VI. EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6.-8. November 2006, Prague

1

SUPREME AUDIT OFFICE CZECH REPUBLIC

Audit of funds spent on cleaning-up flood damage

VI. EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6.-8. November 2006, Prague

2

Forms of state aid

1. Non-refundable

2. Refundable

3. State guarantees

Implementation of state aidImplementation of state aid

State aid is implemented by means of support for selected programmes based on the development concepts for individual sectors (state policies) and approved by the state budget act.

It includes: - support for small and medium- sized enterprise

- transport networks development

- protection of the environment

- cleaning-up the consequences of natural disasters etc.

VI. EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6.-8. November 2006, Prague

3

Catastrophic floods in the Czech Republic in August 2002:

Scale of flooding - 40% of territory affected

- 6% of territory completely flooded

Damage caused - approx. CZK 70 billion

(transport infrastructure, sewers, water mains, agricultural land,

private property,…)

Sources of financing for the clean-up of flood damage

• State budget

• State funds

• European Union programmes

• Credits from the European Investment Bank

VI. EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6.-8. November 2006, Prague

6

Audit of the management of state budget finances earmarked for flood damage

clean-up

• Ministry of Transport

• Transport Infrastructure State Fund

• Ministry of Agriculture

• Ministry of the Environment

• selected beneficiaries

VI. EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6.-8. November 2006, Prague

7

Presentation theme

• Aims of the audits

• Expected risks

• Problematic legislation or auditees

• Results of the audits

• Response from auditees

VI. EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6.-8. November 2006, Prague

8

Aim of the audits:

• To scrutinise the management of state budget funds earmarked for flood damage clean-up

VI. EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6.-8. November 2006, Prague

9

Expected risks:

• Overvaluing of damages

• Obviation of the act on public contracts

• Buildings that were already damaged before the floods

• Use of funds not just on flood damage

VI. EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6.-8. November 2006, Prague

10

Problematic legislation or auditees:

• Time limits too short in regulations

• Cooperation between two co-proprietors (Railway Infrastructure Administration and Czech Railways) in cleaning-up damages on railways

VI. EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6.-8. November 2006, Prague

11

Results of the audits:

• Abuse of award to single candidate: NO

• Overvaluation of damages: YES

• Buildings damaged before floods: YES

• Use of finances not just on flood damage: YES

• Performance of other work than repairs

• Insufficient control

VI. EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6.-8. November 2006, Prague

12

Evaluation of the audit work

• Ministry of Transport:

- 105 actions audited (18% of the total in terms of number; 33% in terms of costs)- serious shortcomings found in 24 actions (i.e. 23% of audited actions)

• Ministry of Agriculture and Ministry of the Environment:- 20 actions audited (7% of the total in terms of number; 15% in terms of costs)- shortcomings found in 16 actions (i.e. 80% of audited actions)

VI. EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6.-8. November 2006, Prague

13

Responses from auditees:

• Rejection of audit findings

• Acceptance of audit findings

• Adoption of remedial measures

VI. EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6.-8. November 2006, Prague

14

Questions

Comments

Discussion

VI. EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6.-8. November 2006, Prague

15

VI. EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6.-8. November 2006, Prague

16

www.nku.czwww.nku.cz

Thank you for your attention

Vladimír SloupVladimir.Sloup@NKU.cz

Phone: +420233045146