Claims from unspent expenditures increased and amounted to CZK 150,000 million in 2016; putting the State Treasury at risks
PRESS RELEASE on Audit No. 16/09 – February 13, 2017
The Supreme Audit Office (SAO) performed an audit of claims from unspent expenditures, which were recorded in 2014 and 2015 at five selected ministries1, and scrutinized the related accounting operations. Claims from unspent expenditures are hypothetical savings, which arise when organisational units of the state fail to spend all of their budgets for a given year. Such claims are not, however, covered financially, so if an organisational unit wants to use them, the actual money has to be provided by the Ministry of Finance. Since 2008, claims from unspent expenditures of audited ministries have increased to CZK 150,000 million. Auditors aimed at finding reasons why claims from unspent expenditures occurred.
When claims from unspent expenditures cumulate, the State debt may rise, which pose a certain risk for the liquidity of the State Treasure. In addition, the Ministry of Finance has little information about future requests from organisational units of the State in respect for the next budget year. Binding applicable legal regulations do not clearly define the ways, in which organisational units might include claims from unspent expenditures into their own budgets. Organisational units may extent their available budget ceilings and use the claims without approvals from the Government, Chamber of Deputies, or the Ministry of Finance. When organisational units decide to use the claims from unspent expenditures, certain risks for the state budget arise, since the claims are only recorded and there is no financial envelope for them. In order to fund such claims, the Ministry of Finance must take further steps, e. g. issuing state bonds. The SAO recommends that the Ministry of Finance issue clear rules so that the ministries use their own resources and reserves first before claiming funds from the unspent expenditures beyond their budget for a given year.
Auditors warned that most of these claims from unspent expenditures are the consequence of failures to fulfil tasks in a given year. Ministries transferred the implementation of the tasks to following budgetary period and this is why claims from unspent expenditures increase. Only two of the audited ministries – the Ministry of Agriculture and the Ministry of Health –were able to quantify, which of their unspent funds came from unfulfilled tasks and which from savings.
In 2014 and 2015, the audited ministries chose various approaches towards using the claims from unspent expenditures. For example, the Ministry of Health included the claims in the beginning of the budget period, but used them only partially while the rest of claims were transferred into the next budgetary period, which resulted in accumulation of claims. The Ministry also requested other funds from the State budget. The Ministry of Finance drew primarily the claims from unspent expenditures, while the other audited ministries included the claims into their budgets according to their current needs.
Supreme Audit Office
1] The audited ministries were: the Ministry of Transport, Ministry of Finance, Ministry for Regional Development, Ministry of Health, and Ministry of Agriculture.