Non-transparent mechanisms of aid distribution and improper supervision found at State Cinematography Fund

PRESS RELEASE on Audit No. 15/28 – June 20, 2016

The Supreme Audit Office (SAO) scrutinized the management of State Cinematography Fund within the period from 2013 to 2015. Auditors aimed at the distribution of aid used to promote cinema and encourage film makers. Auditors scrutinized funds in the amount of CZK 518 million used for film-makers’ encouragement and CZK 136 million used for cinema promotion. At least 70 % of the Funds’ activities are funded from the State budget, other amounts are generated from commercial fees, screening in cinemas, and from exploitation rights to artistic works. Auditors revealed that the Fund took two years since it had been established to develop a long-term strategy for aid to promote cinemas, which did not clearly set its goals. The mechanisms of aid distribution were found non-transparent as the Supervisory Committee did not carry out a sufficient supervision.

In the period from 2013 to 2015, State Cinematography Fund distributed nearly CZK 500 million to promote cinema and encourage film makers. Out of the total sum, CZK 320 million were used in support of 169 applications for aid into Czech cinematographic works. When members of the Supervisory Committee evaluated the projects anonymously and without reasoning their marks, significant differences occurred with four out of twelve audited invitations. For example, one project scored 23 marks out of 100 with one evaluator, while the score was 97/100 with another evaluator. The evaluation manual was developed later and comments on individual projects’ evaluations have been published as from 2015. Auditors found that four applicants had delivered their applications late but were enabled to take longer periods for finishing their projects, which created unequal conditions.

State Cinematography Fund also granted CZK 800,000 to two beneficiaries, who failed to have provided the necessary documentation in due time. The Fund granted CZK 500,000 to one beneficiary before obtaining the documentation of the project’s completion.

From 2013 to 2015, State Cinematography Fund also provided aid to film makers, which exceeded CZK 923 million with 76 applicants. Allocated funds should not have exceeded CZK 800 million in one year, but in 2015, 84 applicants were certified by the Fund and were allocated nearly CZK 1,400 million in total. In eight cases, the Fund did not exclude applicants who applied for more than laid down in the law.

With some supported projects, State Cinematography Fund suspected that budgetary regulations had been violated and notified the competent financial authorities. From 2013 to 2015, the Fund made 27 notifications concerning 23 beneficiaries with the total violation exceeding CZK 68 million. In spite the beneficiaries did not comply with the conditions, nine of them were later granted some 32 million by the Fund. The auditors consider that risky.

Auditors did not find any serious errors in the management of other assets of State Cinematography Fund.

Auditors also compared the amounts of aid provided to film makers in other EU countries and concluded that the highest support rate – some 30 % of expenses – is provided in Ireland, the Netherlands, and Bulgaria. In the Czech Republic, the aid amounts to 20 % of expenses, which is the same as in Germany, Slovenia, and France.

Communication Department
Supreme Audit Office

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