Court of Auditors 2016 report: Illegal payments, procedures – Tourism Ministry, CFR SA, Tarom, APIA, CONPET, Romanian Post, Environment Ministry

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The financial and compliance audits carried out last year by the Court of Auditors identified 21,427 irregularities, which generated extra incomes of RON 978,1 million, damages of RON 687,6 million or financial errors of RON 43,225 billion, the Court of Auditors’ Report for 2016 reveals.

According to the document, as compared to 2016, the volume of deviations concerning unstated, unsecured and, consequently, unrecovered and incomplete revenues decreased by about 35% and the damages caused to the public budgets decreased by about 62.72% as compared to the previous year.

At the opposite end, there were the financial and accounting deviations which in the year 2017 saw an increase of about 48% compared to those found in 2016, the predominant deviation being found in the highlighting and reporting of public patrimony both by the entities in the central administration as well as by those in the local administration.

  • The Ministry of Tourism made illegal payments, in 2016, for services to promote the national tourism brand, for incomplete investments, did not follow the observance of contract clauses, did not charge delay payments and damages and inefficiently used the money for tourism fairs abroad, the Court of Auditors informs in its 2016 public report. The report mentions payments amounting to RON 498,000 for incomplete investments, illegal payments from the state budget amounting to RON 1.42 million, settled services of RON 1.087 million, settled services not included in the contracts (RON 326,000), failure to cash damages (RON 54,000), etc.
  • The CFR SA Director General and the members of the Board (Romanian railways) have collected illegal bonuses amounting to RON 307,000, whereas other employees took advantage of the cars to settle fuel expenditures for activities not related to the company’s operations, the same report reads. On the other hand, following the inventory of carriages, no documents were found to justify the removal from patrimony of 21 carriages. The company’s accounting result has been distorted by incurring expenses or by mitigating incomes: incorrectly reported provisions related to personnel rights that are the subject of labour disputes have been established and reported incorrectly in the sense that they have not been adjusted by the value of the personnel rights granted by the company in the amount of RON 250,814 million (RON 197,365 million – wages and RON 53,449 million – employer’s contributions), as a result of the final civil judgments, etc.
  • TAROM did not actually and effectively, economically and efficiently meet the objectives, duties and responsibilities legally established in relation to air transport, the public report released by the Court of Auditors in 2016 indicates. Among other things, the air carrier paid during 2012-2016 compensation of about RON 3.8 million due to flight irregularities. It also points out that in the period 2012-2015, the total revenues achieved had a slightly upward trend, but in 2016 they had an unfavourable evolution, being below the level achieved at the beginning of the period. The total annual financial resources that TAROM had available during the audited period for the activity were of minimum RON 1.24 billion in 2016 and a maximum of RON 1.372 billion in 2015.
  • The deviations recorded in the controls carried out at the central administration of APIA (Agency for Payments in Agriculture) identified the erroneous registering in the accounts of the amounts granted to farmers as transitional national aid, as well as of the amounts collected from them as debits from the amounts claimed and unlawfully received. The financial balance on December 31, 2016, with an unrealistic balance of the account ‘Amounts to be received from MADR – the state budget’ amounting to RON 1.385 billion, according to the institution’s public report for 2016. Also, the debit turnover of the account ‘Funding of subsides from the State Budget’ and the debit turnover of the account ‘Reported Result’ account were increased unjustifiably by RON 217,000.
  • Following the controls conducted at CONPET – expenditures in 2016 for modernization and upgrading works amounting to RON 668,000 without complying with the principles of efficiency, effectiveness and economy, which were subsequently suspended and/or cancelled. Decommissioned pipelines of the national transmission system without a previous Government decision – RON 927,000 not registered and paid to the state budget. The recording of repair works expenditures, which in reality represented tangible assets, has unlawfully increased the costs of the activity by RON 300,000, which led both to the decrease of the profit tax due to the state budget, as well as to the net profit result at the level of each year. Late penalties amounting to RON 38,000 have not been calculated, invoiced, recorded in the accounting records and, implicitly recovered – penalties for non-payment of the monthly rent, established by the lease agreements.
  • The Court of Auditors points to the Romanian Post, with illegal bonuses amounting to RON 237,000 and legal services based on a contract amounting to RON 579,000, but whose object overlapped with the attributions of the Legal and Regulatory Directorate.
  • The Environment Ministry mistakenly registered in 2016 goods worth more than RON 15.66 billion in both the accounting records and in the “Centralized inventory of public goods assets”, although they were protected areas with ‘various forms of ownership’. In the accounting records of the Ministry were reflected expenditures on services rendered in December 2015, thus both the patrimonial result of 2016 and the execution account were denatured by the amount of RON 2.150 million.

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