Errors in financial statements of the Ministry of Justice amounted to CZK 2,500 million
PRESS RELEASE on Audit No. 16/08 – January 16, 2017
The Supreme Audit Office (SAO) scrutinized the Ministry of Justice and its financial statements for the year 2015 and concluded that the Ministry had failed to keep correct and complete accounts. Errors in the Ministry’s financial statements amounted to CZK 2,500 million. Errors that had a significant impact on the financial statement were found in all accounting statements, i. e. in the balance sheet, the profit and loss account, and in the notes to the annual accounts.
The Ministry of Justice reported incorrectly about the net value of the fixed as well as current assets, its own resources and external financing, revenues, and errors were in most off-balance sheets. That is why the auditors concluded that the financial statements of the Ministry for the year 2015 did not reflect a true and fair view of the accounting subject.
More than a half of the accounting errors that the SAO auditors revealed (CZK 1,300 million) consisted of commitments pending, which the Ministry of Justice failed to enter in the accounts. As a result, the financial statements of the Ministry for the year 2015 contain misleading information about requirements towards future budgets. The SAO has been repeatedly referring to these issues in its financial audit reports.
As for the depreciation process related to fixed assets, the Ministry of Justice has been making errors since 2011, when organizational units of the State began to comply with this obligation. The Ministry did not use a qualified estimate of the period of use and depreciated its assets during the whole time. For example, the Ministry’s headquarters are situated in a building worth nearly CZK 130 million, and 95 % of the sum were depreciated once in 2011.
Errors and incomplete records were also detected in the transfers. Accounts of revenues, estimated accounts, and assets of the accounting entity were incomplete or even lacking. Reports of advance payments of transfers were kept, which were supposed to be settled.
Alongside the accounting errors, auditors also revealed that the Ministry of Justice had provided CZK 543,000 as a voluntary contribution to an abroad project without the necessary approval from the Government, thus violating the budgetary regulations.
Supreme Audit Office