Errors found in the accounting of the Ministry of Finance for the year 2013
PRESS RELEASE on Audit No. 14/25 – August 31, 2015
The Supreme Audit Office (SAO) scrutinized whether the Ministry of Finance kept its accounting for the year 2013 in agreement with the applicable legislation. Auditors aimed at important accounting events at the Ministry as well as with other headings of the State budget, which the Ministry administers, namely the State budget headings 396 – Public Debt, 397 – Public Financial Assets Transactions, and 398 – General Cash Administration.
The scope and objectives of the audit at the Ministry of Finance were extensive since – from the point of view of represented data – the Ministry of Finance is the most important accounting unit of the State and its accounting records are used as an information basis for compiling national final accounts and by the Czech Statistical Office, which elaborates government statistical analysis.
Several systemic failures in the Ministry of Finance’s accounting were found, for instance in the field of accounting operations with temporary budget remainders and accounting of obligations from common taxes. Records of public health insurance payments for citizens, for whom the payments are made by the State, were entered in the Ministry’s accounts of operating costs in spite they were actually transfers of funds to health insurance companies.
The Ministry failed to account for significant decreases of the State’s holdings in companies that were in bankruptcy or that had gone into liquidation. The Ministry also made errors when accounting for foreign currency gains and losses in cases of the State’s holdings, which should be assessed at their full fair values. Incorrect assessments were also made in the field of long-term contingent liabilities related to minimizing environmental damages, which arose before the privatization. Liabilities of the Privatization Fund were incorrectly recognized as short-term payables (payable within one year), in spite they actually belonged into long-term liabilities.
The SAO concluded that in case of the Ministry of Finance, some legal provisions and accounting principles are not applicable. When other legal provisions were applied, the Ministry’s accounting presented data inconsistent with what the data users normally expected. That is why the SAO recommends that the unclear accounting rules are amended by the Ministry of Finance, which is generally responsible for regulations of the current accounting legislation.
Supreme Audit Office