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Audit uncovers a lack of transparency in use of Latvian Agriculture Ministry’s money

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Unclear accounting and use of finances, council members with ties to associations assess money allocation for associations, trips to Spain and Italy for no reason, as well as hundreds of projects with no tangible results – State Audit (SA) assess use of finances in Agriculture Ministry’s (AM) funds.

SA has concluded that there are significant differences in administration of finances among AM funds. The biggest differences are found in the management approach for Forest Development Fund and Hunting Development Fund.

The ministry also finances forest, hunting and fisheries-related projects through its funds. Every year the ministry allocates nearly EUR 2 million to them. Part of this amount is also provided to NGOs and different public awareness raising projects, SA explains.

AM’s funds were formed in the past from formerly existing special budgets. Ten years ago it was recommended to assess the usefulness of existing funds, but this still has not been done, SA notes.

The recent audit revealed flaws with allocation of funding and its monitoring in two out of three surveyed funds. Evaluation of operations performed by the three funds revealed unequal attitude towards project implementers both in regards to conditions for provision of support and control of the use of funding and results of projects, SA reports. No major problems were found in the Fisheries Fund.

Forest Development Fund’s largest volume of financing and the highest project submission activity was noted for donations of Latvian State Forests. Since 2005, Latvian State Forests has been making annual donations to Latvian sports, culture, education and science, social care and environmental organizations. In spite of results of public surveys, which invite diverting donations to social goals or charity, approximately two million euros out of around four million euros are allocated to sports events every year. Only EUR 800 000 are regularly allocated to the Forest Development Fund, SA reports.

The audit concluded that the supervision, project conditions and evaluation process for Latvian State Forest’s donation to Forest Development Fund is unclear and financing allocation principles are impossible to track. Certain projects did not have any co-financing from associations involved.

Major problems were found in the management of Hunting Development fund. Six out of seven advisory council members there in charge of project submissions represent or are closely related to associations and institutions that submit project proposals. SA believes that the large ratio of submissions associated with projects create risks for support of projects.

Every year approximately EUR 70 000 are allocated to two of the largest hunting associations even though projects of one associations are implemented using a company associated with the association’s head. This denies the options to look at actual costs of projects, SA notes. The money is mainly allocated based on associations’ own beliefs on the number of tasks, content and necessary funding, SA adds.

Hunting Development Fund’s project documents are not checked by the Rural Support Service or Agriculture Minister. Project implementers are not obligated to submit any accompanying documents, undergo inspections on site, and the information in documents is not clear and sufficient enough. In the performed audit, SA questions the usefulness of several inspected costs.

For example, the average cost of organizing a business trip for a single worker, regardless of the country and number of days to be spent on business trips is EUR 800. Experience exchange trips to Spain and Italy have been organized for several consecutive years without submitting information about goals and consecutive results. Cases were also uncovered when several receipts were prepared for the same business trip, which were also approved by the ministry for no reason.

Over more than a decade state support has helped implement hundreds of projects for forest, hunting and fisheries industries, including documentaries, programmes, books, seminars and conferences. However, information on results is either limited or completely inaccessible.

SA urges Agriculture Ministry to increase transparency, objective assessment of projects, control over use of funding and openness of information regarding results of different projects.


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