More than £13 million of Covid-19 support payments may have been paid to small businesses that were ineligible for the grants, audits have found.
The NI Audit Office calculations indicated that almost 7% of the £220 million allocated by Stormont under the small business grant scheme was paid in error.
The initiative was one of three business support schemes developed by the Department for the Economy in response to the economic downturn caused by the Covid-19 pandemic.
The Audit Office's report on the department's annual accounts only examines the small business grant scheme, as it was the only one of the three that accrued expenditure in the last financial year, prior to April 1.
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The scheme provided £10,000 grants to small businesses struggling amid the health emergency.
The Land and Property Service (LPS), which administered the scheme, identified ineligible payments totalling £3.74 million during a review of its operation.
Auditors did their own review of the LPS payments on a sample basis.
They calculated that if the level of mistaken payments they identified in their sample analysis were extrapolated across the whole scheme, a potential £13.5 million had been paid out to ineligible applicants.
One of the conditions of entitlement to the scheme was that businesses had to be trading at March 15 2020.
Auditors found that some businesses who received support were not trading from the property deemed eligible for the grant.
Other errors included landlords receiving payment instead of tenants and duplicate payments being made.
Auditor general Kieran Donnelly said the Department for the Economy was working to claw back payments that had been made incorrectly.
He said 374 payments were being reviewed for possible recovery.
The department informed auditors that 62 payments had so far been recovered, 60 repaid in full, and two partial repayments.
Mr Donnelly noted that the potential risk of administering a scheme at such pace had been flagged by departmental officials as it was being developed.
"The scheme was required to be designed and delivered by the department and LPS at a rapid pace and it was in recognition of these particular circumstances that it was subject to a direction from the Economy Minister (Diane Dodds)," he said.
"As part of the submission to the Economy Minister, the department highlighted a number of risks due to the nature of the scheme and the pace with which it was being delivered."
As a consequence of the irregular spend, Mr Donnelly qualified the department's accounts in respect of the scheme.
He also qualified the accounts of Invest NI for the same reason.
Invest NI was not directly involved in the administration of the scheme however the spend had to be processed through its accounts, as it is the government agency with the authority to provide grant funding to businesses.
A spokesman for the Department for the Economy said in a statement: "It is important to note that the C&AG (Comptroller and Auditor General) accepted that the grant scheme was required to be designed and delivered at a rapid pace in exceptional circumstances, recognised that the risk associated with fraud and error and value for money required the Departmental Accounting Officer to seek a Ministerial Direction, and that he recognised department's progress in recovering ineligible payments made to 374 businesses as well as producing a lessons learned report covering the three business grant schemes and commissioning research on the impact and value for money of its Covid-19 interventions.
"The department is working to address the issues raised in the report."
