Nicosia, Cyprus. The Audit Office has criticised the Cyprus State Scholarships Foundation (IKYK) for approving scholarships without first securing the required funding, creating financial commitments beyond its available budget.
Report findings
In a special report published on Wednesday covering 2019 to 2024, the Audit Office said IKYK’s board increased scholarship numbers and amended eligibility criteria without ensuring that sufficient budget appropriations were available.
It said the decisions had long-term financial implications and exposed weaknesses in the foundation’s governance.
The foundation is funded almost entirely through government grants, which account for 99.9 per cent of its income. Scholarship applications have also risen steadily, reaching 1,942 in the 2023-2024 academic year, the highest total recorded during the period reviewed.
Additional scholarship commitments
The report focused on IKYK’s decision to award scholarships to all eligible applicants under its excellence programme for the 2023-2024 academic year.
The decision created obligations for an additional 344 students despite the absence of the necessary funding, according to the Audit Office.
The finance ministry initially rejected the foundation’s request for extra funding. Following negotiations, public debate and parliamentary discussions, the government approved supplementary funding through a revised budget.
However, the Audit Office said the additional funding covered only the students’ first year of study, while the foundation had committed to supporting them until they complete their degrees.
Eligibility and available funds
Under the scholarship scheme’s rules, meeting eligibility criteria does not automatically guarantee an award when available funds have been exhausted, the report said.
In such circumstances, scholarships should be awarded according to applicants’ ranking. The Audit Office said pressure to grant scholarships beyond the available budget did not constitute good practice.
While recognising the board’s intention to support as many students as possible, it said future decisions with financial implications should be properly planned and agreed in advance with the finance ministry.
Internal control weaknesses
The report also identified significant weaknesses in the foundation’s internal controls.
An audit of a random sample of 23 applications found five cases in which scholarships were scored incorrectly because of human error or faults in IKYK’s electronic assessment system.
In one case, a system configuration error resulted in two eligible applicants being wrongly denied scholarships. The Audit Office said no attempt was subsequently made to compensate them.