Auditing operation No. 04/16

State property and State Budget funds earmarked to cover the work of the National Security Authority

The auditing operation was included in the Annual Audit Plan of the Supreme Audit Office (hereinafter referred to as “SAO”) for the year 2004 under No. 04/16. The auditing operation was managed and audit conclusion drawn up by Ms. Marie Hošková, the Member of the SAO.

The aim of the audit was to examine the management of the state property and the State Budget funds earmarked for the National Security Authority.

The audited period covered the years 2000 to 2004 as well as previous year in case of relevant connections.

The audited body was National Security Authority (hereinafter referred to as “NSA”.)

The audit found the shortcomings in the following areas:

The compliance with the Act No. 218/2000 Coll., on budgetary rules and amending some related Acts (budgetary rules)

  • From 2001 to 2003 the NSA did not pay all the incomes it achieved into the State Budget, thus breaching best budget practice. As a result of this conduct the income figures returned in the proposed state closing account of the budget chapter 308 – National Security Authority were distorted by 15 % to 38 % in these years.
  • From 1999 to 2004 the NSA breached best budget practice by wrongfully using the State Budget funds worth a total of CZK 51,020,000. It used these funds in a manner contrary to the purpose for which they were earmarked in the Act on the State Budget.
  • The misuse of the State Budget funds meant that the “current expenditure” item in NSA’s budget was overstated by at least 30 % in 2002 and at least 63 % in 2003. The NSA paid for purchases or technical amelioration of long-term assets out of current expenditure. The budget did not correspond to the NSA’s actual requirements, which would have been significantly lower in terms of current expenditure if the NSA had complied with the law, as expected of central organs.
  • In 2003 and 2004 the NSA did not finance the replacement of assets out of its budget in the context of the prescribed binding indicators of programme financing.
  • In its management of State Budget funds in 2002 and 2003 the NSA violated its duty in law to perform tasks in the most economical way possible and to use State Budget funds to cover essential needs.

The compliance with the Act No. 563/1991 Coll., on accountancy

  • During the audited period the NSA’s accounts were not correct, complete and conclusive. Because not all the NSA’s assets were recorded in its accounts during the period under scrutiny, the data the NSA returned in its balance sheet were distorted.

The compliance with the Act No. 119/2002 Coll., on Firearms

  • In 2003 and 2004 the NSA did not keep records of some ammunition in accordance with implementing Decree No. 384/2002 Coll., on the implementation of certain provisions of the act on firearms.

The compliance with the Act No. 320/2001 Coll., on financial control in public administration and amendments to some Acts

  • The SAO’s audit detected that financial control in the NSA during the audited period was not organised in a way that would provide reasonable assurance that this control yields timely and reliable information on financial management that would form the basis for ensuring that public administration is managed efficiently in its fulfilment of approved objectives and goals.

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