Ministry of Education’s closing account – Unreliable background for the statement of balances
March 7, 2007
The 2005 closing account made by Ministry of Education (ME) did not truly depicture the object of 2005 fiscal period in accordance with accounting laws. Auditors from the Supreme Audit Office (SAO) concluded this outcome during verification of the facts included in statements that had been put out as supporting documents for the final account of the state budget chapter.
Financial audits were performed to ascertain the validity and reliability of activities that were objects of ME financial statements, and which could influence the tested value of closing balance in the 2005 closing account, including realia associated with the previous fiscal periods. ME’s 2005 closing account was not a reliable source for drawing the annual closing account of the state budget chapter 323 – Ministry of Education.
Inconclusiveness and over- or undervaluing remainders of particular statement entries was the cause of the total incorrectness due to counteracting obligatory regulations. “Wrong book-keeping of the provided investment grants (which amounts to more than 22 billon CZK) makes an essential portion of the total loss. This error was cumulatively formed within several accounting periods and it is considered as alarming that it had not been uncovered earlier. Significant shortcomings passed in stocktaking and account qualification”, said František Dohnal, president of the SAO.
Among the main reasons why such inaccuracy occurred is the fact that, during the audited period, ME did not introduce an effectual system of internal control, which could help to uncover, evaluate, and minimize risks related to the object of accounting.
The auditing operation was included in the Annual Audit Plan of SAO for the year 2006 under No. 06/21. Jan Vedral, Member of the SAO, controlled the auditing operation and drew up the audit report as well.
Supreme Audit Office