Accounting for timber felled from state forests must be improved

Toomas Mattson | 6/9/2011 | 12:00 AM

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TALLINN, 9 June 2011 - The audit of the National Audit Office indicated that the accounting of state forests Management Centre (RMK) for timber felled from state forests has improved after the structural reform of 2008, yet it still needs improvement for the journey of the timber from felling to purchaser to be transparent and controlled.

The National Audit Office discovered that an average of 17% more timber per hectare is obtained from clear cutting of state forests after the structural reform. This refers to the possibility that not all the timber felled from state forests reached the purchaser before the structural reform.
In the audit, the National Audit Office made a recommendation for the Ministry of the Environment to ascertain the reasons for previous losses of timber to identify the persons responsible in order to eliminate the possibility of losses of timber in the current organisation of work of RMK.
The Minister of the Environment asserted in the respective letter of reply that the increase in the volume of timber obtained from felling is mainly caused by the improvement of the accuracy of measurement and organisation of work. Although the Minister does not dispute the previous losses of timber, it is deemed impossible to retroactively ascertain the reasons for losses of timber in the previous years and identify the persons responsible. The Minister recognises that the current system does still not guarantee absolute protection against theft, and it should therefore be constantly improved.
In the opinion of the National Audit Office, the introduction of the harvesters controlled by RMK has improved the accuracy of measurement of timber felled from state forests; however, it does not ensure the accounting of all the felled timber in the stock records of RMK. The quality of observation of the journey of timber felled from state forests from the cutting area to the purchaser and filling conveyance documents in a proper manner must likewise be improved. As the current organisation of stock records does not allow for convenient identification with regard to which cutting area or storage space a certain volume of timber is from, it is hard to ascertain the origin of the loss, the reason therefor and the person possibly responsible.
In the opinion of the National Audit Office, the accounting for timber felled from state forests should be substantially improved as the current accounting system does not facilitate comparison of timber felled from state forests and sold to purchasers by assortments and can be mainly used for analysing the total volumes of timber felled from state forests and sold to purchasers. According to the established practice, the purchasers measure the accepted timber based on their classification of timber assortments that is different from the one used in the stock records of RMK; therefore, comparing the volumes of timber measured in the stock records of RMK to the measurement data of the purchaser on a level of various assortments is complicated.

Background information

  • The state is the biggest forest owner in Estonia, having in its ownership more than 40 percent of all Estonian forests. A dominant part of the forest owned by the state is managed by RMK.
  • The annual turnover of RMK has increased from 1.1 billion kroons in 2006 to 1.8 billion kroons in 2010. The annual profit of RMK for the year 2010 was 418 million kroons. Revenue from forests is paid to the state budget from the profit earned by RMK.
  • A structural reform was carried out in RMK in summer 2008 that separated planning, organisation and distribution with regard to forest management work. While in the case of previous organisation of work, the forest district planned the cutting and organised the felling work, the cutting is planned and organised by two separate structural units in the course of the new organisation of work.
  • Analysis of the volumes of timber delivered for felling work and accepted from felling indicated that the volume of timber accepted from clear cutting in the years 2006-2008 was averagely about 96% of the delivered volume before the structural reform of RMK. However, an average of 113% of the volume of timber delivered for cutting was accepted from clear cutting in 2009.
  • After the reform, RMK put into practice the so-called fixed harvesters that enable precise measurement of the volume of timber in the course of cutting. The timber obtained from cutting is entered in the stock records of RMK on the basis of the measurement data of the harvesters and this substantially increases the reliability of the data of stock records. The audit indicates that RMK regularly inspects the measurement accuracy of the harvesters but does not make sure that all data received from the cutting areas of RMK with regard to the volumes of felled timber is sent to RMK.
  • The National Audit Office conducted an audit to verify whether the accounting of the RMK for the volumes of timber felled from state forests and sold to purchasers is transparent and controlled and whether the internal audit system of RMK ensures that all the felled timber reaches the purchaser.
     

Toomas Mattson
Head of Communication Service
National Audit Office
Telephone: +372 640 0777
Mobile: +372 51 34 900
E-mail: toomas.mattson@riigikontroll.ee
 

 

  • Posted: 6/9/2011 12:00 AM
  • Last Update: 11/10/2015 5:47 PM
  • Last Review: 11/10/2015 5:47 PM

The timber obtained from cutting is entered in the stock records of RMK on the basis of the measurement data of the harvesters and this substantially increases the reliability of the data of stock records.

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