Dummy applications and inflated routes: no controls over free school transport

Free school transport for non-state schools cost almost €30 million in 2021 but government has no control over this expenditure, the National Audit Office found.

The NAO annual report revealed how despite the significant cost to government, the Education Ministry had no means to confirm the routes claimed by the service providers. “This exposed the ministry to potential abuse from the part of the service providers, ranging from dummy applications to inflated routes,” the NAO said, pointing to lack of internal controls that exposed the ministry to errors of overpayments and potential abuse.

Sample cases reviewed by the auditors revealed 22 instances where operators of non-state transport were erroneously paid according to rates for vehicles with a higher capacity. The rates vary according to the capacity of the vehicle used, which means operators in these cases were overpaid.

“This implies that the vehicle category code was changed through manual intervention by the ministry, which resulted in an overpayment of €140,752 pertaining to the sampled routes,” the auditors concluded.

Trips are also categorised as short, medium, long or extra-long and are based on pre-established distances. However, auditors found instances related to both state and non-state providers whereby the distance code allocated, and consequently the amount paid, did not correspond to the set distance.

These changes made by the ministry resulted in an overpayment of €136,621 on the sampled cases.

Free school transport has always been provided to students attending primary and secondary state schools, who live more than 1km away from the school. However, in September 2018 the service was extended to include church and independent schools.

The total cost to government for the service stood at more than €40 million in 2021 with the expenditure on non-state schools more than double that of state schools.

The centralised system used for state schools and the fact that student applications for free transport are received by the ministry, provide a greater measure of control. However, in the case of non-state schools, students apply with the transport operators and the data is then inputted into the database by the providers themselves.

This situation, the NAO noted, meant the ministry had no controls in place to verify the accuracy of route registers created by the service providers themselves.

“Notwithstanding the very significant cost, controls in place prior to effecting payment were limited to checks of the statements with the route register. However, accuracy of the latter was fully dependent upon the correctness of the details, comprising students and route details, inputted in the SBN system (database) by the service providers,” the NAO said.

The NAO report identified other weaknesses in the system, including a general lack of independent monitoring and the ease of manual intervention without any audit trail. This led to “significant overpayments”, the NAO said.

It recommended that parents of students attending non-state schools should apply for free transport directly with the ministry, using the same system as that for state schools. This should “substantially improve” the ministry’s control over the service, the NAO said.

The ministry informed the NAO that changes will be implemented for the scholastic year starting in September 2023, having already identified the issue of limited control over non-state school transport before the NAO audit commenced.

At the end of the 2023/2024 scholastic year, the system will be evaluated again and any required changes implemented.

Auditors have also suggested strengthening internal controls by introducing different levels of access to the database for ministry officials.

“No officer is to have unrestricted access. It is also to be ensured, especially on figures that will serve as a permanent basis for payment, that adequate audit trail is embedded in the system,” the NAO said.

It also advised the ministry to investigate the cases highlighted in the audit and perform a holistic exercise to suss out any cases of overpayment. “The respective officers are to be held responsible to recoup any overpayments,” the NAO said.