Supreme Audit report estimates 1.71 billion euros financial damage

Tirana Times
By Tirana Times April 5, 2019 21:29

Supreme Audit report estimates 1.71 billion euros financial damage

Story Highlights

  • The damages came due to mismanagement of budget revenues and expenditures, mismanagement of state property administration followed by irregularities and inefficiencies in the field of public procurement. Damages also came from corruption with concessions and in the Customs, and lack of productivity from the public administration.

Related Articles

TIRANA, April 5- In the final audit report from the State Supreme Audit Institution (SSAI) released for year 2018, inspections have discovered that the governmental institutions have committed an economic damage and financial irregularities amounting to 1.71 billion euros from 2014 until 2018. These damages are done both in the public expenditures and from the missing income that should have been received in the state budget.

In the report it has been ascertained that 193 million euros worth of economic damage are from irregularities and financial violations in income and expenses incurred. Then there are the violations of financial discipline with a negative impact on the performance of the audited entities totaling to 1.518 billion euros, of which total there is a 923 million euros from the incomes, and 587 million euros in non-efficient and non-effective expenses, lacking a proper economy of public funds.

The audit work aims to be the most responsible executive regarding the management of state funds. The SSAI has noted that much remains to be done to create a culture of managerial accountability and to ensure a more efficient financial management and control system. The report writes that the level of ineffective damages and expenditures or negative effects on the state budget in a summarized manner by the auditing activity during 2018 continues to be high.

The auditing work is mainly focused on areas for which the SSAI has assessed a high level of risk. Even in this year, major violations with significant effects in contravention of legal requirements remain in the area of mismanagement of budget revenues and expenditures; mismanagement of state property administration followed by irregularities and inefficiencies in the field of public procurement. Damages also came from corruption with concessions and in the Customs, and lack of productivity from the public administration.

As estimated in the report the highest economic damage was made by the State Tax Agency, with a value of 105.44 million euros, followed by the state property managing through rents, concessions and private-public partnerships (PPP), then the customs; and other.

The audits have been extended to central institutions and subordinate units to have a satisfactory coverage and to guarantee a more efficient financial management and control system. These include the ministries and their subordinate agencies, general directorates and tax and customs departments as well as state-owned joint-stock companies, local government units (such as counties, municipalities, municipalities), and closing the audit of projects with foreign financing.

The Supreme Audit underlined in its that there is a significant problematic on the part of public institutions regarding backlogs. According to this institution, the budget money in a good part of the cases goes to work that should have been already paid due time, which on its part reduces the effect these costs have on citizens’ lives. This is recurring issue that the SSAI has previously voiced on.

“A significant part of the annual budget goes to remit the arrears of past years by not generating real budget growth but payments for services and benefits that have been done in previous budget years. The SSAI found 6,857 payments for overdue invoices and liabilities amounting to 69.5 million euros. Meanwhile, the payments made during the first seven months of 2018 were analyzed in the capital expenditures heading, whereby the payments related to the bills holding 2017 are in the amount of 91.88 million euros, indicating that in 2017 the backlogs have been increased,” the report writes.

The report estimates that the billing of arrears is not accurate and complete. As a result, according the state of arrears at the end of 2017 should have been reported at least 151.8 million euros. Considering also other accounts and inaccuracies found on invoice dates, this figure is higher than actually reported. Likewise, contracts concluded through the undertaking of budget commitments are carried out in several cases beyond the deadlines set forth in the Budget Law causing the creation of arrears.

“The dates of contracts registered with the date of establishment in the system have been analyzed and grouped, and it resulted a total of 16,795 cases or 72 percent of all contracts registered during 2017 were in violation of the determined time limits with a value of almost 502.5 million euros. The highest number of violations is found in the local government units: typically the Municipality of Tirana, Durres, the Ministry of Health, the Ministry of Interior, and the Ministry of Infrastructure and Energy,” writes the report prepared by the SSAI.

Moreover the prevention systems for the creation of arrears and taking commitments without budget funds according to SSAI are not efficient, although constructed. The SSAI wrote that the detection and take-up systems are weak and require significant improvement in monitoring and detection.

Another pressing issue where the Supreme Audit’s report stressed on was the public debt. The auditing institution evaluated that the concentration of public debt towards foreign borrowing has increased the exposure to interest rate risk. The report writes that liquidity management is characterized by significant weaknesses based on a methodology that provides limited and unconfigured information through key spending and collection institutions. Moreover, coordination between debt and liquidity structures is weak, focusing only on payment monitoring rather than proper management of incoming and outgoing inflows. Like the previous year, the SAI draws attention to how public debt is calculated and the non-inclusion of some elements that, if integrated, would produce a new debt figure in relation to GDP.

Regarding all the financial violations that the State Supreme Audit Institution has inspected, in response to all the legal infringements committed, the SSAI has requested the criminal prosecution of 122 institution current and former chiefs and employees from all over Albania, that have intentionally or unintentionally induced the colossal financial damages to the state budget.

Tirana Times
By Tirana Times April 5, 2019 21:29