Press Release – June 11, 2012
The audit scrutinized financial statements submitted as the basis for the closing account of the state budget heading Ministry of Interior for the accounting period of the year 2010.
The audit aimed at management of state assets, lease agreements, reconstructions, maintenance, and acquiring of assets. Auditors also scrutinized stocktaking, management with unnecessary assets, and internal auditing systems.
In view of frequent relocations, it seems disadvantageous to enter long term lease contracts (contracted for 5 or more years). In one case, the Ministry terminated a contract early but had to compensate the lessor for the untimely termination as well as for adjustments of the leased premises.
As a lessor, the Ministry violated the Act on the state property when failed to arrange the possibility to terminate lease contracts early in case the tenant did not fulfil the duties duly and timely, in case the Ministry would need the premises, and in case the premises could be leased more economically.
The Ministry lacks a working system that would ensure the funds required for planned renovations and developments of the assets. Financial means earmarked for planned operations are often used for unplanned renovations, which had not been approved with funding. Already concluded contracts are suspended and the realisations depend on financial provisions.
When acquiring and disposing of fixed assets, the Ministry violated the Accounting Act. The Ministry did not account of the acquired and disposed assets in the corresponding accounting period.
The Ministry failed to perform stocktaking of lands and buildings in agreement with the Accounting Act as the inventory did not ascertain the current state of assets by the end of 2010. The Ministry did not reveal the inventory difference and failed to account of the difference in the corresponding accounting period.
On the basis of 2010 balance sheets it is not possible to ascertain whether the Ministry actually checked all 291 buildings situated in 45 cadastre areas, which the Ministry is in charge of managing. It was not possible to confirm whether the accounts depicted the current state of the Ministry’s assets. Stocktaking was performed insufficiently as the Ministry failed to reveal the differences between the actual state of its assets and the information in the cadastre. Inventory of immovable assets omitted necessities required by the law. These facts support the conclusion that the stocktaking was performed superficially.
The Ministry’s accounting was found to be incomplete and incorrect in 2010 and at the same time cannot be considered to be conclusive.
In agreement with internal regulations, the internal auditing system followed Act on financial auditing in public administration. Yet the Ministry failed to enforce the system within the whole organisational unit of the state.
The auditing operation was performed from September 2011 to March 2012. The audited period was years 2009 and 2010; where relevant, the preceding period and the period till completion of the auditing operation were also scrutinized. The audited body was the Ministry of Interior. The auditing operation was included into 2011 Audit Plan of the SAO under No. 11/23. Daniel Reisiegel, Member of the SAO Board, managed the operation and prepared the audit conclusion as well.
Supreme Audit Office