Management of the State Budget Funds earmarked for reconstruction and completion of the Centre of Justice “Na Míčánkách”
Press release on completion of the auditing operation No. 05/39
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. 05/39. The auditing operation was managed and the audit conclusion drawn up by Mr. Josef Pohl, the Member of the SAO.
The aim of the audit was to examine the management of the State Budget funds spent on realization of the project “Reconstruction and completion of the Centre of Justice Na Míčánkách” and review fulfilments of previous follow up measures. The audited period covered the years from 2003 to 2006 (to August) as well as previous periods in certain cases of relevant connections. The audited body was the Ministry of Justice (hereinafter referred to as “MJ”).
In 2002, the SAO carried out the auditing operation No. 02/01 ‘Reconstruction and completion of the Centre of Justice Na Míčánkách’ and pointed out system shortcomings in the management of preparatory phase of the investment project. The SAO brought up possibilities of the state budget funds savings and recommended some steps that it deemed as necessary before commencement of an implementing phase of the investment project. The Czech government took cognizance of the SAO’s audit conclusion and tasked the minister of justice to implement measures to remedy ascertained shortcomings.
The remedy measures were executed. In spite of executed remedy actions, a weak and unsatisfactory management of the investment project during preparatory phase significantly influenced implementing phase of the reconstruction and completion of the Centre of Justice. The SAO’s auditing operation proved that failures and shortcomings of the preparatory phase represent persistent problems and have an adverse impact on realization of the project particularly on the target completion date and on the total cost.
Efficiency and economy of funds spent for building projects wholly financed from the State Budget should be ensured also by setting a condition to apply there only standard materials and standard equipment – taking reasonably into account respect needed for the institution in question. To meet this condition, it is necessary to deal with economy of the project already since its preparatory phase and designing. The above-mentioned condition was not applied in the case of the investment project of completion and reconstruction of the Centre of Justice.
The MJ decided to implement only selected saving measures. They admitted some changes in the concept of building and the replacement of equipment above standard by another one with the same technical parameters but lower price. Fundamental changes in the concept of building representing considerable savings of the State Budget funds would however require reworking completely the design, a new building permit procedure, and holding off the target date of the building completion. That is, why the MJ decided not to adopt such large changes.
The contract price changed several times during building, and not only to its higher but also lower rate. It finally increased (despite the saving measures of the MJ amounting to CZK 34.574 million) by CZK 289,899,487 to the total amount of CZK 2,170,275,080 including increased rate of VAT.
The current management methodology of investment projects financed from the State Budget funds (Decree No. 40/2001 Coll., on the Participation of the State Budget in the Financing of the Property Reproduction Programme) does not motivate building owners to save funds. A building owner is responsible only for not to overdraw funds determined in the decision on the participation of the State Budget; he is not led to save funds.