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Court of Accounts 2016 Report: Problems at CFR, TAROM, Romanian Post and ANAF
Romania’s Court of Accounts announced, in the public report for 2016, that they discovered 21,427 financial-accounting irregularities and errors of 43.22 billion lei (9.5 billion euros), in the case of companies and authorities that manage state patrimony. The report shows irregularities in several state companies and agencies, such as CFR (passenger railway transport services), TAROM ( Romanian air transport), Romanian Post and National Agency of Fiscal Administration (ANAF).
Controls identified cases of ignoring legal regulations, with irregularities which led either to not gathering budget incomes or to producing prejudices or distorting data from financial situations.
“On the occasion of controls, 21,427 irregularities were identified, which generated additional incomes of 978.1 million lei, prejudices of 687.6 million lei or financial-accounting errors of 43,225 million lei. Compared to 2016, the volume of irregularities dropped by 35% and prejudices produced to public budgets dropped by 62.72% compared to the previous year,”the report shows.
At the opposite pole there are financial-accounting irregularities, which in 2017 knew a 48% increase compared to 2016, the main irregularity being reporting public patrimony both to entities in central and local administration.
Volume of financial irregularities on the rise
“Constant irregularities at the level of administrative-territorial units in 2017 pointed out that incomes of 262 million lei were not collected, prejudices of 431 million lei were generated, on the drop by 52% against 2016, as well as errors in accounting documents, fiscal or patrimony, active stock of 7,337 million lei was not evaluated. The volume of additional incomes in 2017 was lower than in 2016, when it was 374.78 million lei. On the other hand, the volume of financial irregularities had a growing trend, 36% higher than in 2016,”the report shows.
The Court of Accounts pointed out there were many problems in the organization and implementation of good rule at institutional level. In this area, 4,302 monitoring actions were made in 2017 compared to 2016, when 4,037 such actions were carried out.
Of all financial-accounting irregularities, the state budget has the highest share (73%), with errors about the organization and daily patrimony evidence (15.68 billion lei), the way of applying legal provisions about public property and its juridical regime and regulations on inventory of goods (6.804 billion lei); the real and exact reflection of financial-accounting operations in annual reports and annual budget execution accounts (3.896 billion lei).
Problems at CFR
“Concession contracts of 6,803,865 thousand lei with Metrorex and CFR, representing completed investments projects commissioned over 2008-2016 have not been updated”, the report shows.
At CFR, the Court of Accounts found discrepancies of 84.262 million lei, between the value of goods included in the centralized inventory of goods that make up the public domain of the state and values existing in the accounting evidence.
Errors at Romanian Post
In the control made at the Romanian Post(CNPR), there were deficiencies about the reality of the social capital of the company, resulting from the reorganization of the “Romanian Post” Autonomous Company, where goods owned by the state were included.
At the same time, irregularities about illegal payments of bonuses (237,000 lei) were discovered. Moreover, the report shows uneconomical expenses for the purchase of juridical services, following the conclusion of a contract whose object overlapped the attributions of the Juridical department (579,000 lei).
Losses at TAROM
“The Court of Accounts analysed the performance of air transport activity at TAROM state company over 2012-2016.
“Over 2012-2016, the company had losses of 545,340 thousand lei and at the end of 2016 , the reported loss was 2,091,103 thousand lei. Therefore, it is less probable that TAROM shares might generate incomes in dividends so as to become attractive to investors,” the report reads.
So, although the air transport market in Romania knew a significant increase over 2012-2016, TAROM could not turn to account the existing potential, according to the Court of Accounts.
Investment shortage at ANAF
In the case of ANAF, reducing capital expenses in the past years affected especially the IT infrastructure, the present situation being critical, the Court of Accounts warned.
“ANAF has an outdated, non-performing IT and communications infrastructure because no significant investments have been made since 2013. Moreover, ANAF’s IT strategy over 2016-2020 has not been approved yet. Since there is no strategy, short, medium and long term objectives are not known, necessity reports made by DGTI and forwarded to the ANAF acquisition structure over 2013-2016 was not approved,” the report shows.
The lack of investments, at the same time with the permanent surcharging of the storage capacities at Primary and Secondary Data Centres as well as the growing demand for new IT applications led to the appearance of disfunctionalities in the IT system, discovered by the financial audit.