Management of the National Institute of Public Health? Splitting up orders, non-functioning control, and breach of budgetary discipline for CZK 67 million.
Press release for audit No 17/13 – 19. 2. 2018
The Supreme Audit Office focused on the management of the National Institute of Public Health (NIPH) between 2014 and 2016. The auditors examined, for example, how the Institute administered assets, how its control system worked, or how it purchased medical supplies. The auditors examined the Institute's management on a sample of CZK 63 million of operating resources, on assets of CZK 54 million, and other funds for almost CZK 40 million. The audit revealed a number of systemic shortcomings - for instance, errors in tenders relating to purchases of medical supplies or incomplete internal control system. The SAO, as regards the identified shortcomings, reported a suspected breach of budgetary discipline for CZK 67 million to a respective tax office.
The internal control system of the NIPH did not work in the monitored period. In accordance with the law, each public administration institution has to assign workers who pre-supervise the purchases and all the economic operations of the institution. However, the Institute did not specify these workers and the preliminary control did not exist. In practice, the Institute paid invoices stating a wrong supplier or other misleading data, or it did not recognise that the contract was no longer valid.
Other shortcomings related to the purchase of special medical supplies for devices testing HIV and viral hepatitis. Since 2006, the NIPH has been getting medical supplies from the supplier of one of the medical devices and concluded a contract on these supplies. However, in 2014 to 2016, the Institute also purchased medical supplies that were not part of this contract. Instead of reacting to the situation and holding the procurement procedure, it divided public procurement contracts ranging from CZK 11 to almost CZK 15 million in smaller orders. This avoided the competition and the medical supplies were acquired from the same supplier. The Institute thus violated the law and the SAO evaluated its procedure as a breach of budgetary discipline for CZK 39 million.
In another case, the NIPH concluded a contract with another supplier for the amount of CZK 7 million in 2013 for the supply of special medical supplies, without any tender procedure. The Institute once again violated the law, and the SAO evaluated also this procedure as a breach of budgetary discipline.
The audit also showed that in 2014 the NIPH did not apply the wage limit set by the Ministry of Health, which is the founder of the Institute. This was set at CZK 125 million, but the Institute paid CZK 146 million on wages. Even in this case - according to the SAO - the Institute violated the budgetary discipline. The NIPH had the opportunity to negotiate with the Ministry on raising the wage limit, which could prevent these unnecessary problems.
Finally, the NIPH provided its employees with housing for which they did not require adequate compensation. For example, a senior employee paid for a renovated flat in Prague with an area of 53 square meters CZK 960 a month, including the costs of energy, water and sewage, heating and other items related to housing.
Communication Department
Supreme Audit Office