The primary objective of the audit was to evaluate the compliance of the accounting statements and transactions of the Ministry of Culture with the Accounting Act, the Regulations of the Minister of Finance and other legislation regulating the preparation of Annual Reports and the lawfulness of transactions.
As a result of the audit the State Audit Office concluded that although the economic transactions conducted by the Ministry of Culture were in compliance with legislation in material respects, the State Audit Office deems it necessary to note that the internal auditing procedures of the Ministry (incl. the establishment of the rules of procedure for disbursement of grants and the adherence to these rules of procedure; the organisation of the internal auditor’s work; the justification of the budgets of institutions administrated by the Ministry, first of all theatres) are not sufficient to ensure the use and preservation of assets and the use of budgetary resources pursuant to the procedure established in the State Assets Act and the State Budget Act.
The Ministry of Culture lacks a uniform internal procedure for allocating funds from the state budget which have been prescribed to be distributed as grants, and for supervising the use of these funds in accordance with their designated purpose.
For example, a commission has been formed for allocating grants within the scope of the programme “Publication of serious music and materials concerning music,” whose task is to review applications submitted to the Ministry for receiving state aid and to forward suggestions to the Minister concerning the use of state budgetary funds. However, no rules of procedure have been established for the commission, which would ensure the effective and objective work of the commission and the verifiability of its decisions. In the opinion of the State Audit Office, while forwarding suggestions to the Minister concerning the use of state budgetary funds the members of the commission find themselves in a conflict of interests, given that members of the commission have participated in making proposals for allocating funds for projects which they are related to.
Moreover, the circumstance that the Ministry lacked knowledge of the form of ownership of the Estonian Drama Agency administrated by the Ministry indicates the weakness of the Ministry’s internal audit system, wherefore, in the opinion of the State Audit Office, wrong decisions have been taken in planning the consumption of financial resources allocated from the state budget.
The State Audit Office is highlighting these problems in order to emphasise that an internal audit system should be an integral complex of measures aimed at lawfulness and rationality, which enables the management of an institution to ensure the accomplishment of goals in an orderly, economical and efficient way. An internal audit system must protect assets and resources, ensure adherence to management principles, correctness and thoroughness of accounting, and timely submission of reliable information concerning finances and management.
