CoA’s contribution to improving the management of external public funds



december 14, 2017 • views 3794




The external assistance provided by the international community still plays an important role in the country's social and economic development, in achieving the priority objectives of the Republic of Moldova established in the national strategic documents.

As an external public auditor of the state, the mission of the Court of Accounts (CoA) is to contribute to improving public financial management, promoting accountability and transparency and defending the financial interests of Moldovan citizens. The CoA warns of existing risks, provides assurance, signals the existence of both deficiencies and successes, and makes recommendations to decision-makers. Recommendations aimed at improving the performance of funds’ use and administrative actions are subject to rigorous implementation monitoring.

In recent years, the CoA has increased the dialogue with the Parliament of the Republic of Moldova by establishing more regular contacts with specialized commissions, as well as the cooperation and exchange of experience with other supreme audit institutions and international bodies.

The Legislature, the Executive, as well as the external donors need information on measuring and assessing the economy, efficiency, and effectiveness of programs or activities, to make decisions and take action to improve performance.

In order to associate with the European Union, the Republic of Moldova has adopted and will further adopt a number of reforms for the implementation of the Association Agreement, focusing in particular on improving the rule of law and the business environment. In the context of reform support, the European Union has allocated 310 million Euro as financial assistance under the 2014-2016 bilateral programs. Thus, the 2014-2016 Annual Action Programs supported various areas, including: public finance reform (37 million Euro), agriculture (64 million Euro), job creation in rural areas and rural development (60 million Euro) etc.

Given the significant assistance from the European Union and other partners (World Bank, European Investment Bank, various development agencies), the CoA pays particular attention to assessing the performance and impact achieved in investment projects and programs financed from external sources.

As far as trade is concerned, the European Union has strengthened its position as the main trading partner of the Republic of Moldova. According to the data of the National Bureau of Statistics, in 2016 the exports to the European Union countries amounted to 1332.4 million USD, which represent 65.14% of the total value of Moldovan exports. Out of the total volume of exported goods, the share of food and live animals was 293.0 million USD, beverages and tobacco products - 45 million USD, accounting for 338.1 million USD, or 25%.

In this context, the Republic of Moldova has made significant efforts to comply with European Union regulations and standards. A number of measures have been taken on the construction and endowment of four border inspection posts within the National Food Safety Agency, the reconstruction of the Agency's premises and the provision of the necessary equipment, as well as the provision of assistance in the field of food safety.

However, according to the data of audit missions, harmonization and implementation of the national legislation remains slow, and diagnosis and food quality assurance skills are still insufficient.

At the same time, there are some deficiencies in the Moldovan legislation, including the market surveillance and food safety system, there is no sustainable and relevant policies that would ensure organization and coordination of actions aimed at guaranteeing food safety and quality of food production.

Consequently, measures are needed to recover delays in strengthening both food safety competences and harmonization of the national legislation with the Community acquis.

As regards the economy development, the public sector needs support in asserting the agriculture and food sector's sustainability, improving statistical data and analytical capacities.

To increase the quality of Moldovan horticultural production, it is necessary to invest in research, but also in harvest, post-harvest and in processing infrastructure, thus to increase the export capacity of the country.

For this purpose, the external partners allocate funds for development of production and export capacities of the local agricultural producers. The audit of the Restructuring Program of the wine sector "Filiera Vinului", which aimed at restructuring and establishing vine plantations, modernizing wine-making processes, laboratories for wine quality testing, can be used as an example.

Although 44.3 million Euro has been disbursed, the audit has identified a number of difficulties in the wine sector, which affect the reliability of the Program's results and the expected effect.

The findings of the audit missions in some cases denote inefficiency of external funds’ use, presence of waste cases, delay in execution of works, establishment of non-quantifiable performance indicators, failure to use the goods procured within the implemented projects. All this reduces the performance and impact of interventions funded from donor sources. Some of the external assistance is directed to operational activities (feasibility studies, foreign experts, training) or compensatory activities (for example, support for agricultural producers to compensate losses as a result of the embargo imposed by the Russian Federation). Thus, investments from external sources do not always have a sustainable and tangible impact.

The external financial assistance to the Republic of Moldova is implemented on the basis of the principles of good financial management and cooperation is envisaged in order to protect the financial interests of the European Union and of our country. Preventing and combating fraud, corruption and any other illegal activities have an important role in the financial assistance agreements.

Ensuring good management of European funds is an essential element to be taken into account when allocating financial resources. In this context, it is important to regularly check that operations financed from external funds have been properly executed and that all appropriate measures have been taken to prevent and remedy irregularities or fraud.

The audits of European funds shall examine legality and regularity of the expenditure related to the implementation of the European Union funds and shall verify that a good financial management has been applied. These relate to both the assumed commitments and the made payments.

It is worth mentioning that the CoA conducts the external financial audit activity in accordance with the International Standards of Supreme Audit Institutions (ISSAIs). In the future, in my view, the CoA will have to address more often performance issues such as obtaining the expected results and impact. Greater emphasis will be placed on identifying and promoting positive examples and best practices in matter of external fund use as well as in matter of implementing national policies and strategies.