WITH DEFICIENCES OF VIEW
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On October 12, the auditors of the Court of Accounts of the Republic of Moldova (CoARM) presented the results of two audit reports within the Public Finance Control Committee (PFCC).
The audit team led by Tatiana Șevciuc, Member of the CoARM, presented the findings of the Performance Audit Report of the implementation of the National Regional Development Strategy (NRDS) for the years 2016–2020.
The CoARM’s team mentioned that the purpose of the audit was to evaluate the performance of achieving the objectives set out in the Action Plan regarding the implementation of the National Regional Development Strategy for the years 2016-2020, and the mechanisms for achieving them, as well as the identification of deficiencies in the Strategy’s implementation process and their impact on the overall objective.
The analysis of the NRDS’s implementation for the period 2016-2020 highlighted major difficulties, which need to be solved, for the efficiency of governance in the field of regional development. Thus, evaluating the degree of realization of the Strategy, the CoARM finds that, of the total of 44 actions included in the action plan, 28 actions were fully implemented, 11 - partially, and 5 actions remained unrealized.
The Republic of Moldova has undertaken to strengthen economic integration with the European Union (EU) based on the Association Agreement between the Republic of Moldova and the European Union and the Sustainable Development Goals of the UN, the audit noting some deficiencies and problems, which affect the achievement of progress in this field. Thus, from the 27 actions provided for in the National Action Plan for the implementation of the Association Agreement, in the period of 2017-2019, 21 actions were carried out, and 6 remained undone, the implementation rate constituting 78%.
The audit found that during the years 2016-2020:
- the regionalization of water supply and sewerage services in the districts of the country was not successful, the processes being difficult and slow;
- the National Territorial Development Plan and regional plans were not developed;
- the new Regional Development Concept was approved late with the transition to a new Strategic approach;
- the new Strategy and the amendments to the Law on regional development were not approved.
The Court of Accounts concluded that, although some progress has been reported in regional development, the institutions responsible for policy implementation in this area face a series of difficulties, which affect the reliability of the results obtained from the investments made and compromise the effective achievement of the predetermined objectives.
The audit team led by Viorel Chetraru, Vice President of the CoARM, presented the results of the second Compliance Audit Report on the management of public assets by the State Enterprise “State Administration of Roads” (SAR) in 2020. As a result of the audit activities carried out, it was certified that due to existing gaps in the company's governance and internal control system, some activities, financial transactions and economic events, carried out by the SAR in 2020, did not comply, in all significant aspects, with the applicable regulations.
Thus it was stated that:
- the revenue planning and execution system, created by the specialized central authority to maintain the operational activity of the SAR, is mainly based on the proportion of the volume and cost of the works executed by the contractors and less on the real needs of financing the expenses, generating in 2020, an excess of revenues, obtained from the financial resources allocated from the state budget for the maintenance and repair of roads, of approximately 21.1 million lei;
- the financial means required for the administration of national public roads, in the total amount of 16.9 million lei, were planned, approved and allocated based on previous practices, based on fixed amounts, without rigorous calculations and justifications being drawn up;
- the revenues for the performance of the function of beneficiary for the public road maintenance works were calculated and inappropriately increased by approx. 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 strict coordination with the relevant ministry, generated the non-compliant execution of the Program for the design of national public roads for the year 2020;
- some budget allocations in the total amount of 33.1 million lei, were recorded in non-compliant accounting records, double, both in the sales revenue account, as well as to the account of other revenues from operational activity, as well as to both the account of administrative expenses and the account of other expenses from operational activity.
The program of national public road design works was not implemented in accordance with the outlined objectives, given: i) the inclusion of 11 design works worth a total of 17.7 million lei, unforeseen, and ii) the failure of 14 procurement procedures for design works worth a total of approx. 29.3 million lei.
The lack of clear objectives to ensure the continuity of operational activities, the investments in 111 projects regarding the repair of public roads, in a total amount of approx. 71.2 million lei, carried out since 2007, until now remained to be registered as assets in progress, which, not being completed, do not contribute to the development and modernization of the road network infrastructure.
Also at the compartment of good management of public patrimony, the audit reveals that according to the irrevocable decision of the Supreme Court of Justice, was lost the right of ownership of the state and economic management of SAR over the immovable property located in the municipality of Chisinau, 12A Bucuriei Street, 3rd floor, where the state enterprise has been operating until now. The loss of the state's ownership right over the real estate conditioned the appearance of rent expenses of 1.5 million lei, as well as the appearance of real risks of additional expenses of approximately 16.5 million lei, which resulted from attracting the company as a defendant in three national litigations, for the use of administrative rooms, during 2014 – 2019.
In the end, the Court of Accounts concluded that the general objective drawn 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 Action Plans regarding the implementation of policy documents, and the ratio of the quality of roads in bad and very bad condition increased from 27.2% to 47.3%, due to the decrease of those in good and mediocre condition.
The public finance control committee pointed out the importance of implementing the recommendations submitted by the auditors, in order to ensure compliance, efficiency and control of the use of public money intended for the maintenance and modernization of the road infrastructure.
