The Ministry of Labour and Social Affairs had shortcomings worth of CZK 8.4 billion in its accounting for the year 2016
Press Release for audit 16/29 – 13. 11. 2017
The Supreme Audit Office (SAO) examined the Ministry of Labour and Social Affairs´ accounting procedures, compiling the financial statements, and the final account for 2016. It also focused on the data submitted by the Ministry of Labour and Social Affairs to assess the implementation of the state budget. According to the auditors, the Ministry of Labour and Social Affairs did not produce correct, complete, and conclusive accounting in 2016. Total misstatements in the financial statements reached CZK 8.4 billion.
The SAO has already pointed out several times that data unreliability and high misstatement in accounting at individual ministries threaten the objectives of the accounting reform that took place in 2010. Accounting data serves as a source of information for public finance management. The accounting reform should therefore ensure their reliability. National accounts should be based on reliable government accounting data. Serious shortcomings in the Ministries' accounting may therefore negatively affect the consolidated financial statements of Czech Republic.
In the Ministry of Labour and Social Affairs´ accounting, the auditors found significant shortcomings totalling CZK 8.4 billion. The most significant shortcomings related to accounting for revenues from pre-funded projects under the Human Resources and Employment operational programme for more than CZK 4 billion. The Ministry accounted it in 2016, but it should have done it one year earlier. The Ministry also did not charge for long-term contingent liabilities from concluded contracts. Misstatements for more than CZK 627 million had an impact on the reported off-balance sheet accounts. Due to such shortcomings, off balance sheet accounts give incorrect information about claims for future budgets.
According to auditors, the Ministry of Labour and Social Affairs kept inconclusive accounting in 2016 and did not carry out a proper accounts inventories. The Ministry often changed the accounting software, and the uploaded data were not detailed enough. Since 2011, the Ministry of Labour and Social Affairs has changed its accounting software three times, for the last time in 2016. However, the transition to the new system was not well prepared. Weaknesses were already in the initial stages set in the accounting system.
Due to the inaccuracy of accounting, the SAO could not assess whether the 2002 accounts of the Ministry of Labour and Social Affairs provide a true and fair view of the Ministry's accounting and financial situation. It is impossible to evaluate its reliability. For the same reason, the SAO was unable to assess whether the final account data were consistent with the accounting data.
Auditors also detected shortcomings in the data submitted for evaluation of the state budget performance. This data should provide detailed information on the movements of the state budget, i.e. revenue and expenditure from the state budget. This allows to track the expected earnings, estimate the expenditure, and track actual performance. Shortcomings in this data, according to the SAO, exceeded CZK 143 million.
Supreme Audit Office