The Council of the State Audit Office of Latvia has approved 13 new performance audits and 3 compliance audit topics for 2024, which it will launch in addition to the 27 financial audits prescribed by law. Also, work continues on 40 audits already started before. In the new audits, the State Audit Office of Latvia will continue to pay attention to the assessment of human capital issues in departments where there are long-lasting unsolved and stagnant problems and will also focus on state budget expenditure and revenues in strategic areas and the Green Deal and climate neutrality issues.
“When drafting audit plans, the audit teams will compare the situation of Latvia and neighbouring countries in the identified issues and evaluate the progress of our country towards the priorities outlined in the National Development Plan of Latvia (NDP2027) where it is possible and where it is useful. In performance audits, we plan to assess economy and efficiency more, and the reduction of administrative and bureaucratic burden as far as possible by providing specific recommendations to audited entities,” stated Auditor General Edgars Korčagins.
He also points out that “most of the new audits are performance audits, in which efficiency aspects will be assessed such as whether state funds been spent economically enough and whether state services have achieved a sufficiently good result?” When in compliance audits, we seek an answer to the question “Are things done right?”, then in performance audits, our question is “Are the right things done?””.
Issues related to human capital in the audits are intended to be assessed in those departments where this problem has existed for a long time and it has not been possible to find solutions so far. For example, one will assess in the sector of internal affairs how to keep police officers in the service and continue to employ them even after they retire from service. Whereas in the sector of education, we will assess whether all the prerequisites have been created and fulfilled in order to provide students with high-quality and modern general education. One plans that the State Audit Office of Latvia will assess the progress of the remuneration system reform in the state administration.
In its turn, in the context of state budget expenditure and revenues, the State Audit Office of Latvia will conduct an audit to assess the effectiveness of inpatient healthcare planning and organization in sector of health. Another audit will assess the management of forests managed by state-owned joint stock company “Latvijas valsts meži” (Latvia State Forests). At the same time, it is planned to assess the effectiveness of measures to limit the shadow economy and their adequacy for solving this current problem in Latvia. With regard to the important issues of municipal finances, two topics have been determined – municipal budget management and assessment of the effectiveness of the system of incentives and discounts introduced in local and regional governments.
Another block of topics should be highlighted in the context of the Green Deal adopted by the European Union and issues of climate neutrality. One audit topic is intended for assessment the actions of the Ministry of Transport in connection with the progress towards climate neutrality goals to be achieved in the transport sector by 2030/2050. The audit will also assess the investments made so far in improving energy performance and developing heat supply systems. A focused compliance audit is also planned for the actions of the Ministry of Agriculture in creating a network of charging stations for electric vehicles.
All 16 new audit topics to be launched in 2024 (in addition to 27 financial audits and 40 audits already in progress)
PERFORMANCE AUDIT TOPICS
1. “Have all the prerequisites been created and fulfilled to provide students with high-quality and modern general education?”
2. “Are the investments in improving energy performance and developing heat supply systems thoughtful and mutually coordinated?”
3. “Does the Ministry of Transport ensure the effective implementation of the measures planned in the development planning documents in order to achieve the goals of climate neutrality in the transport sector by 2030/2050?”
4. “Effectiveness of the activities of the Port Development Fund and performance of the funds spent”
5. “How to keep police officers in the service and continue to employ them even after they retire from service?”
6. “Is inpatient healthcare planned and organized effectively?”
7. “Sustainable management of forests managed by SJSC “Latvijas valsts meži””.
8. “Do EAFRD-financed projects remain sustainable even after the end of the monitoring period?”
9. “Is the system of incentives and discounts implemented in local and regional governments effective?”
10. “Is the system of administrative penalties created by local and regional governments an effective tool for ensuring the interests of the citizens?”
11. “Are the measures to limit the shadow economy effective and appropriate for the solution of a specific problem?”
12. “Are cloud services used in public administration in a secure manner?”
13. “Do local and regional governments manage real estate efficiently?”
COMPLIANCE AUDIT TOPICS
14. “Has the Ministry of Agriculture acted with foresight and in accordance with the principles of good management when establishing a network of charging stations for electric vehicles?”
15. “Is budget management in local and regional governments ensured in accordance with the principles of good governance and does it ensure the achievement of the set goals?”
16. “Implementation of the remuneration system reform in the state administration.”
During audits, a title of the topics may be clarified, and their scope may also change. In certain cases, new topics may be added, for instance, like the audit in the Rēzekne City Municipality in 2023.
How are audit topics determined?
The State Audit Office of Latvia is required to conduct financial audits by law, while the State Audit Office of Latvia selects the topics of performance audits and compliance audits based on the risk assessment of the audit areas. The risk assessment of the audited areas depends on the vision of the State Audit Office of Latvia on irregularities in policy implementation, financing, implementation, management and monitoring of reforms, and also takes into account the public interest and received complaints. In total, the State Audit Office of Latvia carries out risk assessment in 112 areas by choosing audit topics mainly in high-risk areas and balancing it with the resources at its disposal. The aspect of whether a specific topic/matter can affect public trust in state administration is also assessed.
Every entity that has financial means or property of a public entity, as well as entities that carry out state or municipal procurement, and state-owned enterprises or municipal enterprises in terms of the Law on the Management of Capital Shares of Public Entities and State-owned Enterprises and Municipal Enterprises are subject to the audit by the State Audit Office of Latvia. The Saeima (Parliament of Latvia) is not subject to audit by the State Audit Office of Latvia.
Public sector auditing in the State Audit Office of Latvia is divided among six Audit Departments. Audit teams are formed to conduct audits. Auditing is carried out in three stages: planning, obtaining evidence and finalisation.
The State Audit Office of Latvia conducts audits in accordance with international public sector audit standards - Standards (ISSAI) of the International Organization of Supreme Audit Institutions (INTOSAI), whose recognition in Latvia is determined by the Auditor General.
In 2023, the State Audit Office of Latvia completed 41 audits, of which 28 were financial audits[1], 10 were performance audits[2], 2 compliance audits[3], and 1 combined audit[4]. Within the framework of financial audits, two interim audit reports were published last year.
About the State Audit Office of Latvia
The State Audit Office of the Republic of Latvia is an independent, collegial supreme audit institution. The purpose of its activity is to find out whether the actions with the financial means and property of a public entity are legal, correct, useful and in line with public interests, as well as to provide recommendations for the elimination of discovered irregularities. The State Audit Office conducts audits in accordance with International Standards of Supreme Audit Institutions of the International Organization of Supreme Audit Institutions INTOSAI (ISSAI), whose recognition in Latvia is determined by the Auditor General.
100 years of AUDIT STRENGTH
On 16 August 2023, the State Audit Law turned 100 years old. With the adoption of this Law, the State Audit Office from a formal de facto institution founded on 2 December 1918 became a de jure independent, collegial supreme audit institution of the Republic of Latvia. The State Audit Office is one of the independent state institutions enshrined in the Satversme (Constitution) of Latvia. The Constitution was signed by Roberts Ivanovs as the secretary of the Constitutional Assembly, who was then confirmed as the Auditor General. He worked as the first Auditor General for 12 years. His signature confirmed the text of our Constitution alongside that of Jānis Čakste.
Information drafted by
Ms Signe Znotiņa-Znota
Head of PR and Internal Communication Division
Additional information
Mr Ivo Valdovskis
Communications Adviser to the Auditor General
Ph.: +371 29274446 | E-mail: ivo.valdovskis@lrvk.gov.lv
[1] The State Audit Office of Latvia is required to conduct financial audits by law, and they are carried out in ministries and other central government institutions (except local and regional governments) every year. After financial audits, the State Audit Office of Latvia issues opinions on the accuracy of the annual financial statements of ministries and state institutions. In financial audits, compliance issues are also assessed on a random basis in order to gain confidence about the use of funding in accordance with the purposes and legislation.
[2] A performance audit is an internationally recognized method where, in addition to accounting, financial and legal audits, the achievement of results, as well as economy, efficiency, and effectiveness of the impact of the achieved results are assessed.
[3] Compliance audits examine whether activities, actions of officials, financial transactions and information comply in all essential aspects with legislation, planning documents and nationally or internationally recognized best practices.
[4] A combined (compliance/ performance) audit is a compliance audit that also evaluates performance issues, or a performance audit that also evaluates compliance issues.