Auditing operation No. 04/31
The social programme accompanying the restructuring of the Czech steel industry
The auditing operation was included in the Annual Audit Plan of the Supreme Audit Office (hereinafter referred to as “SAO”) for the year 2004 under No. 04/31. The auditing operation was managed and audit conclusion drawn up by Mrs. Marie Hošková, the Member of the SAO.
The aim of the audit was to examine the management of the State Budget funds for the social programme accompanying the restructuring of the Czech steel industry (hereinafter referred to as “SPARSI” and to evaluate effectiveness and economy of their use.
The audited period covered the years 2000 to 2004.
The audited bodies were the Ministry of Industry and Trade (hereinafter referred to as “MIT”), the Ministry for Regional Development (hereinafter referred to as “MRD”), the Ministry of Labour and Social Affairs (hereinafter referred to as “MLSA”) and selected beneficiaries.
The restructuring of the steel industry has been in progress since the beginning of the 1990s and it has been accompanied by considerable run-down of employment. In the year 1989, 136,600 employees worked in the steel industry; in the year 2000 not more than 43,500; and by the end of the year 2005, their number should be about 25,000. Assistance for redundant employees from the SPARSI was commenced halfway through the process only in the year 2000. The provision of financial assistance was prolonged from the year 2003 until the year 2006. Number of assistance agent companies increased from original number of 16 to 72 mainly as a result of filial companies establishing.
CZK 950 million was provided for the SPARSI during the period from the year 2000 to the year 2004 in the form of several specifically oriented partial programmes. An effectiveness of this assistance was not possible to evaluate because the SPARSI was executed without any performance indicator settings. The involved ministries provided assistance trough regional employment agencies and by the partial programmes START (Sub-programme for the business loans for redundant employees from iron- and steelworks) and RESTART (Integration sub-programme for redundant employees from the steel industry) also to clients beyond the area of redundant employees from steel industry. They also did not monitor the number of former steel industry employees who were actually involved. By incomplete data submitted to the SAO, a substantial role was played only by the financial assistance for about 5,700 employees made redundant due to organizational reasons. The other sub-programs covered only a minor part of dismissed employees when e.g. only 90 or 120 of them joined the MLSA re-qualification courses and only 56 participated in the sub-programme START as was mentioned above.
The auditors found some irregularities in financial implementation of the SPARSI. They concerned mainly incompliance with budgetary rules and governmental regulations for using and settlement of the State Budget funds. The total volume of illegitimately used funds amounted CZK 11.4 million.