Informational systems for programming financing: records only formal, objectives set poorly, and data found unreliable

PRESS RELEASE on Audit No. 15/31 – September 12, 2016

The Supreme Audit Office (SAO) scrutinized funds used to develop informational systems, which contain national data about investments and subventions. Programming financing should secure that the State budget funds are allocated and effectively used to cover the pre-set priorities. Objective-targeted budgeting shows what should be achieved, in which way, and how much it would cost in short as well as long terms.

The SAO concluded that programming financing failed in the Czech Republic. From 2009 to 2015, over CZK 415,000 million were registered in the system. Instead of helping to evaluate future and past investments, the system only serves for the programmes’ registration and is thus only formal. Further shortcomings like later prolongation of the programmes’ duration and badly set indicators and parameters also make it impossible to assess whether the programmes fulfil the objectives. For example, the Ministry of Finance did not set targets or indicators in any of the 24 audited expenditures, which could have enabled any assessment of the projects. With two audited programmes, the Ministry extended deadlines beyond the date when they were to be completed; the SAO has repeatedly criticized this practise in its audit reports. Due to formalities of programming financing, the Czech Republic ranked in the worst position in the testing of performance indicators related to budgetary procedure in 2015 when compared with other countries in the region like Slovakia, Poland, Hungary, Slovenia, and Germany.

The information systems that gather data on investments and subsidies are administered by the Ministry of Finance and the General Financial Directorate. In spite over CZK 338 million were spent on their development in the period 2009–2015, these informational systems contain incomplete and unreliable data. Thus the systems do not fulfil their tasks. For example, the General Financial Directorate registered the Supreme Audit Office as a provider of subsidies in the amount of CZK 278 million, in spite the SAO had not done so and according to the law cannot grant subsidies. Auditors also found discrepancies when compared data on subsidies provided to ten selected non-profit making organisations in 2013 and 2014. While the CEDR III (contains data put in by the General Financial Directorate) claimed that subsidies to these organisations amounted to CZK 2,800 million, the DotInfo EDS (administered by the Ministry of Finance) claimed those subsidies only amounted to CZK 342 million. Unreliable data were also revealed in the EDS/SMVS, which at the time of the SAO’s auditing operation contained records about 289 unfinished projects for CZK 10,500 million in total, in spite these projects had already been completed.

In case of public contracts related to the information systems, the Ministry of Finance violated the law on public procurement when awarded some contracts in negotiated procedure without publication without open tenders, including contracts related to the projects’ supervision.

Communication Department
Supreme Audit Office

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