Weakness in the process of receiving and managing applications for state student welfare, acceptance of dozens of overdue applications with opaque procedures circumventing the principle of equality of citizens, approval of sponsorship to applicants who did not meet the criteria, payment of incorrect amounts of money as well as renting offices that cost thousands of euros per month and are not adequately utilized, are some of the findings of the Audit Service in the context of its audit Grants and Allowances Service (OCT).
The audit concerns the year 2023 and according to today's report of the Audit Office, it was carried out both in the context of the financial audit and the audit of compliance of the OCT with the institutional framework, and following a complaint submitted.
In detail, the findings of the Audit Service are the following:
- Weaknesses in the process of receiving and managing applications for state student welfare: There was manual registration of applications in the "HERA" computerized system by the Citizen Service Centres and re-registration in the same system by OCT officials, there was no verification by a second official before the approval or rejection of the applications and there was an unevenness in their evaluation due to the absence of a standardized list of control steps. As the Audit Service points out in its report, all this increases the risk of errors and creates unnecessary administrative costs.
- The amounts extracted from the FIMAS accounting system do not correspond to the amounts presented in the "HERA" system.
- The Council of Ministers had approved an extension of the deadline for the submission of applications without this being governed by the relevant legislation and in addition, a total of 36 applications were accepted after approval by the Director General of the Ministry of Finance in violation of legislation and with non-transparent procedures. This, according to the Audit Service, "circumvents the principle of equality of citizens".
- No deadlines were set for the evaluation of applications, resulting in significant delays in some cases.
- In a random audit by the Audit Service in 13 cases, it was found that in three of them sponsorship or allowances were paid, while the applicants did not meet the criteria. In some cases, an incorrect amount was found.
- The monthly rent for the offices in which the OCT staff are accommodated amounts to €7,000, plus shared fees. The offices are not fully utilized, with the Audit Service recommending that in case the staff does not increase significantly, the surplus space is sublet to another small state service, or that the OCT moves to a smaller space and does not renew the lease that expires in January 2026.
With regard to the general conclusions contained in this report, the Audit Office finds that there is significant scope for improvement in the utilization of funds for financial support for beneficiary students. It also notes that the application management system needs to be improved, while significant weaknesses were also identified in the valves of the internal control system. In general, with the problems identified, it is noted that they are expected to be resolved through a new application software being developed by the OCT.
More than €8 million remained unspent
With regard to important figures, which are mentioned in the report of the Audit Service, it appears that a large amount in the 2023 budget was not spent.
Specifically, the budget for this year regarding state student welfare amounted to €50.8 million. The €8.7 million were not spent.
The recommendation of the Audit Service is for the OCT to find ways to exhaust the amount of the budget, in order to better serve the purpose of granting state student welfare. It also proposes the review and differentiation of the amount of points and/or the amount of sponsorship and allowances.
With regard to the number of applications submitted by the public in 2023 to the OCT for State student welfare, the following figures are noted:
- 17,865 applications were received, of which 15,466 were approved. 2,396 were rejected while three were pending.
- Based on "HERA", in 2023, payments of €42,166,547 were made, of which €144,620 related to 2022 applications for the year 2021 – 2022.
- The Central Bank rejected bank transfers due to incorrect IBANs of €68,891. "HERA" was informed with cancellations of €63,691 for which a re-issuance of the relevant payments was immediately promoted. For the amount of €5,200, no cancellation was forwarded as it was not possible to immediately reissue payments due to the difficulty of locating the beneficiaries in order to ensure the correct IBAN.
Late applications
As stated in the report, based on an article of the legislation, applications for the granting of state student welfare are submitted no later than March 31 of the current academic year. Failure to submit an application within the specified deadline entails the loss of the right to state student welfare.
It was found that the Council of Ministers, on 26.5.2023, approved the extension of the deadline, setting the deadline for submission of applications for the academic year 2022-2023 as 16.6.2023. 36 applications were accepted, which were submitted late, from 19.6.2023 to 28.12.2023. "For 25 of them, we found an e-mail from the head of the OCT to the Director General of the Ministry of Finance, dated 30.8.2023, by which it requested the approval of their examination as time-consuming. The general manager requested that the applications be examined and kept informed. We did not find any subsequent electronic communication on the matter, nor any communication/approval for the remaining 11 applications. We would like to point out that Law 203(I)/2015 does not provide authority either to the Council of Ministers or to the Director General of the Ministry of Finance to approve an extension of the deadline for the submission of applications. In addition, we believe that the acceptance of 36 applications submitted late through non-transparent procedures violates the principle of equality of citizens," notes the Audit Service.
Specific cases under the microscope of the Audit Service
The report characteristically mentions the following cases:
– While, according to the university's certificate, the attendance was three years, the OCT paid the student a sponsorship for four consecutive years, from the academic year 2019-2020 to the academic year 2022-2023. The sponsorship for the year 2022-2023, amounting to €2,370, was paid on 16.6.2023.
– Between 17.6.2022 and 8.12.2023, sponsorships and allowances for distance learning were paid for the academic years 2021-2022 and 2022-2023, for a total amount of €6,215, while based on article 10(1)(d) of Law 203(I)/2015, state student welfare is not granted to students attending distance courses.
– Allowances totalling €700 were paid on 8.12.2023 and 27.12.2023, to a student attending a five-year study program, which resulted in a master's degree, while according to article 5(1)(b) of the Law, student allowances are paid only for undergraduate level studies.
Recommendations for compliance
Both on the above issues and on other points where weaknesses have been identified, the Audit Office has made the following recommendations:
A) The OCT should find ways to exhaust the budgeted amount, such as by reviewing and differentiating the amount of points and/or the amount of sponsorship and allowances, in order to better serve the purpose of granting state student welfare. We point out that the amount of the sponsorship is set in Law 203(I)/2015 without being differentiated since then, even though the cost of living has increased significantly.
B) To record, approve and implement an appropriate internal control procedure for all stages from receipt of the application to payment, including separation of duties, establishment of a standardized checklist and re-examination by a second officer.
(C) The OCT shall carry out a regular reconciliation and reconciliation at the end of the year of the payments presented by the "HERA" system with those presented in the FIMAS accounting system, in order to identify and resolve any disputes that arise in a timely manner.
D) To set a reasonable period of time for the examination and approval/rejection of applications. In order to achieve this, a deadline must also be set for applicants to submit all the required supporting documents that they did not submit with their application.
E) To consider the possibility of amending the Legislation so that students of an undergraduate course of study that leads to the acquisition of a postgraduate degree, for the four years of study, should be considered, so that this category of students is not unfair. In cases where the error was in the applicant's favour, the OCT should request a refund of the amount on the basis of article 14 of Law 203(I)/2015.
F) In order to terminate the payment of rent for surplus space, if the number of its staff is not expected to increase significantly in the coming years, the OCT should consider subletting the surplus space to another government service, which is permitted by the terms of the contract. Otherwise, the OCT will have to find another smaller accommodation space, as the contract expires in January 2026.
