WITH DEFICIENCES OF VIEW
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The Court of Accounts of the Republic of Moldova, on May 25, examined the Audit Report on the consolidated financial reports of the Ministry of Justice concluded on December 31, 2021 and the Performance Audit Report of the Project "Construction of the Chisinau Penitentiary".
The purpose of the external public audit was to provide reasonable assurance that the consolidated financial statements of the Ministry of Justice as at 31 December 2021 do not contain, as a whole, material misstatement due to fraud or error and the issuance of an opinion.
For the year 2021, the Ministry of Justice was approved allocations in the amount of 934.8 million lei, which during the year were specified in the amount of 820.4 million lei, or 114.4 million lei less. The execution compared to the specified plan was carried out at the level of 93.8% (769.6 million lei).
Generalizing the findings that were the basis for issuing the audit opinion, the following deficiencies are revealed:
- Failure to apply the general rules of valuation and registration in the case of 35 plots of land with a total area of 82.02 acres by 12 institutions subordinated to the National Administration of Penitentiaries conditioned the significant distortion of the balance of the subclass "Non-productive assets", which was underestimated by 105,9 million lei
- The non-capitalization of the value of the capital repair works of buildings and other objects reconstructed/repaired by 9 penitentiary institutions subordinated to the National Administration of Penitentiaries, determined the overestimation of the balance of capital investments in progress by 44.5 million lei, the undervaluation of buildings by 45, 3 million lei and special constructions with 6.2 million lei
- The cancellation and the irregular transfer to expenses by the National Administration of Penitentiaries of the stocks of circulating materials conditioned the overestimation of the balance of the subclass “Goods-expenses regarding the use of stocks” by 7.7 million lei.
The audit found non-compliance with labor law by the Ministry of Justice and the National Probation Inspectorate, which caused the initiation of legal disputes and reinstatement of persons by court decisions, with additional budget costs amounting to 1.1 million lei.
The non-application of the general rules of valuation and registration by the National Probation Inspectorate of 6 real estates with a total balance sheet value of 0.7 million lei did not ensure their regular accounting, being registered as a single object in the accounting records. Also, 75 buildings and constructions with a total area of 7572.2 m2, without the balance sheet value, were not regularly evaluated and registered by the Ministry of Justice, the National Administration of Penitentiaries and 7 subordinate institutions, as well as the National Probation Inspectorate, which affected the balance of the "Fixed Assets" subclass in the consolidated financial statements.
In 2021, within the Ministry of Justice there was a low level of execution of capital investments, the audit identifying some problems and deficiencies in the processes of construction and reconstruction of investment objectives, not capitalizing the budgetary resources for capital investments in the total amount of 121,0 million lei, allocated for the construction and reconstruction of courthouses and penitentiaries.
Regarding the achievement of the investment objective "Reconstruction of Penitentiary No. 10 - Goian", the audit revealed that, although at the end of 2019 the construction and reconstruction works worth 38.2 million lei were completed, by the end of 2021 the final acceptance of the works was regularly not carried out, as well as the commissioning of the object.
Regarding the construction works for the investment objective "Construction of the Bălți Detention Center", it is noted that the second stage of the execution of the works is to be initiated after the procurement procedure, during 2021 being contracted the services of updating the documentation of design related to the second stage of construction, in the amount of 1.3 million lei, the expertise report being presented to the contracting authority by the end of December.
Based on the above findings, the Court of Accounts states that the audit evidence obtained was sufficient and adequate to provide a basis for expressing a qualified opinion on the consolidated financial statements of the Ministry of Justice concluded on 31.12.2021.
With reference to the Audit Report on the performance of the Project “Construction of the Chisinau Penitentiary”, the Court of Accounts finds the following.
The project "Construction of the Chisinau Penitentiary" was initiated in order to contribute to the achievement of the Government's objective of improving detention conditions and ensuring new standards in terms of safety, security and discipline, in accordance with international norms and standards. In the social aspect, the project is intended to contribute to the modernization of the main pre-trial detention institution in the country, introducing a new managerial approach, aimed at improving the treatment of detainees, reforming the organization and management of prisons.
The needs of the Chisinau Penitentiary Construction Project, which was initiated in 2013, were financed through the following sources: (i) the 49 million EUR framework loan agreement; (ii) The contribution agreement, amounting to 1 million EUR and (iii) The contribution of the Government of the Republic of Moldova, amounting to 6.8 million EUR. Of the total sources of financing and project costs of 56.8 million euros, the major share belongs to the loan of 86.3% (49.0 million EUR), followed by the Government contribution of 11.9% (6.8 million EUR) and the 1.8% grant (1 million EUR).
In order to assess the performance of the Chisinau Penitentiary Construction Project, taking into account the risks identified at the planning stage, the external public audit verified the actions taken by the institutions responsible for implementing the project and capitalizing on the financial resources allocated in 2014-2021.
The audit observations show that the problems and shortcomings, which affected the efficient and effective implementation of the Chisinau Penitentiary Construction Project, relate to:
- Failure to establish the attributions and responsibilities of the Ministry of Justice, as well as the competences of the National Administration of Penitentiaries on the activity of the Implementation Unit of the Construction Project of the Chisinau Penitentiary (IUP) within the project
- Late establishment of the IUP and selection of persons who did not meet certain qualification criteria in the competitions to fill the vacant posts
- The non-functionality of the procurement working group and the functional inability of the IUP to ensure the implementation of the project activities, as a result of the resignation of the manager and other employees of the IUP
- The technical assistance services contracted by the IUP within the project were of poor quality and were delayed, which did not contribute to supporting and consolidating its management capacity.
The management and control system set up within the Ministry of Justice and the IUP was not fully functional and efficient to ensure the achievement of the project objective and the achievement of the expected result. The construction works of the penitentiary have not yet been initiated, although, according to the Loan Framework Agreement, the construction works were to be completed on December 31, 2017, and the commissioning of the penitentiary was planned for July 2018, the project implementation deadline. expiring on December 31, 2022.
The problems and deficiencies found by the external public audit in carrying out the project activities compromised the full implementation of the planned objective, conditioning a low level of disbursement of financial resources from the external sources of financing of the project. Thus, out of the total value of the loan of 49 million euros, only 0.7 million euros, or 1.4%, were disbursed. The capitalized balance of the disbursed amount amounted to 0.6 million EUR, or 85.7%, the unrecovered balance amounting to 0.1 million EUR, or 14.3%.
Therefore, the level of disbursement of financial resources from the external sources of financing of the project is only 2% of the total value, or 1 million euros, and the capitalization of the funds from all sources of financing of the project is 3%, or 1.7 million EUR, due to the lack of progress in starting the construction works.
The deficiencies found in the implementation of the project conditioned the increase of the estimated costs for the construction of the penitentiary by 12.3 million euros, the bearing of the expenses from the state budget in the form of interest of 27.7 thousand euros for servicing the loan, as well as the increase of the expenses for the remuneration of the IPU staff by 7 million lei, following the extension by the BDCE of the project term.
In general, it is concluded that the actions taken by the responsible institutions did not contribute effectively and efficiently to the implementation of the Chisinau Penitentiary Construction Project, which affects the achievement of the Government's objective of improving detention conditions.
