WITH DEFICIENCES OF VIEW
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The Court of Accounts of the Republic of Moldova, on May 30, examined the Audit Report on the consolidated financial reports of the Ministry of Economy concluded on December 31, 2022.
The patrimony managed by the Ministry of Economy belongs entirely to the state, which at the end of 2022 amounted to 18,692.95 thousand lei. According to the State Budget Law, financial resources in the total amount of 219.8 million lei were planned for 2022, and following the budget rectification, financial resources in the amount of 946.8 million lei were specified.
During the year, 669.7 million lei were capitalized, which represents about 71% of the sum of the specified allocations. The non-utilization of 277.09 million lei was generated by the lack of execution of grants of approximately 210 million lei for the first tranche, provided for the capitalization of the Credit Guarantee Fund within the Organization for Entrepreneurial Development.
The audit noted that it was not disbursed due to the lack of fulfillment of two of the five disbursement conditions established by the Loan Agreement. In particular, the signing of the Subsidiary Agreement between the Organization for the Development of Entrepreneurship and the Ministry of Finance was not successful, and the Operational Manual for the Credit Guarantee Fund was not approved.
In the same way, the subsidies in the amount of about 47.9 million lei granted to non-household consumers, regarding the compensation of the price difference for the consumption of natural gas and thermal energy for the cold period of the year, were not executed.
In the management year, the actual revenues of the Ministry of Economy were constituted from the following sources:
- from the account of state budget allocations - 666 million lei, which represents about 98.19% of the total revenues, while other revenues of budgetary institutions - constituted 6.7 million lei or 0.99%,
- from the income from other assets entered free of charge – 5.5 million lei.
At the same time, the expenses of the Ministry of Economy were distributed as follows:
- grants awarded - 560 million lei;
- subsidies – 76.9 million lei;
- personnel expenses – 20.1 million lei;
- other expenses – 10.9 million lei;
- goods and services – 6 million lei.
In the opinion of the Court of Accounts, except for the effects related to the aspects presented in the Basis for the qualified opinion, the financial statements, in all material respects, give a true and fair view according to the applicable financial reporting framework.
The basis for the qualified opinion was determined by the fact that following the dissolution of the Grant Implementation Unit granted by the Government of Japan, the assets of this Unit were to be transferred to the Ministry of Economy according to the Regulation on the manner of transmission of public property assets, however, in the transmission documents completed by the Unit, the information regarding the compromised claims in the off-balance sheet accounts in the total amount of 8,067.8 thousand lei was not mentioned. Thus, due to the gaps in the documents for the transmission of the assets and liabilities of this Unit, as well as the insufficient control by the ministry regarding the inventory of off-balance sheet accounts, the Ministry of Economy, in the consolidated balance sheet ended on December 31, 2022, erroneously reported the information on the compromised claims in the off-balance sheet accounts, these being undervalued by 8,067.8 thousand lei.
The internal managerial control system established within the Ministry of Economy does not fully ensure the functionality of the key controls, as well as the identification and management of risks related to the financial-accounting process, which, for the most part, admitted the aforementioned distortions and observations. At the same time, the ministry has not developed standard accounting policies for subordinate institutions, coordinated with the Ministry of Finance, which may condition for future periods the risk of non-uniform accounting records and failure to ensure compliance with the legislative and normative acts in force.
The internal audit subdivision within the ministry was partially functional, the position being filled on November 28, 2022, which made the leader lack an instrument that ensures prudent risk management and contributes to the improvement of internal managerial control, as well as increases the level of efficiency and effectiveness of the managed processes.
