WITH DEFICIENCES OF VIEW
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The Court of Accounts of the Republic of Moldova, examined, on April 29, in an online hearing, the Audit Report on the consolidated financial statements of the Ministry of Economy and Infrastructure (MEI) concluded on December 31, 2020 and the Compliance Audit Report on public procurement within MEI during 2019-2020.
The purpose of the financial audit was to provide reasonable assurance that the consolidated financial statements have been prepared and presented according to the applicable financial reporting framework and do not contain material misstatement due to fraud or error with the subsequent issuance of an audit opinion and relevant recommendations.
MEI is the central specialized body of the public administration which, including throughout its subordinated entities, ensures the implementation of government policies in the following areas of activity: economy, information and communication technology, construction, transport, quality infrastructure and market surveillance, security and energy efficiency, tourism.
The ministry's budget consists of 7 budget programs and 21 sub-programs. The managed patrimony belongs entirely to the state, which at the end of 2020 amounted to 6763.03 million lei. In 2020, 4518.99 million lei were capitalized, which represents 91.3% of the amount of specified allowances. The main cause, which admitted the non-capitalization of 428.44 million lei, was the global pandemic situation which, including, in view of the restrictions imposed at national level, delayed both the implementation of several activities and limited the number of organized events.
In the opinion of the audit team, the consolidated financial statements as at 31 December 2019, with some exceptions, provide a fair and accurate picture in all material respects according to the applicable financial reporting framework. The basis for the opinion with reservations was determined by the fact that the State Road Administration did not account in 2018 for the works received for the construction of the bypass of Ungheni municipality.
Likewise, it is noted that the information in the consolidated financial statements related to non-financial assets at aggregate level was undervalued with 32.31 million lei and overvalued with 18.96 million lei, which were expressed throughout:
• improper allocation of capital investments in assets under execution;
• non-receipt of the technical project “Pipeline of interconnection of the Romanian natural gas transmission system with the natural gas transmission system of the Republic of Moldova, phase II, on the Ungheni-Chisinau direction”, although the construction works were completed, which generated the overestimation of receivables by 11.74 million lei, which were to be reflected as non-financial assets;
• the non-compliant classification of some special constructions amounted to 4.82 million lei for other fixed assets, which allowed their untrue reporting and non-calculation of the respective wear.
The meeting also examined the results of the public procurement compliance audit within MEI during 2019-2020. The MEI Apparatus and its subordinate entities were subject to the audit. We mention that, according to the Audit Program of the Court of Accounts for 2021, the State Enterprise "State Road Administration" is subject to external public audit individually. Thus, at present, the audit of the compliance of the management of the public patrimony by the SE “State Road Administration” in 2020 is underway, which will also include the objective related to the compliance assessment of the public procurements carried out.
At the same time, the audit area included the entities whose founder is the Ministry of Economy and Infrastructure and which during the audited period benefited from financing in the form of subsidies, granted from the state budget, namely: MOLDAC National Accreditation Center, Institute of Standardization in Moldova, National Institute of Metrology, Organization for the Development of the Small and Medium Enterprises Sector, Single National Service for Emergency Calls 112.
The audit activities focused on the evaluation of public procurements performed by the audited entities, which amounted to about 102 million lei in 2019 and over 78 million lei in 2020.
The audit identified multiple deficiencies related to the process of public procurement within the entities, related to: regulation of the activity of working groups for procurement, quality of public procurement planning, admission of deviations from the regulatory framework in force, non-exhaustive digitization of low value public procurement, the lack of automated systems for monitoring, reporting and analyzing public procurement. Thus, at least 20% of total public procurement was affected by various deficiencies and irregularities.
For example, when planning public procurement, the audited entities did not comply with the applicable basic principles, which were expressed throughout:
- non-publication of public procurement plans on the website in 4 cases, with a total value of 6.8 million lei in 2019 and 21.9 million lei in 2020;
- failure to implement the plans approved by public procurement by about 33% (or 49.0 million lei) in 2019 and 46% (or 65.6 million lei) in 2020;
- carrying out public procurements not included in the annual plans, in total, of about 4.8 million lei in 2019 and about 2.4 million lei in 2020;
- non-transparent planning or non-planning of low value public procurement, with a value below 10.0 thousand lei without VAT, which amounted to over 3.7 million lei in 2019 and as many in 2020;
- the acquisition of goods and services outside the contractual relations, in the total amount of 1.6 million lei in 2019 and 1.8 million lei in 2020;
In the process of performing and reporting on public procurement, the entities admitted multiple non-compliances, namely:
- the division of acquisitions, in order to avoid the legal procedure of public procurements, with a total amount of 1.6 million lei - in 2020;
- making purchases prior to the closing date, registration of the respective procurement contracts, in the amount of 1.2 million lei in 2020;
- failure to obtain from economic operators the performance guarantee for public procurement contracts, the total value of which in 2019 amounted to 5.2 million lei and in 2020 - 6.3 million lei;
- untrue presentation of the report on low value public procurement contracts in 21 cases in 2019 and 13 cases in 2020, with distorted values that amounted to over 4.0 million lei each year, etc.
One of the factors that generated non-compliances was the fragmented internal control within the audited entities. Thus, in some entities the procurement working groups operate on the basis of outdated internal acts, not adjusted to the current rules and conditions of public procurement, in other cases - in the absence of the respective regulations adopted, and not being assigned the tasks, responsibilities of each group member. At the same time, within the entities, the self-assessment of the established internal managerial control is not carried out in a timely and adequate manner, and the internal audit unit in some entities is not functional.
Consequently, the Court of Accounts concludes that the overall procurement process conducted within the MEI and its subordinated institutions did not fully meet the principles of legality, transparency and efficiency. Therefore, the processes of estimating, planning and executing the budgets of the contracting authorities in correlation with the principles of good governance have been negatively influenced, limiting the transparency regarding the information and accessibility of potential economic operators regarding the public procurements carried out, as well as reduced confidence and veracity of national statistical data on public procurement.
