Several minor deviations in the economic activities of the Ministry of Defence

8/19/2004 | 12:00 AM

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TALLINN, 19 August 2004 - While auditing the economic activities of the Ministry of Defence of 2003, the State Audit Office did not have to negatively comment upon the Annual Accounts of the Ministry. However, some minor deviations were detected, which do not affect the correctness of the Annual Accounts, but indicate shortcomings in the internal audit system and lawfulness of transactions. For example, the audit ascertained that running accounting is not always accurate and contains mistakes caused by negligence; while apartments have been let out at prices lower than the market price, the tax payable on fringe benefits has not been paid in each case; and a film project was supported, although this cannot be deemed as a part of the primary activities of the Ministry of Defence.

Jüri Kurss, the Audit Manager, provides two telling examples to describe the shortcomings detected in the accounting of the Ministry: “The Ministry has paid a number of invoices twice. Even though money was regained in these cases, such situations need not always turn out so well. Hence, the Ministry lacks an overview as to which invoices have been paid and which have not. The other example concerns accounting entries, for which casual accounts were used. For example, research that the Ministry had ordered was paid for in three instalments. The first instalment was recorded on the row “Information,” the second instalment was disclosed on the row “Research and development activities,” and the third instalment was recorded on the row “Other expenses relating to economic activities.” There were more such errors, which, all in all, may lead to the situation where the Annual Accounts of the Ministry do not disclose truthful information about services for which money has been spent.”

The State Audit Office also reproves 26 lease agreements concerning non-residential space of the employer, which the Ministry of Defence has made with its employees, because the lease agreements prescribe the rent at the level of 5 kroons per square metre in case of residential space and 3 kroons per square metre in case of non-residential space. Hence, in 2003 the Ministry of Defence let official apartments to its employees at rental prices lower than the market price. Cheaper rental prices constitute a fringe benefit granted to employees, on which the tax assessed on fringe benefits should be paid. The failure to pay that tax was justified by the reason that the budget lacked resources.

The State Audit Office states for the second year in row that the Ministry of Defence is financing film projects, although this does not belong among the primary activities of the Ministry.
While in 2002 the film “Names in Marble” ("Nimed marmortahvlil") was supported with one million kroons, in the year 2003 the Ministry promised to support the film project named “Hot Cold War” (“Kuum külm sõda”) with 1.2 million kroons. Of the said 1.2 million kroons, 350,000 kroons were disbursed in 2003. The State Audit Office does not cast doubts on the need to make the documentary, but finds, however, that using the budgetary resources of the Ministry of Defence to that end is unjustified.

Sven Soiver
Press Representative of State Audit Office
Telephone: (372) 640 0787
GSM: (372) 53 414464
E-mail: [email protected]

  • Posted: 8/19/2004 12:00 AM
  • Last Update: 10/1/2015 10:17 AM
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