Committee Reports > List of Committees > Dáil > 1986 > Committee on Public Expenditure > Report - Review of Shannon Free Airport Development Company Limited

APPENDIX C

SHANNON DEVELOPMENT COMPANY LIMITED

CAPITAL GRANT PAYMENTS

1 Proposal from Client

A request from a client for financial assistance in the form of capital grants is assessed in detail by the relevant Project Officers under legislation governing the Shannon Industrial Estate and delegated authority from tthe IDA for the Small Industry Programme. If it is felt that the client is entitled to and warrants such assistance, a formal document is prepared by the Project Officer, endorsed by his/her Division Manager for submission to:

a)Industrial buildings & Grants Committee in the case of Small Industry.

b)The Board in the case of Shannon Industry.

Approval of proposals are notified back to the Division concerned.

2 Letter of Offer and Grant Agreement

Following the approval of the Board or IB&GCtee, a letter of offer is drawn up, signed by the Company Secretary and forwarded to the client.

3 Letter of Acceptance

This is a formal letter from the client accepting and agreeing to the conditions outlined in the Letter of Offer, upon receipt of which by Shannon Development, the Capital Grant Agreement is prepared for signature.

4 Signing of Grant Agreement

This grant agreement is signed and sealed by the client and the Company.

5 Claim for Capital Grant from Client

After steps 1 to 4 outlined above have been taken, a formal claim for grants from the client is the next step. This claim is made under the conditions outlined in the Grant Agreement. All valuations of expenditure, etc. have to be certified by the clients’ auditors.

On receipt of the claim, Portfolio Management, Legal & Grants Division go through a very detailed check list. Items checked on that list include:-

a)existence of signed Grant Agreement

b)signed lease of premises

c)Memorandum & Articles of Association of Client received

d)insurance arrangements on buildings and machinery

e)verify that financing arrangement of client is in line with Grant approval

f)rent paid to date by client to Company

g)authorised grant

h)grants already paid

i)Capital grant claims are examined, and duly certified, by the Consulting Engineer appointed by Shannon Development Company. In relation to building grants, the Consulting Engineer’s examination includes the tendering element, as well as the work done, final costs, etc. Where the work is done directly by the claimant, as opposed to under contract, the Consulting Engineer examines all labour and material costs incurred by the claimant, as well as the quality of the work, etc. Machinery grant claims are examined to ensure that the machinery exists and that it is new, that the claimant obtained competitive quotations, that the prices used in the calculation of the claim are in line with the quotations or current price lists for the same or similar machinery. Machinery manufactured or modified by the claimant is further examined to ensure that the claimant’s direct expenditure is reasonable and competitive.

On receipt of all the necessary reports, particularly those from the Clients’ Auditors and the Company’s Consulting Engineers, the Portfolio Management, Legal and Grants Manager is then in a position to requisition a grant cheque from Finance Division.

In the case of very small grant claims from small industries, it is sometimes not possible to obtain auditors certificates, but in these cases the Client through the production of invoices, etc. has to satisfy Shannon Development that the claim is genuine.

The system outlined above, which is a mixture of detailed routine checking and the use of specialist consultants, has worked very well for the Company.

INDUSTRIAL DEVELOPMENT AUTHORITY

CAPITAL GRANT PAYMENTS

1) PROPOSALS from CLIENTS

Requests from promoters of projects for financial assistance are assessed in detail by the appropriate project officer, under the various schemes operated by the IDA within the powers conferred on it by the Industrial Development Act (1969) and subsequent legislation. When the assessment has been completed and the project officer is satisfied that the proposal is in accordance with the criteria laid down, a formal document is prepared and submitted with the endorsement of the relevant Departmental/Divisional Manager to the appropriate Grant Approving Board/Committee. All approvals are formally recorded in the minutes of the meetings and the signed minute of approval enables the project officer to initiate the appropriate legal arrangements, which must be complied with before payment may issue.

2) GRANT AGREEMENTS/LETTERS of OFFER

Following the approval and having regard to the contents of the proposal and the terms of the approval a Grant Agreement or Letter of Offer is drawn up depending on the type of approval. Grant Agreements are signed and sealed by both parties whilst the Letter of Offer signed by a duly authorised person is accepted to enable claims to be processed.

3) CLAIMS for PAYMENT of GRANT

When the legal formalities have been complied with the promoter may then submit claims drawing down the grant. Claims are usually made by the grantee’s Accountant and are submitted in an agreed format. The Accountant is required to certify that the expenditure has been incurred and paid, is exclusive of VAT and is in accordance with the books and records of the company.

On receipt of the claim Grants Administration Department initiate a formal inspection of the assets by a suitably qualified member of the Grants Inspectorate. The assets are inspected and other matters such as Planning Permission, lease/tenancy agreements examined, tenders/ quotations and invoices verified. Other explanations may also be sought and investigations of market value, value for money, etc. may be undertaken

When the grant inspection is underway, the Grants Administration Department carries out the necessary checks to ensure that the various conditions of the agreement have been fulfilled. These may include Property Title, Environment Control, Memorandum/Articles of Association of company, Insurance requirements, Share Capital, Equity etc. When all the necessary checks have been completed the Grant Inspector’s report is then examined having regard to items disallowed or deferred and compared to the auditor’s certificate. Where progress payments are made regard will be had to all previous claims reports for the project.

On satisfactory completion of all the various checks, a cheque is then requisitioned from the Accounts Department and forwarded to the promoter.

4) CONCLUSION

The system as outlined above is designed to ensure that the project as carried out by the promoter is in accordance with the proposal approved by the Grant Approving Board/Committee whilst at the same time affording the IDA reasonable protection when processing claims.