The Audit Office has identified significant weaknesses in the operation of the Cyprus State Scholarships Foundation (IKYK) in a special report covering the period 2019-2024, published on Tuesday.
The report highlights problems in both the evaluation and award of scholarships, as well as shortcomings in the foundation's internal control mechanisms, while setting out a series of recommendations for improvement.
Scholarships awarded without available funds
One of the report's most significant findings concerns a decision by the IKYK Board of Directors to award scholarships to all potential beneficiaries of the "Excellence" programme for the 2023-2024 academic year, despite insufficient budget appropriations.
According to the Audit Office, the decision created financial commitments for 344 additional beneficiaries, requiring a supplementary budget and additional state funding of €1.7 million.
The Audit Office notes that, under the terms of the scholarship programmes, IKYK was not obliged to award scholarships to all potential beneficiaries when available funding was insufficient.
Errors in scoring
A sample review of 23 scholarship applications for the period 2019-2024 found incorrect scoring in five cases.
Four errors were attributed to human error, while the fifth resulted from incorrect configuration of the IRA information system.
The error affected an entire scholarship programme and resulted in two applicants being denied scholarships despite meeting the eligibility criteria.
The Audit Office further noted that no effort was made to examine how those applicants could be compensated.
Appeals uncovered further mistakes
The report states that five of 20 appeals reviewed were upheld because of errors in the original scoring process.
Additionally, following three appeals, IKYK identified and corrected systemic errors within the IRA system, resulting in the recognition of 20 additional beneficiaries across two scholarship programmes.
Weaknesses in controls
The Audit Office found that no secondary sample review of applications was being carried out.
Instead, application assessment, verification of information and final scoring were all performed by the same individuals.
In two cases, financial eligibility assessments were based on income declared by applicants themselves, without all the required supporting documentation.
As a result, the Audit Office recommended linking IKYK's system to Social Insurance salary records to enable verification of applicants' income.
Additional shortcomings
The report also identified:
- Lack of a secondary mechanism to verify the accuracy of scoring;
- The ability to submit supplementary information after an application had been filed, potentially leading to unequal treatment of applicants;
- Failure to stamp 17 of the 23 scholarship agreements reviewed;
- Delays in terminating scholarships without prior notice to recipients;
- Inadequate segregation of duties among staff, increasing the risk of errors and omissions.
IKYK cites staffing shortages
For its part, IKYK acknowledged the discrepancies identified in the five cases involving incorrect scoring and said the Audit Office's recommendations would be incorporated into a new information system.
Regarding the absence of a secondary review process, the foundation cited staffing shortages and said checks by a second officer would be carried out whenever possible.
It added that plans are in place to assign internal audit functions to an external body during 2026.
With regard to the 344 additional scholarship recipients, IKYK said it had requested an extra €1.1 million in its 2026 budget, noting that the signed scholarship agreements constitute long-term financial obligations until beneficiaries complete their studies.
