The SAO scrutinized 2011 balance accounts of the Czech Social Security Administration and revealed a risk of data abuse

Press Release – September 17, 2012

The audit aimed at 2011 balance accounts and financial statements of the Czech Social Security Administration. The audit report concludes that total inaccuracy of the accounts amounted to CZK 694.7 million. The on-going reformation of the public finance accounting system, which began in January 2010, has been accompanied with difficulties. New regulations were ambiguous, thus made it difficult for organisational units of the state to comply with them. The SAO has repeatedly warned that the amended Accounting Act and related decrees are unclear – latterly in the press release on the audit of the balance accounts of the Ministry of Education. In spite of the above mentioned inaccuracy, the SAO concluded that the balance accounts of the Czech Social Security Administration had given true and fair view of the accounts of the year 2011 as the total absolute inaccuracy did not exceed the pre-set maximum allowable irregularity ratio of records1.

When scrutinizing the labour costs and expenses of the Czech Social Security Administration in year 2011, auditors revealed that several employees were registered as self-employed persons – and could carry out independent gainful activities, during which they could abuse the available data about clients of the social system. These self-employed persons failed to produce the necessary employer’s permissions to carry out the entrepreneurial activities thus violating the Labour Act as well as working rules of the Czech Social Security Administration.

For the purpose of the audit, 39 employees of the Administration’s headquarters were selected. Auditors revealed that 15 of them were recorded in the ARES information system (Access to Registers of Economic Subjects and Entities), which allows a retrieval of information on economic entities registered in the Czech Republic. On top of that, six of them possessed trade certificates, which allow them to conduct business operations in the field of financial consulting, i. e. arranging loans and providing insurance services. The trade certificates of the other 9 employees entitled their owners to do consulting, arrange business activities, and provide services. The SAO concluded that these employees could use the information available from the Administration’s databases within their entrepreneurial activities.

For further details about the audit operation No. 11/26 (in Czech only), see the following link: (pdf 216 kB).

Communication Department
Supreme Audit Office

1) The maximum allowable ratio of bad evidence that the users of reports can treat as still acceptable was defined as 0.5 % of the value that best represents the scope of the Czech Social Security Administration‘s financial activities. That was CZK 2,000 million in 2011.

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