Auditing operation No. 04/30
Fulfilment of the State Budget revenues in the area of the collection of the premium for the social security and the contribution for the state policy of employment
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. 04/30. The auditing operation was managed and the audit conclusion drawn up by Mr. Jiří Drábek, the Member of the SAO.
The aim of the audit was to examine the correctness and the completeness of the showed revenues from the premium for the social security and the contribution for the state policy of employment at the relevant state administration authorities.
The audited period covered the years 2003 and 2002 as well as previous or following periods in certain cases of relevant connections.
The audited bodies were the Czech Social Security Administration, Prague Social Security Administration including its administrative office for Prague 4, District Social Security Administration offices in Brno-město, Jihlava, Šumperk, Pardubice, Cheb and Chomutov.
The audit detected deficiencies in the collection of the premium for the social security and the contribution for the state policy of employment at some District Social Security Administrations and at Prague Social Security Administration, which did not allowed on time estreat of the claims, which are the State Budget revenues, because:
- They did not use the possibility to set the presumable extent of premium according to the Section 22 b of the Act No. 589/1992 Coll., on premium for social security and contribution to the state policy of employment. The District Social Security Administrations and the Prague Social Security Administration did not use this possibility at all or they used it many months or years after this legal provision had come to force. The increase of the claims after setting the presumable extent of premium was in 75 cases CZK 244,324 thousand.
- They issued the statements of arrears in long time intervals or even couple years after calling the payer off the register. The increase of the premium and the penalty after the issuing the statements of arrears was in total CZK 62,992 thousand.
The Prague Social Security Administration has not fulfilled its legal duties during the audited period.
Some District Social Security Administrations and the Prague Social Security Administration did not sufficiently use the possibility to write off the outstanding premium and penalty due to the uncollectibility according to the Act No. 582/1991 Coll., on organization and implementation of social security. For example after the cancellation of the bankruptcy they did not take any measures leading to the possibility of write off the claims in 15 cases in total amount of CZK 48,996 thousand, even though the estreat of those claims did not lead to the satisfactory result or the payer was deleted from the business register.
Due to the incorrect bookkeeping the Czech Social Security Administration showed the state of the account 315 – the receivables from the budget incomes – lower in 2002 by the amount CZK 314,143 thousand and in 2003 by the amount CZK 181,597 thousand. As a consequence in the audited period the expected State Budget incomes were distorted and this had negative impact on the quality of the data used for the State Budget compilation.
The Act No. 582/1991 Coll. on organization and implementation of social security and the Act No. 589/1992 Coll. on premium for social security and contribution to the state policy of employment do not encompass any special regulation which would allow divergent way of bookkeeping, different from the general legal regulations concerning the accountancy. Unless there is adopted any special regulation concerning the accountancy in above-mentioned acts, the only valid audit criteria is the Act on accountancy.
The results of the auditing operation show the necessity of legal regulations amendments in:
- The termination of the duty to pay penalty in case of the declaration of bankruptcy or in case of the settlement permit, e.g. at 88 payers the increase of penalty after the declaration of bankruptcy was in total CZK 926,364 thousand.
- Writing off the outstanding fines due to the uncollectibility. By 31 December 2003 the Czech Social Security Administration registered on the account 315 – the receivables from the budget incomes – the outstanding fines in total amount CZK 1,686 thousand, even though the premium and the penalty were written off due to the uncollectibility at those payers.
The estreat of those receivables is not efficient concerning the trait of the debt and their state presented in the bookkeeping is distorting the value of the expected incomes showed by the Czech Social Security Administration.