The Ministry of Culture had significant errors in its annual accounts as well as in the data for the assessment of state budget implementation for 2018
Press release on audit No 19/03 – 25 November 2019
The Supreme Audit Office (SAO) has found errors amounting to CZK 2.7 billion in the annual accounts of the Ministry of Culture (MoC) for the year 2018 and also errors in the data for the assessment of the implementation of the state budget which amount to CZK 0.8 billion. By contrast, the Ministry did not have serious misstatements in its closing account.
In general, the closing account, the annual accounts, and the statement for the assessment of state budget implementation are the pillars of accountability. They provide the public with comprehensive information on the management of state resources and on the overall work of the Ministry. “Such information should, of course, be an essential element of sound financial management. This is also the reason for monitoring this type of information,” said the SAO Member Jaromíra Steidlová, who led the audit. The auditors found significant errors caused by incorrect reporting and incompleteness of disclosed data at the MoC in two out of the three above-mentioned pillars.
In the 2018 annual accounts, errors were found in the notes to the accounts. The auditors have quantified these at CZK 2.7 billion. In particular, these errors were caused by the fact that the MoC did not report existing contingent liabilities resulting from previously issued decisions to grant national subsidies. Also, the errors were caused by the fact that estimated expenditures on pre-financing of contributory organisations, which again resulted from previously issued decisions, were incorrectly reported as a contingent receivable from foreign subsidies, and not as a contingent liability. This caused that the information in the notes to the annual accounts significantly did not correspond with the actual facts.
For these reasons, the SAO assessed some information in the notes to the annual accounts as unreliable. The other information related to the 2018 annual accounts of the MoC gave a true and fair view of the subject matter of the accounts. If the MoC had corrected all the weaknesses identified by the SAO during its audit in 2016, it could have prevented errors in the annual accounts amounting to at least CZK 1.9 billion.
Auditors have also found significant misstatements in the data for the assessment of the implementation of the 2018 state budget. Expenses provided to contributory organisations were declared incorrectly. The data for the assessment of the implementation of the state budget thus contained errors amounting to CZK 0.8 billion. The MoC did not declare its expenditures for the renovation of the main building of the National Museum and the reconstruction of the historic and operational buildings of the State Opera as an expenditure for the maintenance and restoration of a cultural monument but instead as an expense for day-to-day business of these institutions.
These errors do not allow the comparison of data in time of the Ministry or between individual accounting entities. Consequently, certain information on the management of the MoC with state resources for 2018 was distorted.
The auditors have also found that some parts of the Ministry’s control system did not work in practice in a way that would ensure the reliability of the information in the annual accounts in their entirety. The MoC further breached budgetary discipline when it paid more than CZK 108 thousand for the training of a member of staff on the basis of an ineffective contract. The Ministry had paid for the training before publishing the contract in the contract register.
Supreme Audit Office