On June 19, the Court of Accounts of the Republic of Moldova (CoARM) reviewed the audit report on the consolidated financial statements of the Ministry of Environment as of December 31, 2023.
The ministry oversees 9 institutions which managed resources worth 514.2 million MDL, incurred expenses totaling 462.8 million MDL, and administered assets valued at 1.756 billion MDL in 2023.
The main observations leading to the issuance of an qualified audit opinion were:
- The Ministry did not evaluate and account for forest fund lands of 334.3 thousand hectares and water fund lands of 326.8 hectares, economically managed by state enterprises. The account "Shares and other forms of participation in domestic capital" was undervalued by a minimum of 3.878 billion MDL and a maximum of 24.584 billion MDL.
- Contrary to legal provisions, the Ministry included 26 buildings, part of state public property, in the share capital of 8 state forestry enterprises, overvaluing the account "Shares and other forms of participation in domestic capital" by 7.1 million MDL.
- The Ministry irregularly maintained the share capital value of 2 state enterprises in its accounting records, although the Public Property Agency, the legal founder, had recorded these values, leading to duplication and overvaluation by 4.6 million MDL in the account "Shares and other forms of participation in domestic capital."
- The Ministry did not evaluate and recognize in the accounting records 3.31 thousand hectares of forest fund lands leased by the "Moldsilva" Agency, resulting in the underestimation of the account "Lands" by a minimum of 83.8 million MDL and a maximum of 243.2 million MDL.
- Investments made in previous years for upgrading pumping stations of the Bălți-Soroca water supply system, managed by S.E. "Acva-Nord," were not transferred to beneficiaries, overvaluing the account "Machinery and Equipment" by 31 million MDL.
With reference to other issues that did not influence the audit opinion, the Court of Accounts warned about the lack of accounting policies regarding the assessment of forest vegetation (trees, forests, shrubs, etc.) that are part of public property.
According to good practice, some countries estimate the value of vegetation by the volume of timber possible to collect from the managed forests. Applying these practices, taking as a basis the data from the Forestry Planning of the state-owned forest enterprises, which are issued for 10 years, it is denoted that at the date of approval of the Forestry Arrangements the volume of the wood mass available to collect, was 39.6 million m3, during the active period a volume of woody mass of 3.3 million m3 was collected, at the situation of 31.12.2023, the balance of the unharvested wooden mass fund is 36.9 thousand m3. Applying the minimum selling price of firewood, set in the price catalogues approved by state forestry enterprises, the minimum value of vegetation (trees, forests, shrubs, etc.) would have constituted at least 27.7 billion lei.
The Ministry erroneously classified 22 special-purpose constructions with a total area of 7.5 thousand m² as "Buildings," overvaluing this account by 3.6 million MDL and undervaluing the account "Special Constructions" by the same amount.
The "Moldsilva" Agency recorded a service apartment privatized in 1995 in its accounting records on the basis of the Sales Agreement against property receipts by a natural person.
The "Apele Moldovei" Agency did not evaluate and account for 12 immovable assets with a total area of 562.3 m², reporting them at a "zero" value.
For maintaining dikes, the "Apele Moldovei" Agency received 70.6 million MDL for repair works in 2023. Among these, 389.8 thousand MDL were for tree felling, but only one contractor confirmed the volume of 324 m³ of wood obtained from felling 691 trees, handed over to a municipality without supporting documents.
Asset management issues included:
- Out of 337.6 thousand hectares of forest fund lands, property rights are registered for 53.6 thousand hectares, with 1.14 thousand hectares leased. Discrepancies between real estate register extracts and "Moldsilva" data showed 2.17 thousand hectares of leased forest fund lands, contrary to regulations.
- There were no measures taken over the years to delineate land areas with flood protection dikes and dams, risking uncontrolled alienation of water fund lands.
- The "Apele Moldovei" Agency received 49 special constructions from Technological Irrigation Stations in 2022-2023, valued at 5.3 million MDL, but rights were not registered in the Real Estate Register.
- The State Hydrometeorological Service did not register property rights over part of a building with an area of 60.6 m².
Government Decision No. 760/2020, which required the liquidation of 5 state enterprises and the transfer of flood protection infrastructure to the "Apele Moldovei" Agency, has not been implemented.
Two economic operators could not document 3.9 million MDL worth of dike repair works, specifically "Sowing grass on flat or sloped surfaces" and "Watering surfaces with a hose from a tank."
The "Moldsilva" Agency did not recover receivables for forest fund land leases, totaling 11.1 million MDL as of December 31, 2023, with 4.9 million MDL being historical receivables with a high risk of non-recovery.
The Ministry of Environment addressed some of the identified non-conformities during the audit, but these corrections did not impact the consolidated financial statements as of December 31, 2023.