Cyprus' Audit Office has uncovered a series of shortcomings at the Cyprus State Scholarships Foundation (IKYK), including errors in the assessment of applications, scholarships approved without secured funding and a lack of secondary checks in the evaluation process.
However, the special report goes beyond operational failures and raises broader questions about whether the current model for managing state scholarships and student financial support remains fit for purpose.
Call for a unified support body
The Audit Office is urging the government to examine the potential benefits of merging IKYK with the Student Grants and Benefits Service, arguing that the two bodies currently operate parallel support schemes for students and families through separate applications, procedures and service channels.
According to the report, a single organisation could simplify access for applicants, improve coordination and promote more efficient use of public resources.
Scholarships awarded despite funding shortfall
One of the report's main findings concerns a decision to award scholarships to 344 additional applicants even though the available budget was insufficient.
To cover the first year of payments, the state provided approximately €1.7 million in additional funding, while IKYK requested a further €1.1 million for 2026 to continue supporting the same students.
The foundation said the scholarship holders had already signed agreements, creating a financial commitment lasting until the completion of their studies.
While acknowledging the intention to support as many applicants as possible, the Audit Office said such decisions should be based on proper planning and prior consultation with the Ministry of Finance rather than relying on funding being secured later.
IKYK responded that discussions had taken place with the ministry before the scholarships were approved and noted that supplementary funding was ultimately authorised by parliament in January 2025.
Errors in application scoring
The Audit Office also identified problems in the assessment process.
In a sample of 23 applications, five cases were found where scoring was not consistent with the published criteria.
IKYK confirmed the discrepancies and said recommendations from the Audit Office would be incorporated into a new upgraded information system.
Further issues emerged through the appeals process. Of 20 appeals examined, five were upheld because the original scoring had been incorrect.
In other cases, appeals led to the discovery of errors within the foundation's HERA electronic system. Correcting those parameters resulted in the identification of 20 additional eligible applicants across two scholarship schemes.
Lack of independent checks
The report found that the same members of staff were responsible for evaluating applications, reviewing supporting documents and assigning final scores, without independent verification by a second officer.
The Audit Office considered this a significant weakness in internal controls.
IKYK attributed the problem to understaffing and said that, where possible, a second-level review will be introduced. The foundation also plans to outsource internal audit functions to an external body.
Scholarships as a policy tool
The report notes that the issue has become more significant following the abolition of the Independent Social Support Agency, whose responsibilities were transferred to IKYK.
As a result, the foundation now manages a broader range of student-support programmes, increasing the need for adequate staffing, modern systems and clear accountability structures.
The Audit Office also argues that scholarships should be viewed not merely as financial assistance but as a strategic policy tool.
At a time when Cyprus is seeking to strengthen its human capital and encourage the return of skilled professionals, the report recommends a more targeted scholarship programme focused on excellence, priority sectors and stronger returns for the state.
Ultimately, the report raises a broader policy question: who should manage scholarships, student grants and financial aid in the future, and under what structure and strategic objectives.
