TALLINN, 14 June 2005 - SAO finished the audits of the financial year of 2004 of the Office of the Chancellor of Justice, Supreme Court, Office of the President of the Republic and the Office of The Parliament, which were carried out pursuant to State Budget Act.
In the course of the audits, the SAO evaluated the authenticity of the annual reports of the mentioned authorities and gave an evaluation of the transactions’ legality. In the case of all four authorities the SAO made some comments on the authenticity of the annual reports and pointed out observations about the transactions’ legality.
As a result of the audits, the SAO found that accountancy is generally adequately organised. The general rules of state accountancy which entered into force on January 1, 2004, brought along several alterations for state accounting entities compared to former organisation of accountancy. The SAO found that in constitutional institutions the implementation of the general rules of state accountancy has been carried out without major problems. The most common weakness in the case of all four authorities was the fact that contracts signed on the terms of financial lease were not recorded in the authorities’ balance sheets. Weaknesses were also discovered in the recording of revenue (Office of the President of the Republic) and the proper recording of assets (Supreme Court).
Evaluating the legality of transactions and financial management, we discovered some common problems that occurred in several authorities:
Audited authorities have signed leasing contracts (foremost for passenger cars and office equipment), which pursuant to instruction No. 9, “Leases”, of the Accounting Standards Board are regarded as financial lease contracts. Pursuant to subsection 3 of § 29 of State Budget Act (SBA), state authorities are prohibited from taking loans, using financial lease and take on other such obligations.
The concept of “financial lease” is not defined in State Budget Act or other legislation in force. As instruction No. 9 of the Accounting Standards Board is currently the only document explaining the concept of “financial lease”, the SAO based its evaluation of commercial lease contracts on the mentioned instruction, but at the same time we find that the instructions of the Accounting Standards Board is not legislation but instructions compiled to explain and specify the Accounting Act.
The SAO concurs with the opinion of the Office of the Chancellor of Justice that the part of the sentence ("state authorities are prohibited from using financial lease ") in subsection 3 of § 29 of SBA can be interpreted differently as the exists no legal definition for the term “financial lease” that is related to financial obligation. The SAO has addressed the Minister of Finance with a proposal to establish the definition for the term “financial lease” in a law, so it would be clear which activities on taking financial obligations are allowed to state authorities and which are prohibited.
Public procurement procedures were omitted in the Office of The Parliament and the Office of the President of the Republic.
The SAO is of the opinion that the Office of The Parliament and the Supreme Court do not need official residences for principal activity and the SAO finds that the transfer of these apartments should be considered or ask market price for the rented apartments. In the audit period, the Supreme Court owned 15 official residences that were rented to its employees, and the Office of The Parliament enabled for its employees the use of 8 official residences, where the employees had to pay utility and administrative costs.
Toomas Mattson
Communication Manager of National Audit Office
Telephone: 6400 777
Mob: 51 34900
E-mail: [email protected]
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Posted:
6/14/2005 12:00 AM
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Last Update:
9/22/2015 8:48 AM
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Last Review:
9/22/2015 8:48 AM