TALLINN, 13 June 2005 - Based on auditing the Estonian Maritime Academy's economic activities in 2004, The SAO finds that the organisation of its accountancy and standards of financial management and internal audit system need to improve significantly.

Maritime Academy received 46.4 million kroons from the state budget in 2004 and the organisation of its accountancy does not ensure providing actual, relevant, objective and comparable information about the accounting entity’s financial status, results of economic activity and cash flows, which is in contravention of Accounting Act and general rules of state accountancy.
To record economic activities to the accounting journals, cash based accounting principle is often used instead of the required accrual method. Thus, some of the revenue remains unrecorded in the proper accounting period and the information about the agency’s revenue given in financial statements may not be accurate.

In organisation of accounting of operational expenditure, in several cases the requirements established by Accounting Act, general rules, good practice of accounting or by Estonian Maritime Academy's own accounting policies and procedures have not been followed. In some cases, additional remuneration was not adequately reasoned, accounting of holiday pay was not in accordance with the established procedure.

Inclusive and required accounting of neither fixed nor current assets was not ensured: some of the fixed assets were not registered, the list of fixed assets contained assets that did not actually exist or was unsuitable for use; in many cases, cash movements were not properly recorded, inventories were not carried out in accordance with the established rules.

In the case of transactions with fixed assets every option for generating income was not implemented.
The major decisions of the Maritime Academy have been previously discussed in its supervisory board and adopted after their approval by the board. Internal regulations have been drawn up concerning most of the procedures and in many cases these are ignored The internal audit system does not ensure compliance either. Also, internal regulations have not been brought into conformity with the amendments made into legislation.

Many weaknesses identified in the course of the audit were eliminated already during the audit.

Several shortcomings reflected in this audit report arise from the omissions of the Ministry of Education and Research. The Ministry has not established accounting policies and procedures that would be in accordance with the general rules of state accountancy, which sets additional requirements for the entities of the ministry forming part of the Ministry as an accounting entity.

Respective rules relating to cash resources have not been established for Estonian Maritime Academy, where among other things the maximum limit for cash and security requirements for encashment, maintaining records and inventory should be established.

As of autumn 2003, there is no legal basis for providing the teaching staff with free uniforms and providing the cadets with free alimentation and free uniforms. At the same time, it still applies for money from the state budget, and money is allocated for the Academy.

Mailis Reps, the Minister of Education and Research, concurred with most of the assessments and opinions. In her response, the minister also provided measures for eliminating the weaknesses listed in the draft.

Jüri Lember, the acting rector of Estonian Maritime Academy, declared in his response that he does not concur with many of the assessments, but did not object to the observations given in the draft audit report. In his response, he explained the reasons for the weaknesses identified in the course of the audit, and provided measures for their elimination and prevention in the future.

The objective of the audit was to evaluate the economic activity of Estonian Maritime Academy in 2004, focusing on the organisation of accounting, legality of the economic transactions, functioning of financial management and internal audit system.

Estonian Maritime Academy is an institution of professional higher education operating in the Ministry of Education and Research's area of government and a state authority administered by the Ministry. The Maritime Academy (until 1999, the Estonian Maritime Training Centre) was founded on November 1, 1991. There are 900 students and more than a hundred teachers in the academy.

The objective of the operation of the Maritime Academy as an internationally recognised institution of professional higher education is to provide quality marine education, supervise and coordinate education and development, and organise marine applied research.

Toomas Mattson
Communication Manager of National Audit Office
Telephone: 6400 777
Mob: 51 34900
E-mail: [email protected]

• Posted: 6/13/2005 12:00 AM
• Last Update: 9/22/2015 8:53 AM
• Last Review: 9/22/2015 8:53 AM