On March 31, the Court of Accounts of the Republic of Moldova, examined the Audit Report on the financial reports of the administrative-territorial unit of Bălți municipality concluded on 31.12.2020 and the Compliance Audit Report on the budgetary process and public patrimony management during 2018- 2020 at the ATU Balti.
Balti is an administrative-territorial unit in the northern development region of the Republic of Moldova, being an important economic and social center for the local and regional community, which determines an increased interest from society and from the central authorities.
The purpose of the financial audit was to provide reasonable assurance that the financial statements of the administrative-territorial unit of Balti municipality as of December 31, 2020 do not contain, as a whole, material misstatement due to fraud or error, and issuing an opinion.
The reserved audit opinion was determined by the effect of the distortions existing at 31.12.2020, related to:
- Unjustified increase of the forms of participation in the capital within the country, reported to the account “Shares and other forms of participation in capital within the country”, with the total amount of 511.3 million lei. The increase was determined by the transfer in the management of the municipal enterprises of some material goods, the possession of which does not create investment effect and generator of income from the production activity and which cannot be recognized as tangible assets;
- Underestimation of the value of the “Buildings” account with the total amount of 38.7 million lei, as a result of the non-recognition of the real estate actually owned, with the value of 38.6 million lei and of the expenses for the project documentation and estimate used for the capital repair of the roofs in the amount of 109.6 thousand lei;
- The non-capitalization of tangible assets of the expenses for the construction works of the animal shelter, which determined the increase and the non-justified reporting of the material assets in progress to the account “Capital investments in assets in progress” with the amount of about 7.3 million lei;
- Incorrect reporting of expenses as a financial contribution granted to municipal enterprises to the account "Subsidies granted to state and municipal enterprises" in the amount of 3440.2 thousand lei and underestimation of the value of account 415 with the same amount, etc.
The compliance audit aimed to assess the compliance of the budgetary process and the management of public assets at the ATU Balti during 2018-2020, in relation to the legal regulatory criteria.
The audit attests to a lack of rules and procedures related to the process of managing the budgetary means and public patrimony of ATU Bălți municipality:
- the existence of 26 advertising devices located in Bălți municipality was confirmed in the absence of land lease contracts, as well as in the absence of payment of the local tax;
- the non-updating of the data from the Automated Information System "Fiscal Cadaster 2.0" and the Real Estate Register created premises for the avoidance of the payment of taxes for real estate for a long period (from 4 to 22 years), thus, in 9 cases the value of taxable objects was introduced in the system with delay, and the unaccumulated revenues to the local budget constituted 63.6 thousand lei;
- the lack of an efficient mechanism for cooperation between the State Tax Service, the Public Services Agency and the Local Taxes and Fees Collection Directorate (LTFCD) creates conditions for the non-taxation of real estate, thus, on 01.01.2021 in the AIS concerning natural persons were registered 7795 non-taxable (invalid) objects, the cause being: the lack of the fiscal code of the owners; lack of real estate information in the RER; entering incorrect information;
- the lack of formalization of the transfer of the real estate for use to individuals, LTFCD lacked information to determine the taxable base for calculating the real estate tax. We mention that, de facto, these persons exercise the right of possession, use and disposition over these goods. As a result, the audit found that 775 individuals, contrary to the legal framework, did not calculate for the years 2018-2020 the tax in the total amount of 352.8 thousand lei;
- the ATU Bălți did not ensure the establishment of co-owners' associations in the condominium and the transfer to them of the goods related to private apartments (land, building), consequently 340 lands with a total area of 41.1 acres were not subject to taxation.
Balti City Hall did not respect the principle of performance in the use of budgetary resources, harming the municipal budget. Thus, the capital works for the repair of the road at the intersection of Lesecico and Conev streets with a total area of 60 m, as well as the arrangement of the pavement on Conev street with a total area of 139 m2, executed in 2019, in the amount of about 61,9 thousand lei, were executed again in 2020 by the contractor who carried out capital repair works on the road and sidewalk in Conev Street, being admitted expenses in the total amount of 76.2 thousand lei.
Although the Technical Expertise Report issued a negative opinion regarding the repair of the public bathroom, the City Hall of Bălți still decided to carry out the public procurement procedure regarding the contracting of repair services. According to the report, 3 buildings in the bathroom complex have a high degree of physical wear and tear and it is recommended to demolish them and build other buildings based on a project developed and coordinated in the established manner. However, the project was initiated and partially carried out, Bălți City Hall spending so far budget funds amounting to about 2.43 million lei.
During the years 2020-2021, some employees of Bălți City Hall were involved in the work of mobile groups to monitor compliance with restrictions imposed in order to prevent the spread of Covid-19 infection, although they included people with legal skills to sanction the violations regarding the observance of the requirements imposed by the decisions of the exceptional committee of Bălți municipality. As a result, were calculated salary supplements for the hours worked outside the working hours for 40 employees of the mayor's office, in a total amount of 533.4 thousand lei.
In conclusion, the Court of Accounts attests to a lack of rules and procedures related to the process of managing the budgetary means and public patrimony of ATU Bălți municipality, thus the institutional and financial management not being connected to the principles of good governance.
In order to improve the attested situations, and taking into account the non-execution of the previous decisions of the previous Court of Accounts, the external public audit offers the necessary recommendations, for a punctual remedy of the deficiencies and, respectively, for diminishing the obvious risks.