. My audit report also draws attention to the university’s disclosure in section 9 of its governance statement of instances where the procurement of goods and services was not in compliance with the relevant procurement procedures.

The financial statements of the University of Limerick Foundation are not consolidated in the group financial statements, on the basis that the foundation is not controlled by the University of Limerick. However, the audited financial statements of the foundation for 2018-19 are appended to the group financial statements for information purposes. These indicate that the principal activity of the foundation is the furtherance of education and research, and in particular the furtherance of education and research carried out by the University of Limerick and other educational, research and development bodies associated with the University of Limerick. The foundation’s balance sheet indicates that, at the end of August 2019, the foundation had cash of around €20 million.

Note 26 of the group financial statements discloses the transactions between the university group and the foundation in the year. This indicates that the university received income of €2.6 million from the foundation for specific purposes. The university contributed €350,000 towards the running costs of the foundation.

Like a number of the other universities, the University of Limerick appoints commercial auditors to carry out audits of the group companies and of the consolidated financial statements. In the interests of avoiding duplication of effort, I seek to rely on the work of the commercial auditors to the extent that is appropriate and, by agreement, staff of my office review their working papers as evidence for the purposes of my audit. While this makes the audit process somewhat more complex and prolonged than normal, it is effective. Nevertheless, there may be circumstances where my office seeks additional assurance and evidence and I form my own opinion independent of that of the commercial auditors.

Members may wish to note that my audit of the group’s financial statements for 2019-20 is not yet completed. We received a full set of draft financial statements, including a draft statement of governance and a draft statement on internal control, in mid-March 2021. Our audit fieldwork, including review of the commercial auditors’ working papers, has now been completed and the audit file has recently been submitted to me for review. There are a number of matters where my office has sought additional information and back-up documentation from the university. When these have been received and reviewed, I will be in a position to clear the account for certification.