The State Audit Office has issued an opinion for Saeima on the results of the largest financial audit of the year – the audit of the financial year report. Similarly to previous years, an opinion with objections has been issued also on the report on the 2017 general budget of the state.
It means that in several issues an immediate action is necessary in order to eliminate the identified deficiencies and to provide that every transaction with public property and resources is carried out lawfully, meaningfully and in a goal-oriented way.
The main reasons for issuing an opinion with objections are still incorrectly classified liabilities, not included or incorrectly accounted for assets, not fully introduced principle of accrual accounting regarding taxes and duties. These issues will affect the opinions in the next years as well, until the discrepancies will be eliminated.
Among the most significant discrepancies which have been found in this audit, the State Audit Office mentions discrepancies in accounting issues which are especially important in the context of annual reports of local governments. The State Audit Office viewed also other issues in the audit, this year paying a special attention to the violation of legislation – inadequate local government member monthly salaries and accepted donations. The State Audit Office has found several possible violations by officials, including accepting donations in local governments in a way that is not compliant with the law, which the Office has reported to law enforcement authorities.
The State Audit Office is the only state institution which gives tax payers the opportunity to get a true view of how state and local government budget resources are used. We are a cooperation partner of the Ministry of Finance and the government so that every public administration decision is taken for the long-term development of the state and in the public interests. Responsible use of tax money and open decision making will not only enable to improve the work quality of state administration but it will also strengthen confidence of the society in the state. It is important for all of us. It is important for Latvia,” Elita Krūmiņa, Auditor General, emphasises.
In the audit of the financial year report, the State Audit Office examines the government balance and the revenue and expenditure account prepared by the Ministry of Finance, in order to make sure whether the information about properties, assets and their changes provided by national and local government authorities on 31 December 2017 are true. The work on this audit takes one year – in the intermediate step the results of financial audits in ministries and central national authorities, and the work of sworn auditors in local governments are summarised, in addition carrying out other significant audit procedures in order to issue an opinion on the preparation of the financial year report within the deadline laid down in law.
In addition to the compulsory obligation of the State Audit Office which is laid down in law to issue an opinion on the annual report, also development issues are examined in the audit, for which a separate opinion is issued. In this audit, the State Audit Office was examining the compliance of costs for the events of Latvia’s centenary. Although all in all, funds have been used in accordance with the purpose of allocation, the State Audit Office draws attention to several risks that still remain, which prevent to follow the use of funds qualitatively in the whole period of centenary events.
In the audit, tax and duty accounts were selectively examined, it was analysed whether the most significant tax income posts – social security contributions, VAT, personal income tax, excise duty, corporate income tax, corporate vehicle tax, as well as customs duties – are accounted fully and in the correct procedure and amount. Auditors examined also the tax administration processes, i.e. the registration and exclusion of tax payers, tax declaration, control of tax calculation, tax payments, also debt administration, repayment of overpaid taxes, as well as fraud risks in administration.
As part of the audit, inspections were carried out in the structural units of the State Revenue Service, information was requested and evaluated from the Ministry of Finance, State Treasury, The Register of Enterprises, Ministry of Foreign Affairs, Ministry of Economics, Road Traffic Safety Directorate, Office of Citizenship and Migration Affairs and the Corruption Prevention and Combating Bureau. In order to obtain assurance on the compliance of preparation of local government annual reports to the legislation, 30 local governments were included in the audit selection: six cities – Daugavpils, Jelgava, Jurmala, Liepaja, Riga, Ventspils, as well as 24 municipalities – Aizpute, Akniste, Aluksne, Amata, Baltinava, Cesvaine, Ergli, Grobina, Iecava, Ikskile, Ilukste, Jaunpils, Lubana, Nica, Ogre, Olaine, Rauna, Rucava, Eja, Skriveri, Varkava, Vecpiebalga, Ventspils, and Zilupe.