Home / Press Room / News / The Court of Accounts audited the financial statements of Cruzesti and Durlesti District

The Court of Accounts audited the financial statements of Cruzesti and Durlesti District

February 27, 2019 views 1688

 

The Court of Accounts of the Republic of Moldova examined at the meeting on February 27, the Report on the audit of the financial reports of Cruzesti District, concluded on 31.12.2017 and the Report on the audit of the financial reports of Durlesti District, concluded on 31.12.2017.

Report on the audit of the financial reports of Durlesti, concluded on 31.12.2017

Durlesti district is an administrative-territorial unit of the first level in the municipality of Chisinau with an area of 3087 ha and about 17600 inhabitants. The Court of Accounts audited the financial statements of Durlesti for the year ended December 31, 2017. Following the accumulation of audit evidence, a contrary opinion was issued, determined by the effect of the distortions related to: the balance sheet at December 31, 2017 - in the amount of 710.1 million lei; the actual expenditures amounting to 1.9 million lei and the revenues in the amount of 2.6 million lei.

At the same time, the audit determined that, within the town hall Durlesti did not set up the financial management and control system, which was confirmed by: the non-identification and non-description of the operational processes descriptions; not defining and not describing control procedures and actions; lack of risk assessment and monitoring activities, etc., which has influenced the veracity and completeness of the information reflected in the audited financial reports.

The value of fixed assets was denatured by the amount of 266.1 million lei, determined by the incorrect classification and registration of fixed assets; not increasing the amount of fixed assets by the amount of the capital repair costs, classified incorrectly as current expenses; the increase in the value of machinery and equipment as a result of the double recording of transactions; failure to recognize and underestimate the value of road and pavement infrastructure.

Significant distortion of the financial report was also determined by the non-recognition and non-evaluation of land with an area of 687.82 ha, estimated by the audit team amounting to about 444.1 million lei.

The town hall of Durlesti reported, as subsidies, the expenditures for the cleaning services of the main streets in Durlesti city, executed in 2017, amounting to 938 thousand lei by the "Regia Autosalubritate Durlesti". According to the legal provisions, the sanitation and greening of the locality is a public service of communal household, to be transmitted in direct management or delegation of management, based on a contract. The town hall does not have a direct delegation contract or a service contract with the IM „RAD”. Thus, it is not clear what services to be provided by the IM "RAD".

The lack of information on the value of the tax base on real estate tax and other irregularities found by the audit, permit the loss of revenue in the local budget from property taxes.

During the audit mission by Durlesti City Hall the following irregularities were remedied:

  • appropriately classified fixed assets and working materials amounting to 1.6 million lei;
  • the wearing of fixed assets in the amount of 1.2 million lei was calculated and recorded in the bookkeeping;
  • there were registered in the accounting books streets with the area of 904 thousand m2 amounting to 257,4 million lei and pavements with the area of 9,3 thousand m2 in the value of 5,4 million lei;
  • inventory of material was restored in the accounting records, passed to expenses in the amount of 0.5 million lei.

Report on the audit of the financial reports of Cruzesti, concluded on 31.12.2017

The purpose of the audit mission was to obtain reasonable assurance that the Cruzesti financial reports related to the budgetary process and public property management are prepared and presented in accordance with the applicable financial reporting framework, with the issuance of an audit opinion.

As a result of the accumulation of audit evidence, the Court of Accounts issued the contrary opinion, which was determined by the effect of the significant distortions related to: fixed assets, decreased by 8.20 million lei; of wear and tear, diminished by the amount of 4.29 million lei; lands, underestimated by the amount of 39.5 million lei; receivables, diminished by the amount of 0,05 million lei; debts, diminished by the amount of 0.26 million lei; of the actual expenditures, increased by the amount of 0.27 million lei and the actual revenues, diminished by the amount of 0.13 million lei.

Thus, balances on some items in Cruzesti's balance sheet do not present truthful and faithful information, being caused by:

  • decrease of the value of special constructions with the amount of 8.32 million lei, due to the incorrect classification of machinery and equipment and the non-recognition and unaccounted of the capital repair works, influencing the veracity of the actual expenditures;
  • underestimation of the value of buildings by 0.16 million lei, due to the incorrect classification of capital investments in assets under construction and the non-inclusion of the value of the works for installing the fire signaling system;
  • overvaluation of the value of other fixed assets by 0.69 million lei, due to the incorrect classification of transmission facilities, non-material assets and assets under execution;
  • the decrease of the fixed assets' wear with the amount of 4.29 million lei, due to the non-recognition and unaccounted of the special constructions and equipment wear and its incorrect determination;
  • non-recognition and non-evaluation of 146.55 ha lands, amounting to 39.5 million lei, which determined the decrease of the value of the lands managed by the Cruzesti, etc.

The audit mentions that, during the audit mission, the Cruzesti City Hall took some actions to remedy the deficiencies found. So:

  • carried out the inventory and evaluation of the special constructions related to the roads worth 8.14 million lei, including the related wear and tear - of 4.31 million lei;
  • decreased the value of the non-material assets by 6.6 thousand MDL;
  • carried out the inventory of the local public lands owned by Cruzesti, being reevaluated land amounting of 21.73 million lei and valued in the amount of 17.73 million lei;
  • regularly classified some fixed assets, increasing the value of "Buildings" and decreasing the account "Other Fixed Assets" by 94.56 thousand lei;
  • issued provisions on the establishment of the working group for the implementation of the managerial internal control as well as the designation of the coordinator responsible for organizing, coordinating, supporting, supervising and reporting the implementation of the managerial internal control within the entity.

We would like to mention that the audit evidence obtained shows that the audited financial statements of the audited city halls, concluded on 31.12.2017, do not provide a true and fair view of the patrimonial and financial situation and are sufficient to express the contrary opinion.