Ministry of Foreign Affairs economy management
Auditing operation No. 05/09
The auditing operation was included in the Annual Audit Plan of the Supreme Audit Office (hereinafter referred to as “SAO”) for the year 2005 under No. 05/09. The auditing operation was managed and the 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 property and the State Budget funds earmarked to the Ministry of Foreign Affairs.
The audited period covered the years 2003 to 2004 as well as previous periods in case of relevant connections.
The audited body was the Ministry of Foreign Affairs (hereinafter referred to as “MFA”).
The MFA does not observe unity of budgetary and calendar year in the embassies activities financing. The MFA shifted a budgetary period of embassies two months before the calendar year, i.e. from 1st November to 31st October. The embassies failed to work out final account of advances by 31st December of the budgetary year and they did not delivered collected budgetary revenues from November and December at the end of the month. The MFA declared misrepresented data on the state budget spending, for it presented on the date 31st December data only from the central office while the data from embassies were presented on the date 31st October. The misrepresentation of the single indicators varied between 0.01 per cent and 7 per cent of MFA presented indicator values.
The MFA did not disburse embassies’ budgetary expenses from the relevant charge account but by funds called “continuing down payment” from the deposit account.
The embassies’ financing problem was underlined already by the audit conclusion No. 97/25 published in the SAO’s Official Bulletin No. 2/1998, which pointed out infraction of budgetary rules. The MFA has been acquainted with the specific problem since 1997 but it undertook no appropriate measure whether they co-operated with the Ministry of Finance or they proposed a reasoned draft amendment of relevant regulations for criticized financing. The budgetary rules were amended in 2000; a solution of this problem was not proposed.
The audit further discovered following deviations from prescribed procedures:
The compliance with the Act No. 218/2000 Coll., on budgetary rules and amending some related Acts (budgetary rules)
- the MFA breached budgetary discipline, when it did not spend funds in compliance with factual performance and thereby made an unauthorized use of the state budget funds in total amount of CZK 34,896,000 from years 2003 and 2004;
- the MFA breached budgetary discipline, when it made in conflict with intended purpose unauthorized use of the state budget funds in total amount of CZK 56,123,000;
- the MFA did not account prepayments given to suppliers at the end of the budgetary years and it did not return to the state budget these amounts of prepayments, which went beyond a monthly performance. It thereby breached budgetary discipline in the amount of CZK 5,941,000;
- the MFA did not apply for approval of registration of several programme financing projects; these were not evaluated by the Ministry of Finance from point of view of economy of the proposed state budget participation. For example, expenses of the state budget funds for the implementation of the project “MFA – Paris – the Reconstruction of the Embassy” exceeded the register list costs by 209 per cent.
The compliance with the Act No. 219/2000 Coll., on the property of the Czech Republic and its appearance in legal relations
- the MFA procured motor vehicles of the total value CZK 23,460,000 without any written agreement;
- the MFA failed to record into its bookkeeping and take stock of property of the total value at least CZK 235,078,000 on the date 31. 12. 2003 and CZK 235,002,000 on the date 31. 12. 2004.
The compliance with the Act No. 563/1991 Coll., on accountancy
- the MFA failed to make stocktaking lists of large volume of property as was obliged due to the act on accountancy;
- the MFA’s accounts were not correct, complete and conclusive during the audited period. The MFA financial statements did not provide a true and fair picture of the subject of accounting and financial situation of the accounting entity in years 2003 and 2004, because it did not record to its bookkeeping whole volume of property and it applied for embassies economic year from 1st November to 31st October.
The compliance with the Act No. 199/1994 Coll., on public procurement
- the MFA failed to declare public tenders of bids in total value of CZK 66,062,000;
- the MFA gave winning bidder an advantage over other bidders for public contract in total value of CZK 7,860,000;
- the MFA illegally concluded agreements with bidders for contracts in total value of CZK 48,700,000, despite these bidders failed to submit documents demonstrating their professional ability.