Auditing operation No. 03/21
Funds earmarked for settling restitution claims
The auditing operation was included in the Annual Audit Plan of the Supreme Audit Office (hereinafter referred to as “SAO”) for the year 2003 under No. 03/21. The auditing operation was managed and audit conclusion drawn up by Mr. Jiří Drábek, the Member of the SAO.
The aim of the audit was to examine the use of funds earmarked for covering necessary expenses due to the termination of easements attached to property issued to entitled individuals and which till then, or was, used for the purposes of an organisation within the competence of specific departments.
The audited entities were the Ministry of Education, Youth and Sports (hereinafter referred to as “MEYS”), the Ministry of Culture (hereinafter referred to as “MK”) and the Ministry of Health (hereinafter referred to as “MH”) from the perspective of the material correctness of the financing of individual restitution acts and the Ministry of Finance (hereinafter referred to as “MF”) from the perspective of the accounting of the provision of funds to the above-mentioned departments using the information package for financing state restitution activities.
Matter of the audit was set of specific actions with a total value exceeding CZK 2 billion. The audit conclusion describes several kinds of deficiencies in dealing with such resources.
The MEYS, the MK and the MH interpreted the law by their own way. The funds were, pursuant to § 15 (2) of Act No. 500/1990 Coll. earmarked “…to cover necessary expenses arising from the termination of easements attached to property given to entitled individuals that was till then used on a rental basis…“ and not to be used for the construction of new buildings, extensions and increasing capacity etc. as a replacement for the property provided in the restitution.
The audit conclusion presents a couple of cases with a total value of CZK 1.044 billion that have no relation to any easement established over the property. This fact was confirmed by the extracts from the Land Register that did not indicate a single easement established over the issued property, while the registration in the Land Register is a necessary condition for the validity of easements.
According to the opinion of the SAO this was the result of the incorrect interpretation on the part of the ministerial officials in question, who perhaps assumed that these funds could be used for any purpose that was in any connection with restitution. They did not consider the fact that whilst the property was given to entitled persons there were no easements attached to the property (e.g. rental relationship) and thus it was not possible to finance the stated expenditure from these funds.
The audit conclusion further describes drawing of funds from the sub-programme for restitution to resolve property issues in accordance with Act No. 172/1991 Coll., that do not concern restitution at all. This act refers to the transfer of certain property from the ownership of the Czech Republic to the ownership of municipalities. It essentially relates to the return of property to municipalities that was expropriated from them in 1949. It can not be seen as restitution. Despite this, financing in the amount of CZK 235 264 000 from this sub-programme was used to finance the reconstruction, construction or purchase of property to replace buildings transferred to the ownership of municipalities.
The SAO also requested the submission of documentation necessary for a just decision process (credible documentation on the provision of things, investment intention, registration of event, decision on the financing of an event etc.), however, in 11 cases, the MEYS did not submit the complete documentation within the stated deadline and gave the reason that this documentation was unobtainable. Despite this it had provided a total amount of CZK 250 159 000 of state funds to finance these events.
In some cases the funds expended considerably exceeded the necessary amount. At issue here is the increase of usable floor area and increase of the capacity in new buildings at least 50% above the original usable floor area. CZK 308 million was used in excess of the absolutely necessary expenditure to increase floor area.
The SAO audit further determined that in the case of 42 events classified in the restitution sub-programmes, the MEYS entered in the programme ISPROFIN, administered by the MF, incorrect values a total of CZK 65 122 higher than justified. These data are important for the accounting of these funds with a heading of state financial assets.