The financial and compliance audits carried out last year by the Court of Auditors identified 21,427 irregularities, damages of RON 687.6 million, the total impact of financial and accounting errors amounting to RON 43.225 billion.
The additional revenues obtained following these audits amounted to RON 978.1 million.
*
- Assessment of financial impact by types of audit actions, in the following table:
- Explanations Unit Total of which: financial audit compliance audit
- Additional revenues
- Damages
- * It has been considered the average exchange rate in 2017, of 4.56
- Assessment of financial impact by types of audit actions
- Explanations Unit Total of which: financial audit compliance audit
- Financial and accounting irregularities
*
The Court of Auditors’ report on 2016 identifies numerous irregularities whereby all sectors – infrastructure, health, environment, etc. – have lost huge amounts because of the Government representatives and heads of institutions, as well as non-productive or useless expenses of billions of lei.
Only a fraction of these amounts can be recovered and only for a few of them, the investigation bodies have been called upon.
How much money health system lost because of the ministry
The report has counted several amounts lost by the health system because of the inaction of the Health Ministry’s officials who have been unable to access European funds:
- the downgrading of an IT system on which the amount of RON 44,625 million has been paid and which has not been completed, implemented and put into operation
- the failure of the Health Ministry to take steps to access and implement projects with non-reimbursable financing led to both a loss of European funds amounting to RON 79 million and the failure to access non-reimbursable funds amounting to RON 470.250 million from the Regional Fund (POR 2007-2013).
- the failure of the Health Ministry to take all necessary measures to complete the mapping and modelling of health services and infrastructure led to the impossibility to access non-reimbursable financing of RON 1.467 billion from the Regional Fund (POR 2014-2020).
- medical equipment worth about RON 98.5 million was put into operation, sometimes with delays of more than 300 days or not even put into operation
- The Health Ministry did not take all the necessary steps to use important resources from the funds allocated under the loan agreement between Romania and IBRD
Impact of financial and accounting irregularities from local public administration – EUR 1.6 billion
*
- Revenues Financial audit Compliance audit Total actions
- Revenues
- Damages
- Financial and accounting irregularities
*
The irregularities found at the level of the administrative-territorial units showed:
- Failure to calculate and collect revenues of RON 262 million
- Damages of RON 431 million generated
- Errors in the accounting, patrimony or tax records, lack of registration and valuation of assets estimated at RON 7.337 billion, or EUR1.6 billion.
ANAF – large taxpayers: No seizure exerted in 2016
The amounts collected by the DGAMC (General Directorate for the Administration of Large Taxpayers) from the seized assets were 0 (zero) lei in 2016, and representatives of the Court of Accounts claim that the situation was caused by the following deficiencies:
- the lack of finality in DGAMC’s actions to initiate, conduct and complete the procedure of ensuring the valuation services for the sized assets
- significant delays between the moment when the asset has been seized, the moment of the valuation made by an ANEVAR expert and, subsequently, the moment when the seized asset has been sold
- there are no regulations, operational procedures, instructions, etc. on how to establish the estimated value of the seized asset
- there is a major risk for some seizures to be overstated, meaning that they applied to assets whose actual market value is well below the estimated value at the time of the seizure
Total mess in tax authority’s accounting
Regarding ANAF, the Report mentions errors in the financial statements of the tax authority that, according to the regulations, initiate and carry out legal actions in the event of taxpayers’ non-compliance with the declaratory formalities and payment obligations.
The findings of the advisors who performed the audit at ANAF:
- in 2016 ANAF did not initiate the inventory operations, and in 2015 the inventory results were not included in the accounting records; the records indicate minuses of RON 56,018 thousand
- the effect, respectively the economic and financial consequence of the irregularity, consists in the fact that financial statements, consolidated at the MFP level, drafted on 31.12.2015 and 31.12.2016 respectively, include uncorrected errors, which generate doubts on the fair view of the financial statements.
The report also contains a contrary view, according to which:
- distortions are significant by context
- the financial statements are treated with reservation as long as the annual general inventory has not been made and the results of the previous inventory have not been included in the accounting records.
Tarom: Expenditure on provisions for labour litigations – RON 34.988 million
The report also contains an analysis of the Tarom’s situation between 2012 and 2016 and the audit mentions the company’s failure to use the favourable context, numerous management changes and labour litigation costs or compensations paid to clients:
- Although the air transport market in Romania has experienced a significant increase between 2012-2016, Tarom has failed to capitalize on the existing potential and used a degree of aircraft loading that did not ensure the operational efficiency. No profit has been obtained between 2012-2016 from operating on routes where Tarom faced no competition from other companies, nor from other routes. The company’s management failed to effectively identify and use all potential sources of revenue.
- During the audited period, there were many changes in the company’s management, which was a disruptive factor in the development and implementation of a coherent strategy that would lead to achieving the performance objectives. In only five years, 39 people have been changed in Tarom’s management, either among the board members or the executive management.
- at the end of the financial year 2015, the company recorded expenditure on provisions for labour litigation amounting to RON 34.988 million
- flight irregularities generated compensation payments to Tarom customers amounting to a total of RON 3.790 million between 2012-2016
