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The report on the compliance audit regarding the bookkeeping, recording and managing of the public assets as well as regarding the taxing of the real estate audited by the CoARM within the follow-up mission

November 26, 2019 views 1328

 

During the meeting on the 26th of November this year, the Court of Accounts of the Republic of Moldova (CoARM) has examined the Report of the follow-up mission regarding “The evaluation of the implementation of the requirements and recommendations submitted by the Decision of the Court of Accounts nr. 2 from 13.02.2018 regarding the Report on the compliance audit regarding the bookkeeping, recording and managing of the public assets as well as regarding the taxing of the real estate”.

The general target of the mission was for the audit team to evaluate the way the requirements and recommendations of the Court of Accounts were approached and implemented, as well as the results of the implementation.

The last audit highlighted major lacks within the identification, delimitation, recording and bookkeeping of the public assets and managing the public patrimony.

In order to address the situations mentioned above, the Court of Accounts through the Decision nr.2 from 13.02.2019 has disposed 119 requirements and recommendations towards 13 entities.

The follow-up mission has determined that even though the process of implementation of the requirements and recommendations was at a low level, the entities have given their best and have achieved certain progress.

Thereby,

  • The city-halls of Soroca and Edinet have accounted real estate (public property buildings and terrains) of over 175,7 mil. lei;
  • The city-halls of Balti and Cahul have reestablished within the bookkeeping the sum regarding the settlements linked to the sale, rent and tenancy of the public assets of a value of over 19,3 mil. lei;
  • The city-halls of Chisinau, Balti, Edinet, Soroca and the Public Property Agency (PPA) have received payments of over 9,9 mil. lei for the rent and usage of the local public property terrains, that were used by individuals or legal entities;
  • Upon the request of the city-hall of Balti and the Regional Council of Dubasari, 153 immovable properties were registered in the Land Register;
  • The Balti city-hall has additionally identified 277 immovable properties (that were not assessed in fiscal purposes);
  • The Land Registry Department within the Public Service Agency (PSA) has delineated and registered over 22,1 thousand immovable properties in the Land Register;
  • There was gathered and analyzed sufficient data in order to evaluate over 201,6 thousand immovable properties.

Although there were taken all the necessary measures in order to remove the lacks determined by the previous audit, the entities did not fully strive to eliminate all of the lacks identified. Therefore, only 23% of the requirements and recommendations were implemented, 48% were partially implemented and 29% were not implemented at all.

The activity of the Cadaster and Land Relations Agency (CLRA), the Cadaster Department within the Public Service Agency and the Public Property Agency regarding the implementation and coordination of the State Programs include: creating the cadaster of the real estate, bounding the public property terrains and implementing the new evaluation system of the real estate in order to tax them and add the financial resources to the state budget. Following the evaluation of the activity mentioned above it can be concluded that there is a low level of implementing due to the lack of financial resources and to the constant changes in the institutional and legal framework. As a result, the reform of the central public authorities has dispersed certain domains that were within the CLRA until 2017. The “Cadaster” State Company has become a part of the Public Institution “Public Services Agency”, even if the main cadastral politics are drafted by CLRA. The Projecting and Organization of the Territory Institute as well as the politics regarding the bounding of the public property are already administrated by the Public Property Agency. Simultaneously, the bounding is a part of the cadastral work so the drafting of the politics in this domain is being done by the PPA as well as by the CLRA.

According to the data offered by the Cadaster Department until 01.01.2019:

  • 954,1 thousand acres of land, which consist 28,2% from all the lands, were not registered in the Land Register;
  • 5502,2 thousand assets were not rated, which consist 81,4% off all the assets registered in the Land Register;
  • Within 361 locations in Moldova the terrains linked to private houses were not registered as private property, as it is stated in the 11th article of the Land Code.

The Public Property Agency din not compile the complete inventory of the terrains that represent a public property of the state and those that are linked to the private real estates. However, the follow-up mission doubts the rightness of the data included in the lists of state’s public property terrains that are managed by the Public Property Agency, as stated by the Government Decision from mart 2019. The doubts due to the fact that there was found a total of 2 thousand acres of different terrains that have the same cadastral number. More than that, for 5,3 thousand acres of state’s public property terrains that are linked to private real estate and there was no payment received that would cover their rent usage.

The State Tax Service did not manage to assure a sufficient control over the economic agents that have real estate in usage or rent, which generates the risk of default of the budget.

Referring to the requirements and recommendations that were not implemented by the central public authorities, the follow-up mission has revealed that:

  • The city-halls of Chisinau, Edinet, Soroca and the Regional Council of Criuleni did not examine the results of the audit and the reports regarding the public patrimony administration in their meetings of the Local Council.
  • The inventory of the public property real estate was managed by entities that were only partially audited. For example, the city-hall of Chisinau did not make the inventory of 7,7 thousand acres , which lead to the lack of their registration in the bookkeeping.
  • The city-halls of Chisinau and Soroca did not assure a proper accounting of the commitments of those that have the right to use certain public property and the accounting of the debts regarding the rent, usage and disposal of terrains that value over 55,1 mil.lei, which generates the risk of not paying the liabilities assumed.
  • The city-hall of Chisinau did not take any attitude towards the recommendations given by the audit report on the contracts regarding rent of the terrains for building purposes that led to revenue failure; not completing and presenting the and cadaster to CLRA; designation of the persons responsible for registering and bookkeeping the rent, tenancy and sale-purchase contracts;
  • The President of the rayon Cahul and the Regional Council of Cahul did not take all the necessary measures in order to review the bailment agreement that was carried out in lack of transparency. The Industrial Park of Cahul and a legal entity have signed a contract that involves the bailment over a terrain of 5,9 acres and over 12 real estate that are placed on that terrain. The lack of transparency could involve the risk that the real estate might be privatized at a very low cost.
  • The mayor and the City Council of Cahul did not take the necessary measures in order to cash the damage caused to the city budget after selling a 2,9 acres territory.
  • In some other situations, the verified entities have sufficient funds to remove the lacks discovered that refer to : assuring the identification of all the real estate (including the terrains) that was not evaluated in fiscal purposes, by informing the Public Service Agency about their evaluation, including those that are rented, under lease, in usage or given into economic administration with the proper registration of all contracts; registering the public property real estate in the Land Register, according to the legal framework in the domain; confirming with the necessary documents the rent payments received and the usage of the local public property terrains.

The insufficient implementation of the recommendations of the Court of Accounts was determined by the inadequate monitoring of the public central authorities regarding the development of the state programs that involve creating the Real Estate Register, bounding the public property terrains, implementing a new system of evaluating and taxing the real estate, as well as by the lack of funds and the lack of desire of the local public authorities to put into practice the recommendations.