Errors in the Ministry of Health’s final statements for the year 2014 amounted to CZK 5,000 million
PRESS RELEASE on Audit No. 15/07 – December 21, 2015
The Supreme Audit Office (SAO) carried out an audit at the Ministry of Health and aimed at reporting on the implementation of the budget and accounting data in 2014. Auditors focused on the completeness and the accuracy of the data and identification of systemic risks. Auditors detected serious errors in the final statements, which amounted to CZK 5,000 million. If no corrective measures are implemented, the national financial statements, which will be produced for the first time for the year 2015, will be affected by these errors.
Errors in the amount of CZK 3,400 million were related to one particular off-balance sheet, which is used to report about contingent liabilities of the Ministry of Health that are related to subsidies paid to final beneficiaries.The Ministry’s records did not make it possible to clearly identify, which commitments are included in the account balance. The Ministry violated accounting principles when declared the account balance. Errors in accounts of contingent liabilities will affect the quantification of future budgetary requirements.
The second most significant error that amounted to CZK 1,000 million was related to records of reserves of antivirals. When appreciating the antivirals, the Ministry of Health did not consider temporary or permanent value reductions with some of the reserves as most of the antivirals were past their expiry dates. It would be possible to use some of the antivirals in case of future pandemics, as they still contained the declared amounts of active substances. On the contrary, some stored antivirals did not stand the tests and could not be used even in emergency situations. So the Ministry over-valued the reserves when recorded initial prices of the antivirals in the records.
The SAO could not assess the reliability of the data recorded in the final statements of the Ministry as a consequence of unclear legal stipulations related to pre-financing of transfers co-funded from EU funds. These transfers made a substantial part of the Ministry’s final accounts so auditors could not assess whether the statements gave a true and fair view of the Ministry’s accounting.
In the audited financial statement that served as a basis for the assessment of the State budget’s implementation, errors in the amount of CZK 326 million were found. Auditors did not find any serious errors in the final accounts of the Ministry.
The Ministry of Health also violated the Act on Value Added Tax when distributed the heat produced by the Ministry’s own engine rooms to two other subjects and did not register to VAT as required since the Ministry’s turnover over-reached the limit defined by the law.
Supreme Audit Office