Barter account only off-sheet account held by RTÉ

A report by auditing and accounting firm Mazars has not identified any further off-balance sheet accounts held by RTÉ between 2017 and 2022, apart from the controversial barter account.

However, it said the broadcaster maintained “elements” of a barter account – comprising purchases
and trade credit balances held with three identified media agencies – outside of the financial statements for part of the review period.

The findings are in one of three reports on RTÉ. published by Minister for Media Catherine Martin.

In the 2017 and 2018 financial statements, RTÉ did not account for purchases made through utilisation of barter trade credits, amounting to €186k and €233k respectively.

Purchases were accounted for from 2019 to 2022.

For 2017-2021, RTÉ did not account for the trade credit balances held with media agencies, ranging from €243k at the end of 2017 to €572k in 2021.

Mazars found these balances were effectively maintained off-balance sheet during this period.

The scope of the audit was to identify and examine all transactions made through the barter account and any other off-balance sheet account from 2017 to 2022.

Mazars sought to interview four former RTÉ personnel, including ex-director general Dee Forbes.

However, Ms Forbes, along with the former chief financial officer and ex-group financial controller were not available for interview.

RTÉ’s barter purchases for 2017-2022 amounted to a gross trade credit value of €1.21m (€785,000 net at 65% value).

Some €409,000 consisted of client hospitality/entertainment, €231,000 (€150,000 net) on identified talent agency payments and €226,000 consisted of flights and hotel accommodation.

‘Substantial deficit’ in record-keeping at RTÉ

The report found that all barter account expenditure had a business purpose and no personal expenditure was identified.

However, auditors noted a “substantial deficit” in RTÉ’s record-keeping that placed “significant restrictions” on Mazars to consider the business purposes for all barter account purchases.

RTÉ advised that a hard copy folder that was maintained for this expenditure was lost during an office move.

The broadcaster said this was a key reason why there was a deficit in record-keeping for purchases from 2017 to 2019.

Mazars concluded that the barter account was essentially managed as an additional budget which was available to RTE’s Commercial Division for primarily travel, accommodation and client hospitality purposes.

The account was not subject to direct oversight by the former director general or the former chief financial officers.

Documents for 34% of invoices/receipts and 17% of signed booking forms were not available for the review.

Some 23% of barter account purchase transactions identified during the review were not recorded on RTÉ’s own internal schedule of such purchases.

Mazars highlighted a number of instances where it was concluded that there was no valid basis for these transactions to have been paid through the barter account, including:

• Two payments made in respect of talent at €150,000 in total, described as consultancy fees and classified as promotion costs in the RTÉ accounts.
• Four payments made in respect of Renault events at €44,000 in total; part of this was classified as audience research by RTÉ.
• One payment relating to a cancelled executive board meeting at €2,510.
• One payment relating to office purchases at €8,054.

Mazars noted that several barter account purchase transactions where the basis of approval of these purchases was not clear, due to these events being expensive in nature and the commercial benefit to RTÉ not being clear in the absence of a valid and documented assessment by the broadcaster.

• One payment (net of an adjustment) relating to a chauffeur service at €480.
• Four payments relating to SOHO House Venue Membership at €5,375 in total.
• Four payments relating to a Japan Rugby World Cup trip at €73k in total.
• One payment relating to Japan Rugby World Cup tickets at €20k.
• Two payments relating to the Madrid Champions League Final at €19k in total.
• Two payments relating to Ireland football match in Gibraltar at €4,603 in total.

Mazars concluded that the internal controls around the barter account process, particularly in respect of purchases, approvals, governance and oversight were not adequate for the period of its review.

These included an inadequate system of recording and record-keeping in respect of purchases, particularly from 2017 to 2019.

Overall, Mazars said there was a lack of clear oversight of the process by the former commercial director, former group commercial director, former chief financial officers, the former director general and the RTÉ Board.

Purchases not included in report to minister

The RTÉ’s chair’s annual comprehensive report to the minister, which details travel, subsistence and client hospitality expenditure, incorrectly omitted certain barter account purchases amounting to €654,000 between 2017 and 2022, according to Mazars.

Correspondence from current and former external auditors in respect of the broadcaster’s financial statements confirmed that purchases made through barter media agencies (and associated revenue) for 2017 and 2018 were omitted from the financial statements of RTÉ and trade credit balances with barter media agencies for 2017-2021 were also not included, the report found.

It said the current external auditors did not consider the omissions as material for audit purposes but considered the treatment to be incorrect and requested adjustment.

The view of RTÉ management was that the accounts were not materially misstated and, on this basis, did not consider the omissions as material to warrant a retrospective adjustment in the financial statements, the review said.

Cancelled board meeting, Renault events records

RTÉ provided supporting documentation for a transaction paid from the barter account relating to an invoice from Druids Glen Resort for charges incurred on foot of a cancelled executive board meeting.

This meeting was scheduled for 15-16 November 2021, cancelled on 12 November 2021 and documented on the broadcaster’s internal schedule which lists the former director general as the lead name for the invoice.

The cancellation fee totalled €3,861.38.

Based on the Mazars review of the Tri-Partite Agreement entered into with Renault, RTÉ and the talent
party, from October 2020 to 31 December 2021, the broadcaster was under a contractual obligation to cover the costs of three dealer events as outlined:

• Costs of each event covered by RTÉ as part of this agreement to include: set build, event management and catering (finger food and refreshments) for 100 people.
• Recreate The Late Late Show setup with minimum three guests and include music from up and coming talent from each event location.
• Evening event: 6pm drinks reception. Show from 7.30pm to 9pm, followed by a Q&A, finishing at 9:30pm.
• Invitation only exclusive event for each dealership.
• Audience members subject to Covid-19 and other public health/security/safety restrictions.

RTÉ provided supporting documentation in respect of these transactions which related to three staff members staying in a hotel for the Renault event on 22nd March 2022 in Cork. No documented approvals were provided for these items.

The broadcaster provided supporting documentation relating to the hiring of a chauffeur to transport a staff member of a talent management agency to the Dundalk Renault event on 10th May 2022, paid from the barter account.

The transaction was documented on the RTÉ internal schedule which lists the former director general and
former commercial director as the lead names for this invoice.

Mazars said it was not clear why RTÉ paid for this expense of a staff member from Noel Kelly Management to attend one of the Renault events.

The only explanation provided by RTÉ, it said, was that the talent party had requested the member to be in attendance and that this determined the broadcaster’s decision to cover the costs of the chauffeur for €480.