Auditors found weaknesses in the management of the National Heritage Institute. There were errors in the cultural objects records, accounting, and public procurement.
Press Release on audit No 20/16 – 12 July 2021
The Supreme Audit Office examined the management in the National Heritage Institute (NHI) between the years 2017 and 2019 and identified weaknesses. The NHI erred in the cultural objects records and in the keeping of accounts. The auditors also found weaknesses in service purchases and in several cases in public procurement. At the NHI, the internal control system was not functioning correctly. Some weaknesses were remedied by the NHI in the course of the audit.
For recording and stocktaking of cultural objects such as mobility funds, historical libraries or archaeological findings, the NHI followed its internal rules. There is no specific law in the Czech Republic governing recording, stocktaking, and care for cultural objects. A special law deals only with museum collections. The NHI manages four such collections, but none of the collections were recorded correctly and did not carry out stocktaking in accordance with the requirements of this Act. The valuation of archaeological findings was not carried out in a uniform manner by the NHI. In 2018 and 2019 stocktaking, the NHI failed to identify that it had three newly acquired castle libraries in its administration.
The auditors also found weaknesses in the accounts of the NHI. For example, it did not register two immoveable cultural monuments — the Invalidovna building in Prague-Karlín and a building in Liliová Street in Prague — purchased for more than CZK 96 million. In the accounts of the NHI, the auditors also found weaknesses in the depreciation and measurement of assets or in the accounting over an incorrect period of time. All this had an impact on the figures in the financial statements.
When purchasing legal services, the NHI did not proceed correctly. For example, the NHI concluded two contracts with a retroactive effect. It paid more than CZK 145 thousand in total for services delivered before concluding the contracts. In addition, the NHI also paid a law firm for services for which it could have used its own staff. In another case, the NHI paid more than CZK 240 thousand for legal services based on a contract which had expired or had exhausted the maximum agreed amount to be paid.
The NHI also provided – for several years – a cultural monument for use free of charge without a concluded contract. The original contract expired and concluded a new one after four years, during SAO’s audit.
In several cases, the NHI did not follow the Public Procurement Act. For example, within one day, the NHI ordered similar services from the same supplier several times, each time amounting to less than CZK 50 thousand crowns. This circumvented both the Public Procurement Act and the Law on the Register of Contracts. In total, it directly awarded contracts for almost CZK 338 thousand. In another case, it directly awarded a contract for IT and legal services for GDPR for an estimated value of almost CZK 400 thousand without prior market research, based solely on older demands for similar services.
The auditors found that the internal control system was not functioning correctly at the NHI. For example, the NHI paid invoices past their due date, reimbursed funds in breach of contract or order form. It did not follow the authorisation procedures for purchases, concluded contracts without prior authorisation by relevant staff and without carrying out a prior check before the commitment was made.
You can find the data of visits to premises managed by the NHI here: https://www.nku.cz/scripts/detail.php?id=11793.
Communication Department
Supreme Audit Office