The Court of Accounts carried out the audit mission at the Ministry of Economic Development and Digitalization

The Court of Accounts of the Republic of Moldova (CoARM) examined, on May 21, the Audit Report of the consolidated financial reports of the Ministry of Economic Development and Digitalization (MEDD) concluded on December 31, 2023.

At the end of 2023, the patrimony managed by the Ministry of Economic Development and Digitalization and its subordinate entities, in terms of existence and material composition, amounted to 21.8 million lei. Revenues amounted to 489.6 million lei. External loans amounted to 204.5 million lei, and expenses totaled 692.4 million lei.

During the meeting, the main observations were presented, which were the basis for issuing the audit opinion with reservations:

•          MEDD did not record in its accounting records the value of the buildings economically managed by public institutions for self-management in a total amount of approximately 111.9 million lei;

•          the value of the social capital of two state enterprises, in the total amount of 316.4 thousand lei was not accounted for in the liquidation procedure;

•          the balance sheet value of a building was not reassessed, according to the regulatory requirements, when it was handed over for use and economic management outside the budget system, to the estimated audit value of approx. 26 million lei.

Moreover, due to the lack of specific reporting requirements information on the financial commitments generated by 1055 guarantees issued and assets from the Credit Guarantee Fund (CGF) for small and medium-sized enterprises, amounting to 1.1 billion., were not recognized and included in the consolidated balance sheet of MEDD and subsequently in the Government Report on the execution of the state budget, lei and 1044 guarantees worth about 820.9 million lei, according to the data of the partner banks, as well as the balance of the budgetary financial means of the CGF, in the total amount of 401.9 million lei. At the same time, they are to a certain extent included in the consolidated narrative report of the MEDD.

The CoARM auditors found other deficiencies, which did not influence the audit opinion, such as:

•          failure to record in the accounting records the information related to two compromised claims settled by the Grant Implementation Unit granted by the Government of Japan, successor of rights and obligations of MEDD, in the amount of 38.7 thousand US dollars, the equivalent of 672.7 thousand lei and in the amount of 114.2 thousand euros, the equivalent of 2.2 million lei. Consequently, the compromised receivables, reported in MEDD's consolidated balance sheet, in the off-balance sheet accounts, were undervalued by the total amount of 2.9 million lei;

•          the improper classification of non-financial assets led to the non-compliant registration in the accounting records of the MEDD of about 67 goods, as well as in the accounting records of the State Inspectorate for the Supervision of Non-Food Products and Consumer Protection of 8 goods, in the form of machinery and equipment, tools, production and household inventory and other fixed assets, to the accounts of the stocks of circulating materials, which eventually generated the aggregate undervaluation of of fixed assets accounts by 81.4 thousand lei.

The reorganization process of the Public Institution the National Institute of Metrology through the merger (absorption) of the State Enterprise the Center for Applied Metrology and Certification is significantly behind schedule and risks failing completely because not all the necessary actions have been taken to carry out the reorganization process.

Although the internal audit subdivision within the MEDD was to be set up in at least three staff units, the audit attested that, due to the non-adjustment of staff numbers to the applicable regulatory framework, it is constituted only by one main internal auditor unit, who was hired in November 2022. The limitation of audit activities in this way makes it conditional on the failure of the persons in charge of governance to properly manage the risks associated with the operational and financial activities of MEDD and the entities within its sphere of competence.

Finally, in order to remove the causes that were the basis of the identified distortions and non-conformities, the Court of Accounts submitted to the Ministry of Economic Development and Digitization and its subordinate institutions 7 recommendations that need to be addressed in the future periods, in order to better control the risks of distortion or compliance.

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