WITH DEFICIENCES OF VIEW
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The Court of Accounts of the Republic of Moldova (CoARM), on November 26, examined during an online meeting, the Compliance Audit Report on the management of public assets by the State Enterprise "State Road Administration" (SRA) in 2020.
SE SRA is an entity founded for the management, maintenance, repair, modernization, development and operation of public roads, in order to carry out road traffic in conditions of traffic safety, fluency and continuity. All activities of management, maintenance and repair of public roads are financed from the internal and external financial resources of the state budget.
The budget of the SE SRA is formed, in proportion of 97.4%, or 83,756.8 thousand lei, from subsidies/transfers from the state budget. The patrimony managed by SRA, in terms of material existence and composition, amounted to 14.1 billion lei, at the end of 2020.
As a result of the audit activities carried out, it is established that due to the gaps in the governance and internal control system of the company, some activities, financial transactions and economic events, carried out by SRA in 2020, did not comply, in all material respects, applicable regulations. This is attested by:
- the revenue planning and execution system, created by the central specialized authority for the maintenance of SRA's operational activity, is mainly based on a proportion of the volume and cost of works performed by entrepreneurs and less on the real needs to finance expenditures, generating in 2020, an excess of revenues, obtained from the financial resources allocated from the state budget for road maintenance and repair, of about 21.1 million lei;
- the financial means necessary for the administration of the national public roads, in total amount of 16.9 million lei, were planned, approved and allocated based on the previous practices, based on fixed amounts, but were not prepared the necessary calculations and justifications;
- the revenues for fulfilling the function of beneficiary at the public road maintenance works were calculated and increased non-compliantly by about 10.8 million lei, given the irregular inclusion in the VAT calculation base;
- the use of financial means in the amount of 3.8 million lei, for general and administrative purposes, in the absence of the necessary coordination with the relevant ministry, generated the non-compliant execution of the Program of works for the design of national public roads for 2020;
- some budgetary allocations in the total amount of 33.1 million lei, were recorded in the non-compliant accounting records, double, both in the account of sales revenues and in the account of other revenues from the operational activity, as well as in the account of administrative expenses as well as at the expense of other expenses from the operational activity.
In terms of expenses, the audit found that the expenses related to the quarterly awards of employees were unfoundedly increased by about 8.1 million lei, given the incorrect application of the calculation basis when establishing them.
In 2020, SRA was involved as a defendant, in 13 national disputes and 8 international arbitration proceedings, the value of the claims submitted against the company, being about 470.3 million lei. Out of the total claims submitted to the company, the international courts issued in 2020, final payment decisions in the total amount of 178.6 million lei. At the same time, SRA confirms the possibility of future risks of losing in the relevant courts the other disputes in the total amount of claims of 291.7 million lei.
Regarding public procurement, it is mentioned that:
- some purchases of goods, works and services, in a total amount of about 627.8 million lei, were non-compliant, through direct negotiations and without the application of regulations related to public procurement;
- at the conclusion of six procurement contracts for the design of road repair works, in the total amount of 14.8 million lei, contrary to the normative provisions, SRA assumed commitments and made payments in installments that exceeded the allocations for the respective objects, with 9.6 million lei;
- SRA admitted the execution of additional works for the repair of public roads in the total amount of 8.3 million lei, in the absence of the respective decisions at the moment, of the working group on public procurement, as well as in the absence of the related additional agreements, which were concluded subsequent to the execution of these works.
The lack of a multi-annual budgeting system, connected to the medium-term budgetary framework, as well as correlated with the real costs of the need to repair and modernize public roads, has generated, as a result of procurement procedures, a shortage of resources to cover payment commitments, independently assumed by the SRA, of the works planned to be executed during 2020 - 2021, in a total amount of about 979.8 million lei.
The program of works for the design of national public roads was not implemented according to the objectives set, given: i) the inclusion of 11 design works totaling 17.7 million lei, unforeseen, and ii) the failure of 14 procedures acquisitions of design works in total value of approx. 29.3 million lei.
Lack of clear objectives to ensure the continuity of operational activities, investments in 111 projects on public road repairs, totaling about 71.2 million lei, carried out since 2007, so far have remained recorded as ongoing assets which are not completed and do not contribute to the development and modernization of the road network infrastructure.
Investments in the repair and modernization of 6 public roads, totaling 48.0 million lei, although they were completed in 2013-2018, were not capitalized according to the normative requirements in force, given the non-preparation and regulatory signing of the processes - minutes of receipt at the end of the works, as well as inadequate and exhaustive performance of the inventory of assets in progress.
Also, in the department of good management of public patrimony, the audit reveals that according to the irrevocable decision of the Supreme Court of Justice, the right of state property and economic management of SRA over the real estate located in Chisinau, 12A Bucuriei street, floor 3, where the state enterprise still operates. The loss of the state property right over the real estate, conditioned the appearance of some expenses with the rent of 1.5 million lei, as well as the appearance of some real risks of additional expenses of about 16.5 million lei, resulting from the attraction of the enterprise as defendant in three national litigations, for the use of administrative rooms, between 2014 and 2019.
Finally, the Court of Accounts concluded that the general objective set by the Parliament and taken over by the Government "80% of national roads in good and very good condition, by the end of 2020, there are no bad and very bad roads", was compromised, due to the non-realization of the Action Plans regarding the implementation of policy documents, and the ratio of road quality in bad and very bad condition increased from 27.2% to 47.3%, due to the decrease of those in good and mediocre condition.
