WITH DEFICIENCES OF VIEW
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The Court of Accounts of the Republic of Moldova, on May 26, examined the Audit Report on the consolidated financial reports of the Ministry of Justice concluded on December 31, 2022.
At the end of 2022, the assets managed by the Ministry of Justice and its subordinate entities amounted to 1.0 billion lei. The revenues of the management period constituted 1.1 billion lei, and the expenses – 901.9 million lei.
In the opinion of the Court of Accounts, except for the possible effects of some aspects, the financial reports, in all material respects, give a true and fair view in accordance with the applicable financial reporting framework.
During the meeting, were stated the observations that influenced the audit opinion, such as:
- In the warehouses of the National Archives Agency, approximately 74.6 thousand files of the state archival fund, property of the Republic of Moldova, are kept, cataloged by the Agency as "Documentary Monuments" of special historical, scientific and cultural value. Due to their entry with a free title and the lack of exhaustive criteria for determining their value and regulation in the accounting policies, this historical treasure is currently not evaluated, accounted for and reported in the financial reports concluded at the end of the management year 2022.
- Due to non-recognition in the accounting records, the National Administration of Penitentiaries, the Training Center and Penitentiaries no. 3, 2, 6, 7, 9, 10, 12, 17 and 18, did not report at the end of the management period 71 buildings and special constructions with a total area of approx. 9.7 thousand m2. This non-compliance generated the undervaluation of the value of the buildings reported at the end of the audited period by approximately 4.1 million lei.
- The non-compliant calculation of wear and tear by the Ministry of Justice and some subordinate entities conditioned the overestimation of the wear and tear of fixed assets and, at the same time, the underestimation of the balance sheet value of fixed assets by 8.1 million lei.
As for the institutional governance system, the Court of Accounts found that due to the failure to fully fulfill their obligations, the leaders of the National Probation Inspectorate, the National Council for Legal Assistance Guaranteed by the State, as well as its territorial offices Chisinau, Comrat, Cahul and Balti, contrary to the normative framework in force, did not ensure the development and approval of accounting policies. Thus, the risks of non-compliant keeping of accounting records and distorted reporting of information and economic events remain to be improperly managed.
Due to the discrepancies between the de facto information on the ground and the information from the accounting records and those from the list of immovable assets, property of the state, under the administration of the Central Apparatus of the Ministry of Justice, as well as the National Administration of Penitentiaries and some subordinate penitentiary institutions, was not assured the registration of 290 buildings and special constructions with a total area of approx. 82.2 thousand m2.
It is certified that, due to the complexity of the process of inventorying, carrying out cadastral works, as well as drawing up/re-drafting, checking, signing and countersigning the primary documents for the transfer of public state-owned lands to the Public Property Agency, they remain to be registered in the accounting records of the Ministry of Justice and its subordinate entities with a total value of 195.9 million lei.
It is also mentioned that, due to non-honoring of contractual commitments by some economic agents who concluded service contracts with penitentiary institutions, to ensure the needs of their operational activities with inmate workers, penitentiary institutions recorded and reported at the end of the 2022 management year:
- receivables with an expired payment term in the total amount of 12.2 million lei, and concurrently
- debts towards prisoners for the remuneration of their work, in the total amount of 7.4 million lei.
The audit reveals that, although legal disputes regarding the collection of debts have been filed with the majority of economic agents, or even though enforceable titles have already been issued regarding the payment of the amounts owed, however, the penitentiary institutions have not been able to collect the compromised debts for several years, the reason being the debtors' inability or reduced ability to pay. Insolvency proceedings have already been filed for some of the debtors.
In these circumstances, the audit reports on the existence of real risks that the debts towards the prisoners for the remuneration of their work, in the total amount of 7.4 million lei, could end up being debts of the state budget, for the reason that all financial commitments towards prisoners belong to the penitentiary institutions, and these commitments do not take into account in any way the economic contracts concluded by the penitentiary institutions with economic agents and their ability to pay, which already is or may be in the future compromised.
The town of Brănești (117 apartments where more than 200 tenants live), which was previously part of Penitentiary no. 18 - Brănești, is fully provided, free of charge, with drinking water by the penitentiary institution. Although, Penitentiary no. 18 bears annual expenses in the amount of approximately 694.7 thousand lei (according to the last calculation made by the penitentiary institution for the year 2015), for the provision of drinking water and sewage to the tenants of the privatized apartments, so far no solution has been identified to recover the costs incurred. The multitude of approaches submitted by the Penitentiary no. 18, to the local authority, the National Administration of Penitentiaries, as well as to the Ministry of Justice, were not able to ensure the identification of a reliable solution to cover the costs borne by the penitentiary institution and the sustainable provision of drinking water and sewage to the housing sector.
In order to remove the causes that formed the basis of the distortions and non-compliances exposed in the Audit Report, 10 recommendations were submitted to the Ministry of Justice and its subordinate institutions, that need to be addressed in future periods to better control residual misstatement or compliance risks.
