The changes in the working methods of selected regional offices of the General Financial Directorate did not lead to the planned savings
Press Release on audit No 20/21 – 8 November 2021
The SAO examined the way the General Directorate of Finance (GDF) managed state funds and selected state assets in the period 2018 to 2020. The audit focused mainly on how the GDF rented real estate, handled unnecessary assets, concluded contracts or recorded assets. In addition, the auditors also looked into the outcome of the changes in the functioning of the GDF regional offices. The audit revealed that changes in the working method of regional offices did not yield the expected savings related to the operation of the buildings. Nor did the GDF act correctly in determining the rent.
On the basis of its own analysis carried out in 2015, the GDF decided that a smaller number of regional offices was sufficient to operate effectively and proposed to close down 23 out of the then 103 offices. The Minister of Finance subsequently decided against the closing down of the regional offices. The GDF has therefore proposed a solution in the form of an optimised “2+2” scheme, where the activity of the 23 regional offices is carried out by at least two staff members on two working days. In 2019, the GDF continued to amend the scheme to a further selected 33 regional offices, with the aim of saving CZK 14.2 million in expenditure related to the operation of the buildings within the first year. However, only CZK 6.8 million – less than one half of the amount – was saved.
The SAO recommends that, to achieve potential savings, the issue of optimising the number of regional offices should be re-examined, also in view of the increasing number of electronic submissions.
The GDF, like other state institutions, is obliged to rent out unnecessary assets at least at a rent that is standard in a given place and time. In a sample of 22 lease contracts audited, the SAO found that in 20 cases the GDF did not set the rent in a way that would guarantee the corresponding amount. In determining the amount of the rent, the GDF did not take into account the size, location, or purpose of the use of the property, and did not determine the open market value by comparison with similar assets. In practice, for example, the GDF compared Prague 1 with the Prague districts of Chodov, Žižkov, and Radlice, the town centre of Mělník with the periphery of Kralupy nad Vltavou and so on.
Furthermore, it was revealed that the legal predecessors of the GDF1 had concluded lease agreements with a limited possibility to hand in a notice of termination. Thus, the GDF does not have a possibility to terminate these contractual relationships by giving notice of its own motion, for example, in cases when it has the option to negotiate a cheaper lease or accept an offer to move to a state-owned building.
1] These two contracts were the Finance Directorate for the Capital City of Prague and the Tax Directorate in České Budějovice.