WITH DEFICIENCES OF VIEW
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The Court of Accounts of the Republic of Moldova, on May 24, examined the Audit Report on the financial reports of the Government’s Report on the execution of the state social insurance budget (SSIB) in 2021.
The purpose of the audit was to provide reasonable assurance that the Government’s Report did not contain any material misstatement, whether due to fraud or error, by issuing an opinion.
The audit evidence was collected within the National Social Insurance House (NSIH) requesting information from the entities that are responsible for some processes, such as the State Tax Service, Ministry of Labor and Social Protection, Social Inspection, Ministry of Health, Public Services Agency, Public medical institutions.
The audit area included revenues from contributions and transfers from the state budget, which amounted to more than 27 billion lei. At the same time, in 2021, the merger of the social insurance contributions due took place at the employer level. Thus, the state social insurance contributions that have the maximum share of the total income amounted to 16.2 billion lei, which is 59.5%. They also increased by 1.9 billion lei more compared to the previous year.
At the same time, the audit mentions that the growth rate of expenditures (139.4%) during the years 2018-2021 exceeded the growth rate of own revenues (124.4%) by 15 percentage points, which determined the demand for financial means necessary to cover the deficit. Thus, general purpose transfers have increased 2.5 times in the last four years. These were caused by insufficient own revenues and used to cover expenses.
In order to cover the temporary cash gap and to honor the obligations towards the beneficiaries, during November-December 2021, NSIH had to contract 2 loans from the state budget, in a total amount of 800 million lei, which were returned by the end of the management year.
With regard to the expenses, receivables and liabilities related to social benefits, the audit reveals that they were assessed in the light of the granting, payment and reporting process, including the impact of the implementation of the recommendations previously submitted by the Court of Accounts. Thus, most of the financial sources were used for providing social benefits in the amount of 26.7 billion lei, which had a share of over 98% of total expenditures.
Regarding the debts, it is mentioned that starting with 2021, changes were made to the debt accounting rules, so they were reflected as long-term debts to the off-balance sheet accounts.
At the same time, the initial balances of short-term debts were not adjusted, estimated by the audit at about 60.3 million lei. The maternity allowances, on the debt side, were overestimated by 2.9 million lei, determined by the corrections made by the economic agents and not reflected in the records by NSIH.
With regard to the process of suspending the payment of the pension of some employees of civil aviation, in case of re-employment in positions with special working conditions, it is clear that this is ambiguous, which led to unjustified expenses in some cases in the amount of 50 thousand lei.
Regarding the evaluation of the systemic process of establishing and granting temporary incapacity benefits, it is revealed that several entities are involved. The insufficiency of the internal control activities when establishing the indemnities for temporary incapacity for work both within NSIH and within the medical institutions, affected the SSIB execution indicators.
Among the most important findings related to this type of allowance, the evaluated sample refers to:
- Granting by the medical institutions the quarantine allowance for the prevention of Covid-19 infectious disease for more than 14 days, contrary to the established regulations, causing unjustified expenses on the SSIB in the amount of 27 thousand lei
- The erroneous introduction by the medical institutions of the information about the “type of illness”, which indicates the amount and source of coverage of this payment, determined the establishment, calculation and non-compliant payment of the indemnity for temporary incapacity for work, amounting to 13.1 thousand lei.
With regard to the establishment and payment of monthly allowances for raising a child until the age of 3, it is found that this was done regularly. At the same time, the allowances for raising the child until the age of 2 years and 2 months are not reported separately.
Another audit finding concerns the process of granting, verifying and paying social assistance and aid for the cold period of the year. In this regard, it is noted that, in 2021, 17% of the amounts unduly paid during the years 2015-2021 were reimbursed, being found a low rate of reimbursement, thus causing unjustified expenses of over 9.3 million lei.
During the audit, a significant component was assessed from a qualitative point of view, namely, remuneration for work within NSIH. Thus, the complex activity of NSIH is accompanied by the lack of staff and the high flow of employees, while the policies establish the implementation of new processes of social support of the population, which can affect the quality of services provided to citizens. Annually, the activity of NSIH is supplemented with new processes, new services and new responsibilities. Thus, the workload, the responsibility, the increasing intensity, the specific quota of citizens served, correlated with the remuneration of the efforts made, do not contribute to the maintenance and attraction of specialists, and there are no candidates for employment competitions. At the end of 2021, the NSIH has a staff deficit of 20%, and the staff turnover rate during the year was 9%.
Based on the above findings and taking into account the materiality threshold set, the Court of Accounts concludes that the Government’s Report on the implementation of the state social insurance budget provides, in all significant respects, a fair and accurate picture, according to the applicable financial reporting framework.
