Tony McLoughlin (Sligo-North Leitrim, Fine Gael)
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To ask the Minister for Social Protection with regard to local Social Employment Schemes formerly under FÁS, if she will consider measures to change where local community group members are been asked by Banks to act as guarantors because the last month's wages payments of a scheme are withheld pending audits; if she will engage with community groups to ensure a better system can operate between the scheme operators, her Department and the Banks. [42599/12]

Joan Burton (Dublin West, Labour)
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Community Employment (CE) schemes work on annual contracts. As part of the contract, the CE Sponsoring organisation is given an advance payment at the project commencement (called the Initial Grant) equivalent to 8 weeks estimated wages to cover the initial wages for the Supervisor and participants (paid on a current week basis) and other set-up costs (insurance costs, start-up materials, training etc.). The CE project year is divided into 13 four-week pay cycles. The Sponsor can claim the actual wages paid out in each 4-week cycle at the end of that cycle. The advance payment/Initial Grant is clawed back in tranches over 8 cycles and the 13th Cycle payment is withheld pending the audit/final reconciliation being carried out of the project finances at the end of the 12th cycle. On completion and sign-off of the audit, a final payment is issued to cover Cycle 13 taking account of any net over/under payment up to Cycle 12.

The speed with which the final payment is processed is dependent on how quickly the sponsor presents a satisfactory completed audit. Sponsors are aware of this and should plan to avoid any unnecessary delays. The Department has recently revised the rules regarding the bank account used for the CE project to take account of the difficulties experienced. Previously a new bank account was required for each project year. Now a single bank account can be used on a rolling basis, greatly simplifying the process and maintaining better cashflow, as the next project year’s advance will be lodged to the single account minimising the overdraft exposure of the Sponsor.