Court of Accounts of the Republic of Moldova

The Court of Accounts audited the Ministry of Defense


The Court of Accounts of the Republic of Moldova, on June 26, examined the Audit Report on the consolidated financial reports of the Ministry of Defense (MoD) concluded on December 31, 2022.

The Court of Accounts of the Republic of Moldova, on June 26, examined the Audit Report on the consolidated financial reports of the Ministry of Defense (MoD) concluded on December 31, 2022.

The Ministry of Defense is the central specialized body of the public administration that ensures the implementation of government policies in the field of defense policy, national defense planning, military intelligence and analysis, national defense system resources, military human resource development, military education, international military cooperation, and military interoperability.

In 2022, the Ministry of Defense managed resources worth 1.5 billion lei and expenses worth 1.2 billion lei. Also, in 2022 the Ministry of Defense managed assets worth a total of 4.2 billion lei.

The most significant non-compliances and deficiencies that were the basis for expressing the qualified audit opinion were the following:

  • The MoD irregularly recognized in the accounting records 13 immovable assets with an area of ​​13.48 thousand m2 which, according to the entries in the Immovable Assets Register, belong to third parties, being privatized. As a result, the reported value of the balance of the "Buildings" group of accounts was overestimated by 5.4 million lei. The identified deficiencies are due to the non-definition of the process of dividing the cost of managed constructions by excluding the value and surfaces of privatized homes, conditioned by the operation of the changes in the Order of the Minister of Finance no. 216 from 28.12.2015, with exhaustive provisions related to the procedure for dividing their cost only at the end of 2022;
  • The MoD erroneously classified the expenses related to the creation of an information system as intangible assets. As a result of these errors, the reported value of the balance of the group of accounts "Intangible assets" was overvalued by 2.7 million lei, and the balance of the account "Capital investments in assets in progress" being undervalued by the same amount;
  • a military unit, during several years, did not calculate the wear and tear related to fixed assets, thus, only concerning the fixed assets entered during 2022, the uncalculated wear and tear constituted 1 million lei.

The MoD established a faulty mechanism of relations with a state enterprise, being its founder. The audit found that land was transferred to the state enterprise free of charge, the income from the leasing of the land being collected in the account of the said state enterprise. It is mentioned that under the provisions of Government’s Decision no. 91/2019 for the approval of the Regulation regarding the capitalization of public property of the state, they were to be collected in the state budget. As a result, 0.45 million lei were not collected to the state budget from the leasing of publicly owned lands.

Also, the audit highlighted the procrastination of the reorganization process of the state enterprises whose founder is the Ministry of Defense.  Thus, as early as in 2004, the reorganization by merger (absorption) of the S.E. "CCM Vichi" with the S.E. "Mărculești International Airport", the founder of which at that time was the Ministry of Defense. As a result, the respective entries were to be made in the Register of Legal Entities, but the deletion from the said Register of the S.E. "CCM Vichi" to date has not taken place.

The reorganization of two other state enterprises, such as the S.E. "Social service combine" and the S.E. "Specialist Training Center for the National Army", which according to Government’s Decision no. 698/2018, were to be reorganized by absorption and, respectively, transformation into a single public institution. The main cause of the non-definition of the reorganization of the respective state enterprises is the misinterpretation by the MoD of the provisions of Law no. 220/2007 regarding the state registration of legal entities and individual entrepreneurs, namely, the presence of bonds against the national public budget does not allow the finalization of the reform. But according to the information of the State Fiscal Service, it cannot serve as an impediment for carrying out the reorganization reforms of state-owned enterprises within the framework of absorption through transformation.

Another factor that stops the implementation of these reforms is the non-delimitation and non-registration by state enterprises of all properties acquired and transferred by the MoD, including land, as well as the lack of a list of assets included in the social capital. In this context, measures are to be taken to comply with the provisions of Law no. 29/2018 regarding the delimitation of public property and Law no. 246/2017 regarding the state enterprise and the municipal enterprise.

During the audit engagement, the Ministry of Defense remedied some certified non-compliances, as follows:

  • was initiated the process of adjustment by division of the accounting values ​​and of the surfaces transferred to private ownership within the housing blocks managed by the ministry and of drafting the minutes of division of the accounting value of these immovable assets;
  • were terminated the contractual relations with 2 economic agents that leased public property from a state enterprise for agricultural activities;
  • in order to unify the structure of the territorial military centers, in 2023 identical personnel lists were drawn up for all military centers, these being approved by the State Chancellery on 30.05.2023, later the job descriptions will also be updated.