The Ministry of Regional Development failed in the management and monitoring of its subordinate organisations
Press release on audit No 21/07 – 15 August 2022
The Supreme Audit Office (SAO) reviewed the financial management of selected organisations of the Ministry of Regional Development (MoRD) between the years 2015 and 2020, specifically the Czech Tourism Centre — CzechTourism, the Centre for Regional Development of the Czech Republic and the Mountain Rescue Service of the Czech Republic (MRS). The SAO also examined how the MoRD managed and monitored these organisations. The audit revealed that the MoRD did not manage the organisations adequately, it often failed to monitor their work and whether they complied with tender conditions, and in some cases, the MoRD even breached the Financial Control Act. The MoRD failed to reveal a number of errors on the part of the Mountain Rescue Service and CzechTourism, including shortcomings in public procurement.
For example, contrary to the conditions laid down in the Financial Control Act, the MoRD abolished the Internal Audit Unit at CzechTourism. One of the reasons for this step was the low likelihood of disproportionate risks in the management of public funds, even though the Ministry repeatedly identified these risks specifically at CzechTourism in the past. The function of the abolished unit was to be replaced by a public administration control carried out by the MoRD, but no such control had been initiated by the Ministry by the end of SAO’s audit (February 2022).
A condition for providing a grant to the Mountain Rescue Service was the regular submission of interim reports on how subsidies were managed. The MRS failed to submit such reports and the Ministry did not invite it to do so, nor did it specify which documents the MRS should provide. The Ministry had not monitored the MRS since 2018, thus it did not reveal that the MRS had failed to fulfil its obligations. Nonetheless, the Ministry provided the MRS with subsidies on an annual basis.
The MoRD failed to detect errors in public procurements both on the part of the Mountain Rescue Service and CzechTourism. The MRS had errors in nine out of ten public procurements audited by the SAO. The MRS infringed the Public Procurement Act, for example, by failing to publish the full text of its contract within the prescribed period, by omitting to cancel procurement procedures in which only one offer was submitted, or by concluding a contract of sale with the successful tenderer before the expiry of the 10-day objection period. These shortcomings were assessed by the SAO as a breach of budgetary discipline amounting to almost CZK 96.5 million. For CzechTourism, the SAO found shortcomings in 19 out of the 60 audited contracts. CzechTourism infringed the Public Procurement Act by, for example, paying a supplier for services without entering into a written contract first, or by repeatedly renewing the contract for the surveillance of CzechTourism’s premises. It extended the contract by a total of 45 months on the basis of seven amendments and paid a total of CZK 2.3 million. It must be mentioned, however, that CzechTourism itself informed the SAO about its unlawful conduct. The MoRD nevertheless agreed to extend the contracts by means of amendments. The shortcomings identified were assessed by the SAO as a breach of budgetary discipline totalling CZK 2.97 million. In the audited areas of the financial management carried out by the Centre for Regional Development, the SAO did not identify any shortcomings.
Supreme Audit Office