Press Release – January 8, 2009
From March to September, 2008, auditors from the Supreme Audit Office performed an audit of financial statements compiled as at 31.12.2007, which were submitted by the Ministry of Labour and Social Affairs (MLSA), the Czech Social Security Administration (CSSA), and by the Labour Office of Brno-City (LOBC). “The financial statement of the MLSA did not constitute reliable background information for compiling the closing account of the state budget chapter”, said president of the SAO František Dohnal.
The CSSA acquired programming software worth CZK 14.9 million, which it wrongly classified as operating expenditures, accounting therefore as direct costs of expendables. Items of assets were activated for use, allocating the sum total of CZK 124.4 million to wrong asset accounts.
The MLSA wrongly allocated to improper budget lines the sum total of expenditures of CZK 2,837.1 million spent on activities co-financed from EU funds; spent a total of CZK 34.4 million to purchase certain applied programming tools, wrongly defraying these costs from the accounts of operating expenditures and wrongly accounting therefore as direct costs.
In view of the over-all extent of irregularities (totalling CZK 10,255.3 million) encountered in the 2007 financial statements of the MLSA and in view of the comparisons thereof with the pre-set maximum allowable irregularity ratio of the records (corresponding to a materiality threshold of CZK 912.1 million) it is clear that the said financial statements of the MLSA fail to give a true and fair view of the subject matter of accounting for the financial year 2007, pursuant to the Accountancy Act and other applicable legislation.
The LOBC failed to observe the subject-matter definitions applicable to asset accounts. In comparison with the preset maximum allowable irregularity ratio of the records (corresponding to a materiality threshold of CZK 51.4 million), the over-all extent of irregularities encountered in the 2007 financial statements of the LOBC, totalling to CZK 4.7 million, it is clear that the said financial statements give a true and fair view of the subject matter of accounting for the financial year 2007, pursuant to the Accountancy Act and other applicable legislation.
The auditing operation was included into the 2008 Audit Plan of the SAO under No. 08/13. Jan Vedral, Member of the SAO Board, controlled the operation and drew up the audit report as well.
Supreme Audit Office