The results of the audit on the consolidated financial reports of the Ministry of Defense (MoD) concluded on December 31, 2021 were examined by the Court of Accounts of the Republic of Moldova, today, June 30.
The Ministry of Defense is the central specialized body of public administration, which ensures the implementation of government policy in the field of defense policy, national defense planning, military analysis and information, resources of the national defense system, human resources development in the military, military education, cooperation in the field of military and military interoperability.
In 2021, MoD managed resources amounting to 1.1 billion lei and expenses amounting to 839.9 million lei. Also, in 2021, the Ministry of Defense administered assets totaling 3.7 billion lei.
The audit found a number of non-compliances and shortcomings, which were the basis for issuing a qualified audit opinion:
- Two real estates, the “Eternitate” Memorial Complex and the “Capul de pod Șerpeni” Memorial Complex, were erroneously classified as special constructions, although they were to be reflected as assets of cultural heritage. As a result of these errors, the reported value of the balance of the group of accounts "Special Constructions" was overestimated by 58.8 million lei, and the value of the balance of the group of accounts "Assets of cultural heritage" was underestimated by the same amount. The non-compliant classification of these real estates has contributed to the irregular calculation of wear. As a result, the value of the balance of the group of accounts "Wear of fixed assets" was overestimated by 53.2 million lei, and the value of the balance of the group of accounts "Financial result from previous years" was underestimated by the same amount;
- The audit was limited in obtaining sufficient and adequate audit evidence regarding the value and composition of the assets transferred to the share capital of state-owned enterprises, reported by the MAîoD to the value of 22.4 million lei;
- MoD illegally recognized in the accounting records 14 real estate with an area of 13.8 thousand m2, which, according to the documents in the Real Estate Register, belong to third parties, being already privatized. As a result, the reported value of the balance of the group of accounts "Buildings" was overvalued by 5.5 million lei;
- MA erred in recognizing a plot of land with an area of 4.03 ha in the value of managed land, although, according to the documents in the Real Estate Register, they belong to third parties. As a result of these errors, the reported value of the balance of the group of accounts "Land" was overvalued by 5.2 million lei.
The audit identified deficiencies related to the management of the patrimony, which is reduced to the non-registration of the patrimonial rights of 8 plots of land with a total area of 965.3 acres, accounted for 68.5 million lei, 2 isolated rooms (apartments that were not privatized), as well as 106 real estate (buildings), of which 104 real estate are accounted for in the amount of 250.3 million lei, and 99 real estate are located on unregistered land. Thus, the registration of these buildings will be possible only after the primary registration of land plots.
The MoD transferred some land free of charge to a state-owned enterprise, being its founder. The revenues from the lease of the lands were collected in the account of the state enterprise, although, according to the legal norm, they were to be collected in the state budget. As a result, the state budget was damaged by at least 1.2 million lei, and no revenues were collected from the lease of publicly owned land.
During the meeting, the audit team mentioned the delay in the reorganization process of state-owned enterprises whose founder is the MoD. As early as 2004, was to be carried out the reorganization by merger of the State Enterprise (SE) „CCM Vichi” with the SE "Marculesti International Airport", whose founder at that time was the Ministry of Defense, and the respective documents were to be made in the Register of law units. Consequently, the deregistration of the SE "CCM Vichi" from the Register of Law Units did not take place.
Also, the reorganization of two other state-owned enterprises, such as the SE "Social service complex" and the SE "Center for the Training of Specialists for the National Army", which according to the Government’s Decision no. 698 from 11.07.2018, were to be reorganized by absorption and, respectively, transformed into a single public institution. The main cause of the indefiniteness of the reorganization of these enterprises is the misinterpretation by the MoD of the provisions of Law no. 220 from 19.10.2007 on the state registration of legal entities and individual entrepreneurs.
The audit identified that, for several years, one of the military units did not ensure compliance with the rules and regulations for taking and keeping track of military assets, identifying cases of dismemberment, theft and sale of used metal components of military equipment. The material damage caused to the military unit and the state as a result of these actions was estimated at 2.7 million lei. In this case, a criminal case was opened, which was supplemented by a civil action regarding the recovery of the material damage, which is currently being examined in court.
In the same context, the MoD did not ensure the regular inventory of material stocks. Consequently, in the inventory process, the equipment deficiencies that appeared because of the theft of goods during the years 2020-2022 were not identified. During an administrative investigation in 2022, equipment shortages amounting to 1.5 million lei were established. After the completion of the administrative investigation, all the accumulated materials were sent to the Buiucani Police Inspectorate, which filed a criminal case on the fact of committing the crime with reference to the theft of military property.
During the audit, the Ministry of Defense remedied some certified non-compliances. Remedial actions were performed in 2022 and had no effect on the consolidated financial statements as of December 31, 2021.
The Court of Accounts, based on the audit evidence obtained, submitted to the audited entity recommendations aimed at improving the audited aspects.