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Tuesday 26.03.2019 | Name days: Eiženija, Ženija

State Auditor: penalties applied in Latvia are toothless; matter on enforcement of losses remain unresolved

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU«We have found that whenever we turn to people to enforce the losses caused by their illegal activities, the process transpires in a somewhat toothless manner. The guilty are usually offered a reprimand or are outright dismissed from their posts. In many cases we see institutions take their time with internal investigations until a statute of limitations enters in force. Matters of enforcement of losses remain completely unresolved,» said State Auditor Elita Krūmiņa in an interview to BNN.

Why is a situation in which those responsible of wasting state money remain unpunished and the losses caused to the budget remain unenforced possible in Latvia? How should it be addressed?

Institutions’ desire and readiness to evaluate their own responsibility whenever violations are uncovered is a very important topic for us. It is important because the feeling of impunity only encourages future violations. Even now State Audit’s duty is reporting different violations uncovered in audits to proper authorities. Thanks to State Audit’s initiative and unyielding dedication, cooperation with authorities has improved significantly. This is proven as much by the number of criminal cases currently processed by courts. The number of violations reported by State Audit and which end up with guilty verdicts in courts is also on a rise.

However, not all cases in which state officials or public administration workers had acted illegally using state or municipal finances can be classified as ones that need to be investigated by law enforcement institutions. Institutions should perform internal inspections in accordance with existing legislation. We have found that whenever we turn to people to enforce the losses caused by their illegal activities, the process transpires in a somewhat toothless manner. The guilty are usually offered a reprimand or are outright dismissed from their posts. In many cases we see institutions take their time with internal investigations until a statute of limitations enters in force. Matters of enforcement of losses remain completely unresolved

Because institutions are too lax with recovery of wasted resources from those responsible, we believe it is necessary to increase the State Audit’s authority on enforcement of losses caused to the state as a result of illegal activities. Unfortunately, amendment to the State Audit Law did not seem important to the 12th Saeima, and we have yet to see any enthusiasm from the parliament to work on resolving this problem.

But we have no desire to let this topic slip out of our sight. Waste of public funds and property ought to be punished by enforcing the losses from the guilty person’s own wallet, as the law demands it. If we want to make sure any person put in charge of state and municipal money and property to act responsibly, amendments to the State Audit Law are needed.

Just recently you claimed that often things in state administration are done ‘just because’ – without any enthusiasm or interest for the result. Why do you think things are this way in Latvia?

Too often we have to conclude that the weak spot of public institutions is defining goals and looking to see if what is done complies with said goals. And even if goals have been established, often there is a lack of clear and tangible criteria the institution can use to judge if what employees do in their day-to-day fits the priority goal at all.

The reason for low interest is also the insufficient focus on results. If workers lack positive motivation and they know that there will be no consequences, the desire to put effort disappears.

Who benefits when procurement processes are organized in accordance with legislation but never reach their desired result?

In any case – this is not beneficial to society, which entrusts public administration with its taxes. Any procurement process or other act that uses state or municipal finances must be performed in accordance with the law, but it is no less important to follow processes to make sure goal are achieved. For example, State Audit has mentioned several times that governance of major investment projects in Latvia is rather flawed. If unprofessionalism is to blame, officials should learn and search for solutions, but if its unwillingness – authorities should assess their responsibility.

As for services necessary for the state – why do you think state budget funds are allocated but no always used for the stated public needs? Do you think state and municipal funds in Latvia are used honestly?

State Audit provides its expert opinion on these matters every year by performing audits in central government institutions and evaluating annual accounts. Too often we face situations when money is requested for publicly important goals but is then divided and used to cover costs not associated with the initial goal. State Audit believes such practices are unacceptable.

Why does this happen in the public sector? A good manager will always consider where and how he invests finances and what returns he can expect. It is hard to imagine such a situation in private business sector. Part of the answer is definitely associated with the aforementioned topic of responsibility and focus on result.

Which of Latvia’s ministries did not inspire a sufficiently clear impression on the institution’s financial state, money flow and financial results in previous years?

Speaking in terminology used by auditors, not a single opinion with objection was provided in audits in 2015. Nevertheless, we did emphasize cases with major violations of regulations in several ministries and central government institutions. These include Education and Science Ministry, National Electronic Mass Media Council, Environment Protection and Regional Development Ministry, Healthcare Ministry, Agriculture Ministry, Interior Affairs Ministry and Culture Ministry. In 2016, objections were given to Defence Ministry, Education and Science Ministry, Environment Protection and Regional Development Ministry, as well as Corruption Prevention and Combating Bureau, whereas in 2017 – Defence Ministry, Education and Science Ministry and Healthcare Ministry.

Can you blame legislators or see any flaws in the work they do? In which fields does the State Audit uncover problems the most often?

Over the course of audits, going into different fields, we see that regulations are often imprecise, and we would rather see more clarity about legislators’ true goals. But this does not take the blame away from those who apply those regulations! If regulations are unclear, they should be changed. It is also unacceptable if we use only one part of a law because we like it more.

How would you comment on officials’ work after State Audit uncovers violations? In which cases do you face the strongest counter-reaction?

Although society mostly focuses on uncovered violations in audit reports, any auditor will tell you – the most important result of work for State Audit is the advice provided to the audited institution after.

Public reaction can be different, after all – who likes being criticized? This is why an auditor’s look from the side often becomes the decisive external piece of motivation for institutions to review their activities and think if what they do with state money and property can be made more efficient, reasonable and beneficial. Often violations and disorders are prevented during the audit. This makes us happy.

Looking at international practices – any higher audit institution always pays more attention to those who do not want to understand that money allocated for public finances should be used more carefully. Our goal is not publicly punishing or humiliating anyone. We expect courage from people to accept responsibility and readiness to fix errors. I have always said – State Audit of the Republic of Latvia carefully supervises those who do not want to work better and assists those who do.

We go with the times and create new products to help sort out work of public administrations. A simple example: during an audit on maintenance of cemeteries in nineteen municipalities, we noticed similar problems in almost all of them. Auditors prepared a self-assessment questionnaire, one we presented to other municipalities. We offered a simple tool to help municipalities view their work from the side without waiting for State Audit to appear. We have received word from a municipality that has used this tool just recently and had performed the necessary changes for cemetery management. Residents of the municipality benefited from this active and responsible decision.

The number of audits – is it sufficient? Do you have enough resources to do everything accordingly?

Let digits speak for themselves. State Audit performed 46 audits in 2017. A total of 68 reports were compiled. It was roughly the same in previous years. Is it a lot? The State Audit Law states that we are to perform audits on use of finances by state, municipal administrations and commercial associations, as well as EU and other international institutions.

This means the number of institutions up for audit is considerable. This is why responsibility of each separate institution’s head in the proper use of state finances and property in accordance with the law is all the more important. The role of State Audit: using audits to improve and educate the public sector’s understanding of good management principles and their importance. We organize seminars and workshops, share positive experience and invite institutions to do the same. Learning for others’ mistakes is less painful than learning from our own. Our goal is ensuring for this understanding to grow.

Time stops for no one – all industries continuously develop, and our auditors have to keep up as well. Auditors have to look into all kinds of topics in a short amount of time, from healthcare to cyber security, from education to transport infrastructure and taxes. That’s nothing simple, but it is interesting. This is why our doors are always open to young and knowledgeable people who want to improve our country’s quality of life and contribute to its future. I am convinced the State Audit can contribute much.

What are the most troubling problems the State Audit should tackle in the future?

The State Audit’s role is making sure state and municipal finances are used appropriately and reasonably. Our goal is serving as a representative of society’s interests – the State Audit is the one who provides society a trustworthy opinion in regards to how state finances and property is used. The country was formed and exists to benefit its residents.

Y performing careful inspections every year, we remind the government about the importance of both improving budget planning and carefully observing the use of this money.

Municipal administrations will remain a target for our attention, because they are public governance institutions that are the closest to residents. Municipalities’ desire and readiness to sort their processes differ. We see this in audits of paid services there. During audits, we provide municipalities and all others a way to work more efficiently. Municipalities that follow our advice gradually improve their processes whereas the ones that ignore our recommendations stagnate.

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