Court of Accounts
Republic of Moldova
On April 12, the Court of Accounts of the Republic of Moldova examined the Audit Reports of the Financial Reports of the Territorial Administrative Units in the Straseni District: Level II - the District and Straseni Budget Level I and the Bucovat to the situation of 31 December 2018.
The overall objective of the audit engagement was to provide reasonable assurance that the financial statements are not affected by material misstatement and the entity's executive authorities ensure that the reporting is accurately presented in accordance with the financial reporting framework.
For the year 2018, the budgets of the audited entities were executed in total at revenues of 261.4 million lei, to non-financial expenses and assets and 237.6 million lei respectively.
The total assets recorded in the balance sheet of the authorities audited on 31 December 2018 amounted to 447.7 million lei.
During the audit mission, the entities undertook a series of measures to bring the fixed assets groups into line with the regulatory framework, while their reporting on 31 December 2018 also included a number of non-conformities, including:
1. Distortion of fixed assets as a result of the increase in the value of fixed assets:
• the value of capital repairs amounting to 42.6 million lei, not belonging to the Straseni District Council;
• with the value of the capital investments in assets under execution amounting to 5.5 million lei, related to the reception of some works at the management's Office;
• by 220.1 thousand lei in the management's Office and by 17.9 thousand lei in the City Hall of Straseni, due to the unwarranted increase of the value of the executed works indicated in the minutes of execution of the works.
2. The decrease in the value of the constructions under execution resulted from the exclusion from the registry of the management's Office of the works in the amount of 12.5 million lei made for the goods not belonging to the council, but to the Straseni municipality, in the absence of the delivery act of the work to the owner of the goods. As a result, the city hall of Straseni reduced the value of the buildings of the educational institutions by 7.0 million lei and the special constructions by 6.7 million lei, which conditioned the non-payment of the annual wear and tear in the amount of 0.9 million lei;
3. Also, the incorrect classification and reporting of fixed assets by an increase and respectively by diminishing in the amount of 2.1 million lei to the entities within the council, by 3.7 million lei at the city hall of Straseni and 1.0 million lei at the city hall of Bucovat.
4. Entities have not evaluated and reported evidence of public property:
• at the management's Office - 133.1 ha and 9.48 ha, respectively, of special constructions (roads) in normative value of about 171.9 million lei and of the buildings of district interest of about 12, 2 million lei;
• in Straseni - with a surface of 1405 ha, amounting to about 516.0 million lei;
• in Bucovat - with an area of 273.3 hectares amounting to about 263.5 million lei.
5. No special buildings in Straseni were reported as 151 streets with an area of 91.46 ha; in Bucovat - 22 streets. There are not delimited and recorded in the real estate register 20 roads of 83.2 km, in the management office.
6. The reporting of the value of assets in the form of capital participations in the founding entities is not supported by supporting documents and analytical evidence of the value of the assets invested in the enterprises founded by the Straseni in a total amount of 82.8 million lei and by the Straseni municipality the amount of 41.0 million lei.
Although, on December 31, 2018, 2 municipal enterprises were liquidated: the Straseni Thermal Networks with the capital value of 11.1 million lei and the Production Department for Communal and Housing by 18.4 thousand lei, these economic facts were not recorded in the accounting records.
Also, according to the municipality's records, the value of the assets transferred to the founding companies was not reported at about 59.5 million lei.
Administration of management and control powers is not fully exercised by the authorities. The value of the Codru resting camp is 21.9 million lei, including the value of the buildings 2.0 million lei, the sewage treatment plant 7.0 million lei and 12.9 million lei the capital investments under execution. For capital investments amounting to 12.9 million lei, the Education Department as an investor did not provide the reception at the end of the works (2016) and the final acceptance of the object, respectively. Although the commission did not acknowledge receipt at the end of the works (due to non-compliance with building laws and regulations), the executive authority of the District Council for three years did not undertake any finalization measures, the subject being at risk of deterioration. Thus, the good execution guarantee in the amount of 389.4 thousand lei was returned in the absence of the legal basis.
Due to admitted irregularities, which were not taken into consideration by the management's Office, the value of the means of transmission was denatured by a total of 1.6 million lei, including by an increase of 772.1 thousand lei: the value of 2 pumps paid and not installed in Micauti-Straseni water supply; by an increase of 209.6 thousand lei: exaggeration of the value of construction works found to be non-executed by the State Inspection in Construction; by diminishing by the amount of 636.2 thousand lei due to the complete non-registration of the value of the executed capital works.
The audit mission found the non-assurance of the compliance of the public-water infrastructure for the gas networks. The manager's office does not have, for 13 objects registered with the value of 25.1 million lei, mandatory annual inventories for the exhaustive quantitative and value authentication of the public property networks. There was no record of the 3.2-kilometer medium pressure gas network (Divertis Center).
It was not ensured the collection of the water tax, delivered by the "Straseni Canal Water" to an economic agent bottling it, which affected the revenues of the district budget for the year 2018 in a total amount of 104,600 lei. It is not justifiable the payment of the tax for the periods of previous years.
The Education Department increased the value of repair works for a building made by the tenant from 176.4 thousand lei to 518.4 thousand lei, reflected in the absence of approval by the council as payment for the rental of the real estate. At the same time, the size of the lease payment has not been set legally, being cumulatively reduced to the situation as at 31.12.2018 in the total amount of 416.3 thousand lei.
When performing public spending on the budget of the district, the institutional competences delimited were not taken into account. Thus:
• the transfers with special destination for the road infrastructure in 2018 were approved and used on the basis of the decision of the non-conforming council, for roads other than those stipulated in the law, with expenses of 2.2 million lei, which were to be borne by the LPA level I to which these roads belong.
• in the absence of competencies, for the reparation of the roads from the rayon budget was additionally allocated the sum of 1.3 million lei and received works of the local roads in Straseni.
The existing distortions that influenced the accounting and reporting of the accounting elements for the Straseni budget were determined by:
• non-registration of the public property stock with the value of 6.4 million lei, including 2.5 million lei identified by the audit; of the Codru Hotel building worth 1.2 million lei;
• the non-valuation and non-accounting of the natural resources of Straseni municipality related to the forest fund with a total area of 339.5 ha, including 133.5 ha with a value of at least 1.7 million lei.
• The value of the infrastructure related to the water supply system is not real, the value of the fixed assets being increased by at least 122.7 thousand lei, as evidenced by goods in the amount of 10.4 thousand lei, including the execution of the reconstruction works to the power supply network of water by diminishing the value of the object by 48.0 thousand lei; due to the removal of the 700 m / l metal pipe in the value of 74.7 thousand lei (13 pipes of 7.5 m / l worth 10.4 thousand lei, which are not taken at evidence from October 2017).
• The estimated budget and the inclusion of incomes in the financial statements is not ensured through the use of data relevant to the tax base, and the reflection of debt and debt balances does not affect the budgetary discipline and does not give the financial statements a true picture.
• The City Hall of Straseni did not ensure the reporting and the proper use of the special-purpose transfers for the year 2018 in the amount of 1.9 million lei;
• The reporting of expenses and revenues from the delivery of thermal energy delivery services was not ensured by the Straseni municipality authority, conditioned by the established difference of 3.4 thousand m2 between the heated surfaces and the actual data used for the calculation of the services, being unjustifiably burdened by the budget of the Preschool institutions in the amount of 375.1 thousand lei.
• The erroneous application of some norms regarding the remuneration of the work of the staff determined the non-conforming budget expenditures, which contributed to the increase of expenditures in 2018 in the amount of 201.7 thousand lei in Straseni and 361.5 thousand lei to district council subdivisions.
Record and report accounting items for the budget for Bucovat was influenced by:
• The waste water treatment plant (TOPAS 75PF), received in May 2017 and in operation, was not accounted for to the amount of 964.4 thousand lei.
• 5 buildings (including a community center involved in the public activity of LPA) have not been accounted and evaluated.
The irregularities mentioned in this audit mission reveal unsystematic practices in institutional and financial management, which led to the contrary opinion given for the financial reports submitted to the local budget of the second level and the municipality of Straseni, and a reservation with the town hall Bucovat.
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