Financial control will add to the security of Wexford Festival Opera

Wexford Festival Opera is in the news again, and it has nothing to do with Covid-19, social distancing in the opera house, or the prospects of the 2020 festival actually going ahead as planned in October. It’s about money.

It's just over 12 months since Opera magazine published an editorial that took a patronising English perspective on the public funding of opera in Ireland, replete with misconceptions and downright errors of fact.

The standout claim was that Wexford had lost “a worrying €600,000 in 2018”, and when the festival’s 2018 accounts were published they showed a deficit of €594,733. But the sum that was burned through in 2018 was actually rather higher, a total of €731,324. The festival had started the year with a surplus of €138,324, and much of the problem has to be put down to a precipitous €358,227 drop in income over the 2017 level.

The Arts Council was so perturbed by the festival's financial situation that more than once it postponed making a decision on the organisation's grant

The festival is in the news now because of the release under freedom of information of a review prepared for the Art Council by Mazars and delivered in March 2019. For six or so months before that the council had been trying to get to the bottom of the financial malaise in the organisation that runs one of Ireland's best-known and longest-running showcases for the performing arts.

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The council was so perturbed by the situation that more than once it postponed making a decision on the festival’s grant. At one point, the review reveals, the council “agreed a capped advance against 2019 funding subject to strict weekly reporting conditions”.

The review was requested in line with clause 47 of the Arts Council’s funding agreement with clients who fall under the heading of “strategic funding”. These are the heavy hitters. “Strategic funding” covers all of the council’s clients in receipt of annual support that runs into seven figures.

Clause 47 allows the council to appoint an independent auditor for companies in receipt of more than €100,000 a year. The festival’s annual funding broke seven figures in 2006 with a grant of €1.335 million, and this has since risen to €1.45 million.

It’s not the kind of growth the festival would probably have been anticipating. Like a number of other major clients, Wexford’s share of council funding has dropped during that time, in its case from 2.28 per cent in 2006 to 1.81 per cent in 2020, though in the crisis year of 2018 the festival’s share was higher, at 2.34 per cent.

An auditor appointed under clause 47 can investigate the management and use of public money, the company’s financial controls, its corporate governance, the quality of information that is being provided to the board and issues of tax compliance.

Wexford Festival Opera is a flagship cultural organisation, and while its support from the public purse is pretty miserly by international standards it is still in receipt of the third-largest chunk of Arts Council annual funding. The festival resisted the freedom-of-information release of the review, and it's not hard to see why.

The list of concerning items uncovered by Mazars is long. It includes faulty box-office reconciliations; flawed purchasing and procurement policies; the lack of a formal payroll policy; loose control of time off in lieu; the potential for unauthorised spending on credit and debit cards (including actual unvouched claims and an unexplained use of a hotel minibar); out-of-date information on the bank mandate; cost-allocation issues between the festival and its National Opera House subsidiary; the lack of both a fixed-asset register and a formal risk-management framework; and what you might call fuzziness in some job descriptions.

The beef is mostly in the area of budget management. Simply put, effective controls on artistic expenditure appear to have been nonexistent

So where's the real beef? It is mostly in the area of budget management. Simply put, effective controls on artistic expenditure appear to have been nonexistent. In 2018 the then artistic director, David Agler, prepared and managed his budget in an Excel spreadsheet that, although it was shared with stakeholders, was not integrated with the festival's Sage accounting system.

A single sentence from the review says it all: "There was no formal timely reporting in place by the Artistic Team to inform the Artistic Director of the developing overspend situation on the budget, or to immediately escalate this position to the Finance Committee and the Board."

The left hand did not know what the right hand was doing, and no one on the board or even the finance committee could have known about unbudgeted commitments that might have been entered into or unpaid bills that might be about to arrive.

Both the opera festival, which was founded in 1951, and the National Opera House, which was opened as Wexford Opera House by Brian Cowen in September 2008, are controlled by Wexford Festival Trust, a company limited by guarantee, without a share capital. The Arts Council subvents the festival but not the opera house. The exchequer provided €32 million of the cost of building the new venue, which was renamed with the word National in its title in 2014.

Wexford Festival Trust has had difficulty with the maintenance costs of the venue, and if the goal of the renaming was the release of public funds in relation to this, it was successful. Tying in with the opening of the 2018 festival, Minister for Culture Josepha Madigan announced a capital grant of €1 million.

Mazars noted that “the Operations Manager stated that her role has minimum involvement with the Festival, however [number redacted] of her salary is charged to the Festival”.

Salaries for other posts that involve work for the opera house – including the chief executive’s – are also charged to the festival. There were also issues about the ownership of fixed assets, and about the fact that “the underlying profit/loss of each entity may potentially not be a true reflection of results during the year due to costs not recharged” between the house and the festival.

Chief executive David McLoughlin and financial controller Denise Kavanagh were set timelines to turn the situation around, and the board also had its knuckles rapped. The current chair, former An Bord Pleanála chair Mary Kelly, took up her post in January 2019, just in time to be a key part of the solution. The festival announced last January that its 2019 costs had come in below budget and that its 2019 accounts for the year would show a surplus.

Wexford delights in doing things its own peculiar way. It's part of its unique charm. But potentially suicidal shortcomings of oversight do nothing to enhance that charm

The chasm between board and executive on the one hand and artistic decision-making on the other is of very long standing in Wexford. The board is of course right to take a course that gives artistic directors great freedoms. But its position has at various times amounted to a view so hands-offish as to seem bewildering.

The last time I spoke to a chair of the board – not the current incumbent – about the formal position on the use of Irish singers I dared to suggest that the artistic director might be encouraged in that direction. “But, Michael, could you do that?” was the answer that I got.

The urge to maintain some kind of arm’s-length approach to artistic decisions is understandable. But it is complicated by the fact that opera expertise from hands-on professional experience in places other than Wexford has long been very thin on the ground on the festival’s board. It’s not at all clear that reasonable dialogue has been the norm.

Wexford delights in doing things its own peculiar way. It’s part of its unique charm. But potentially self-destructive shortcomings of oversight do nothing to enhance that charm.

Financial control, it’s safe to say, will never be quite the same in Wexford again. And in the end that can only enhance the security of the environment in which the venerable festival’s artistic directors will have to work.