State-owned enterprise governance: audit reports highlight the need to strengthen accountability in public asset management

State-owned enterprises and commercial companies with state capital manage assets and financial resources worth billions of lei and operate in strategic sectors for the economy and security of the Republic of Moldova, such as energy, transport, telecommunications, infrastructure, and other public interest services. The performance of these entities directly influences the quality of services offered to citizens, economic competitiveness, and the efficient use of public money.

In this context, the Court of Accounts of the Republic of Moldova (CoARM) continues to pay increased attention to auditing the public corporate sector, contributing to the strengthening of accountability, transparency, and good governance in the administration of state property.

According to official data, as of January 1, 2025, central public administration authorities managed 224 economic entities, of which 161 were state-owned enterprises and 63 were commercial companies with state capital, while local public administration authorities managed another 669 municipal enterprises and commercial companies. The scale of this sector demonstrates the importance of an efficient system of supervision and control over how public assets are managed and how state ownership rights are exercised.

In accordance with its constitutional and legal mandate, the Court of Accounts can audit state-owned enterprises, municipal enterprises, and commercial companies in which public authorities hold at least 50% of the share capital, assessing whether patrimony and financial resources are managed legally, economically, efficiently, and transparently.

We draw attention to the fact that the regulatory framework governing the activity of state-owned enterprises, municipal enterprises, and commercial companies with state capital—Law no. 246/2017 on the State Enterprise and Municipal Enterprise, Law no. 1134/1997 on Joint-Stock Companies, and Accounting and Financial Reporting Law no. 287/2017—expressly provides for the mandatory auditing of their annual financial statements. The mentioned laws also stipulate the conditions and the body that establishes the procedure for selecting audit entities and the terms of reference. According to the regulatory and legal framework, the audit must be conducted by an independent audit firm, selected through a competition.

At the same time, the regulatory framework obliges state-owned enterprises, municipal enterprises, and commercial companies with state capital to publish independent external audit reports on their official websites. This requirement aims to ensure transparency in the activity of these entities, facilitate public access to information regarding audit results, and inform stakeholders about the findings and recommendations formulated by the independent auditor.

However, the level of compliance with this legal obligation remains low. Out of the 116 state-owned enterprises and 31 joint-stock companies with full or majority state capital evaluated during audit missions, only 11 entities had published independent external audit reports on their official websites. This situation indicates a low level of compliance with legal requirements regarding transparency and limits public access to relevant information concerning the performance and financial management of these entities.

Auditing the sector during the 2023–2026 period

During 2023–2026, the Court of Accounts carried out a series of compliance audits and performance audits targeting some of the most important state-owned enterprises and commercial companies with state capital. These included audits conducted at JSC "CET-Nord", JSC "Moldtelecom", JSC "Furnizarea Energiei Electrice Nord", JSC "Energocom", LLC "Arena Națională", as well as audits regarding public-private partnerships developed within JSC "National Lottery of Moldova", the use of financial resources for the maintenance and development of national public roads, and the management of assets transferred to Free Economic Zones.

A distinct place is held by the performance audit approved in 2025, which evaluated whether the state, through designated representatives in the governing bodies of state-owned enterprises and commercial companies with majority state capital, effectively exercises its ownership function and ensures administration in compliance with modern corporate governance principles.

The results of these audits highlighted deficiencies and vulnerabilities affecting the performance of the public corporate sector. Depending on the specifics of each entity, shortcomings were identified regarding the management of public property, planning and monitoring of economic-financial activity, functioning of managerial internal control mechanisms, transparency of decision-making processes, investment management, monitoring of performance indicators, and the exercise of duties by governing and supervisory bodies.

The findings formulated by the Court of Accounts demonstrate that good corporate governance is not merely a legal requirement, but an essential condition for the efficient use of public assets and for increasing the performance of enterprises in which the state is a shareholder.

In this regard, the recommendations formulated in the audit reports aim to strengthen the accountability of founding authorities, improve supervision mechanisms exercised by boards of directors and executive bodies, enhance risk management and internal control processes, and increase transparency and accountability in public asset management.

Performance audit on state-owned enterprise management – a systemic evaluation of corporate governance

The performance audit "Does the state, through designated persons, ensure efficient management of state-owned enterprises and commercial companies with majority state capital, in accordance with corporate governance principles?" was approved by Court of Accounts Decision no. 76 of October 23, 2025.

Unlike audits targeting individual economic entities, this mission evaluated the functioning of the corporate governance system at the national level and the way the state exercises its ownership role through designated representatives in the governing and control bodies of state-owned enterprises and commercial companies with majority state capital.

The audit mission took place during a period when the Republic of Moldova was implementing extensive reforms in the field of state-owned enterprises, assumed also in the context of the European Union accession process. In this regard, the Strategy for State Property Management in the field of state-owned enterprises and commercial companies with full or majority state capital for 2023–2030 sets as objectives the consolidation of corporate governance, the professionalization of governing bodies, and the increase of public corporate sector performance, in accordance with the principles of the Organisation for Economic Co-operation and Development (OECD).

The Court of Accounts found that, in recent years, certain progress has been made in developing the regulatory and institutional framework. Financial reporting and monitoring mechanisms have been created, regulations on the selection of state representatives have been promoted, and actions aimed at strengthening transparency and accountability in public enterprise management have been undertaken.

Nevertheless, the audit reveals that these developments are not yet sufficient to ensure efficient and sustainable management of economic entities with state capital.

Among the main findings of the audit is the fact that the responsibilities of founders, governing, and control bodies continue to be regulated fragmentarily, which affects the coherence of the decision-making process and the efficiency of public asset management. At the same time, the state still lacks a unitary approach regarding the reorganization and development of state-owned enterprises, and modern corporate governance models are implemented unevenly.

The audit also highlighted that the process of selecting and evaluating state representatives on boards of directors and in control bodies uses general criteria that do not always reflect the complexity and specificity of each economic entity's field of activity. Meanwhile, the mechanism for evaluating the performance of members of these bodies is implemented with delays, which limits their accountability and reduces the possibility of correlating obtained results with the mandate exercised.

Another important finding concerns the remuneration system for members of governing and control bodies, which is not sufficiently correlated with the level of responsibilities assumed nor with the effectively achieved performance. In the absence of consistently applied performance indicators and efficient evaluation mechanisms, remuneration does not constitute an incentive tool for managerial performance.

Furthermore, although authorities apply performance monitoring mechanisms for state-owned enterprises, the audit identified deficiencies regarding reporting uniformity, the quality of presented information, and the capitalization of monitoring results in the strategic decision-making process. Consequently, the collected information is not fully utilized to improve management and for early interventions in entities recording inadequate results.

Based on these findings, the Court of Accounts concluded that the current corporate governance model does not yet guarantee the high-performing management of state-owned enterprises and commercial companies with majority state capital. In this context, the institution formulated a comprehensive set of recommendations addressed to Parliament, the Government, the Public Property Agency, and founding authorities, aimed at strengthening the regulatory framework, professionalizing governing and control bodies, consistently applying principles of transparency and accountability, streamlining monitoring mechanisms, and increasing the economic performance of entities with state capital.

By its nature and scale, this audit represents one of the most important systemic evaluation exercises carried out by the Court of Accounts in recent years, offering public authorities and Parliament a comprehensive picture of existing challenges in state property management and a set of solutions aimed at aligning corporate governance with European and international standards.

The Court of Accounts emphasizes that all audit reports and related decisions are public documents and can be consulted on the institution's official website. At the same time, information presented by audited entities regarding measures taken to implement the recommendations formulated following the audit is published in the same section.

The publication and capitalization of these reports contribute to increasing public interest in how enterprises in which the state invests significant resources and exercises property rights are managed. Equally, they provide Parliament and society with relevant information concerning the performance of public asset management and the accountability of state representatives designated in the governing bodies of these entities.

List of audit reports on state-owned enterprises and commercial companies with state capital, audited by the Court of Accounts between 2023 and July 2026

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State-owned enterprise governance: audit reports highlight the need to strengthen accountability in public asset management