The SAO scrutinized balance accounts of the state budget heading "Ministry of Education" for the year 2011
Press Release – August 27, 2012
The Supreme Audit Office performed an audit that aimed at 2011 balance accounts, financial accounts, and the closing account of the state budget heading “Ministry of Education”. The audit revealed that the Ministry had failed to keep reliable accounting records. The audit report concluded that the Ministry needed a complete inventorying system, which could be used in agreement with the Accounting Act. For example, the intangible assets were not recorded at all. In the audit report, the SAO calculated the inaccuracy of the Ministry’s accounts in the amount of CZK 117.2 million.
Reliability of final accounts can be assessed only in case there are no specific constrains. At the Ministry of Education, the reliability assessment was limited because of the existing state of legal regulations in 2011.
When applying the new accounting regulations, the Ministry made ambiguous and unclear records that were quantified in the amount of CZK 26,000 million, thus exceeding the maximum allowable ration of bad evidence by ten times1. As a result, the reliability of the closing account of the state budget heading “Ministry of Education” was significantly influenced. The bad evidence namely occurred in the following fields: long-term assets depreciations and advance payments of expenses, which were to be reimbursed from the EU funds. The SAO has repeatedly warned that regulations for accounting and statements of organisational units of the state should be unambiguous, articulate, and complex.
In the beginning of 2011, amendments to the Act on Accounting and related regulations have come into effect. During the accounting period of 2011, only eight amended accounting standards were in force, which partially substituted 22 previously effective accounting standards. The Czech Accounting Standards were issued so that the necessary concordance of accounting methods could be provided and the comparability of individual units’ balance accounts would be improved. In case the needed accounting standards are not issued yet, there are no guidelines for particular accounting problems because a conceptual frame is missing for elaboration of a compact and complete accounting system.
Since 2010, individual accounting units have been affected by several new or amended legal regulations. In some cases, the changes to accounting regulations are significant and there is a certain risk that accounting units may not implement the new rules in their fullness or in due time.
For further details about the audit operation No. 11/29 (in Czech only), see the following link: http://www.nku.cz/assets/media/informace-11-29.pdf (pdf 474 kB).
Supreme Audit Office
1) The maximum allowable ratio of bad evidence that the users of reports can treat as still acceptable was defined as 2 % of the value that best represents the scope of the financial activities of the Ministry of Education for the given accounting year. That was CZK 2,400 million in 2011.