In 2013, the Ministry of Finance managed funds under the state budget heading General Treasury Management in breach of budgetary regulations

PRESS RELEASE on Audit No. 14/14 – March 16, 2015

The Supreme Audit Office scrutinized how the Ministry of Finance managed funds under the state budget heading General Treasury Management in 2013. Auditors scrutinized funds amounting to CZK 17,300 million in total.

Funds from the state budget heading General Treasury Management are supposed to be used for expenses that do not come under other budgetary headings. In spite of the given definition, the Ministry of Finance used CZK 2,300 million for projects, which should have been included into the State budget headings of responsible ministries for the year 2013. These funds were used by the Ministry of Interior, the Ministry of Foreign Affairs, the Ministry of Finance itself as well as by the Czech Sport Union.

The heading General Treasury Management also includes state budgetary provision funds, which are designated for urgent and unexpected expenditures. Auditors revealed that the Ministry had used CZK 442.9 million out of the budgetary provision funds to cover predictable expenses and expenditures, which should have initially been budgeted in the corresponding headings in compliance with the Act on Budgetary Regulations.

Thus the Ministry of Foreign Affairs obtained CZK 124.5 million, out of which CZK 75 million were spent on contributions and membership fees in international organizations although these expenses belong to mandatory expenditures of the Ministry. Another example is the Ministry of Culture, which obtained CZK 50.5 million for organizational costs of the Karlovy Vary International Film Festival, Febiofest, and Prague Spring Festival. Further on, the Ministry of Culture utilized CZK 17 million out of the state budgetary provision funds for organisational costs of the 1150th anniversary celebration of St. Cyril’s and St. Methodius‘s evangelizing mission in Great Moravia, which had been planned since 2012. All of the above mentioned cases were examples of predictable expenditures.

The Ministry of Finance also utilised state budgetary provision funds in the amount of CZK 355 million for two ISPROFIN Programmes. Under Programme for development and modernization of material and technical bases of regional education, CZK 93.4 million were assigned in 2013, in spite this field should have been funded by the Ministry of Education and local municipalities. There is no clear methodology for selection processes, and projects were chosen by the finance minister. In 2013, under programme entitled Operations funded upon decisions of Chamber of Deputies and Government, CZK 261.3 million were used in total. With CZK 103.4 million, the decision upon the utilisation was made by the finance minister, in contradiction with rules previously authorized by the Budgetary Committee of the Chamber of Deputies. It is not clear, which rules were applied during the selection and assignation processes with the said Programme. The SAO concluded that such decisions were at least non-transparent.

The SAO also finds the transfer of CZK 2,000 million initially determined for the administration of the national debt into the heading General Treasury Management as excessive. Instead, these funds could have been used by the Ministry of Finance to depreciate the national debt.

Communication Department
Supreme Audit Office

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