Court of Accounts: 5 bln lei worth of government expenditures for fighting pandemic, as of June 30

The Court of Auditors submitted to Parliament a special report on the management of public resources during the COVID-19 lockdown that finds that, in most cases, the use and management of public resources and funds to prevent and combat the COVID-19 pandemic was in accordance with the purpose, objectives and powers provided for in the existing legislation, but there were some "systemic deficiencies and slippages."

Government expenditures from the state budget, local budgets and the unemployment insurance budget for the fight of the coronavirus pandemic amounted to 5 billion lei as of June 30, the Court of Accounts said in a release on Tuesday.

The supreme audit institution finalised and submitted to Parliament the special report on the management of public resources during the state of emergency, a document based on an ample control conducted over May - July 2020 at 949 entities from the central and local public administration. More than 700 external public auditors were mobilized in the effort to efficiently and quickly respond to Parliament's request.

Of the 5 billion lei spent, payments for the allowances granted during the suspension of the individual employment contract at the employer's initiative account for 73 percent (3.69 billion lei), allowances to other categories of personnel whose activities were interrupted or were severely slowed down represent 13 percent (662 million lei), and spending with emergency medical stocks represents 5.3 percent (266 million lei). The rest of the funds were allocations for the risk incentive and other expenses specific to the emergency period.

Donations and sponsorships in cash or in kind received by the public institutions add to the public expenditures with preventing and fighting the pandemic. Thus, the entities audited by the Court of Accounts received and registered 214.7 million lei (44.4 million euros) in donations and sponsorships.

The financial impact estimated by the auditors following the control actions is composed of additional revenues, damages and financial accounting variations, so that the additional revenues amount to an estimated 647,000 lei. The estimated financial accounting variations in the verification period stand at 659 million lei, while the damages are 38.3 million lei.

The document also presents examples of best practices by public entities that have optimally managed the available resources during the state of emergency.

"The Romanian Court of Accounts, in its capacity as the supreme audit institution, is set to provide an objective analysis of how public resources have been managed during the state of emergency and to support public institutions in creating effective response mechanisms. The report is the result of a sustained effort of all Court structures, which take into account the context, the inherent restrictions brought about by the pandemic, from the adjustment of the annual plan of action to the adaptation of the working conditions, which required physical distancing," said Court of Accounts president Mihai Busuioc, cited in the release.

He added that in all its actions, the institution sought to not compromise joint public response efforts to the Covid-19 crisis. "We want the recommendations included in the report to represent an opportunity for the authorities to improve crisis-specific procedures, with a direct impact on public money management," Busuioc said.

The selection criterion of the audited entities were the allocations from the central and local budgets for the management of the state of emergency, respectively the amounts used, by financing sources and destinations.

Thus, those authorities were selected that received significant amounts from these budgets, but also those that received additional responsibilities and powers during the period of emergency. The procurements specific to the emergency situation, by type and value, were also a major selection criterion.

The special report on the management of public resources during the state of emergency can be consulted on the website of the Court of Accounts.

"This report is designed to present to Parliament, citizens and other entities interested in how to manage public resources during a lockdown, the findings of the Court of Auditors, as well as the conclusions and proposals derived therefrom, in accordance with the mandate received under Romanian Parliament Decision 4 /16.04.2020 issued to extend the lockdown to entire Romania," reads the report called "Management of public resources under the lockdown."

According to the report, the Court of Auditors has concluded after auditing public procurement that the necessary stockpiles of medical products were not replenished fully or within required deadlines, as a result of accepting the "force majeure" clause which effect was extending the delivery deadlines and the fact that the actual delivery of the contracted products was made, in some cases, towards the end of the lockdown.

The reports also says that in enforcing the provisions of the public procurement law, the National Office for Centralised Procurement (ONAC) did not implement a unitary treatment of all business operators that participated in the procedures for awarding framework agreements under the lockdown, which led to the violation, in all cases, of the principles of equal treatment and non-discrimination. The consequences of such way of working were felt in the subsequent development of the subsequent contracts, at the level of the General Emergency Management Inspectorate (IGSU), when there were delays in the delivery of the quantities committee by suppliers (masks, overalls), by citing the force majeure clause, or products not delivered by the deadline (fans, isolation stretchers), without establishing and collecting penalties for delay.

The court's audit also targeted the state-run UNIFARM SA pharmaceutical supplies distributor finding "a series of errors, irregularities and management deficiencies that resulted in the partial accomplishment of its duties, as it did not adequately and urgently provide the healthcare system with specific products to fight against the pandemic."

"In conclusion, it was found that, purchasing from intermediaries and not from domestic producers or external producers/suppliers, the healthcare equipment/materials were contracted by CN UNIFARM SA at overestimated prices, without all the necessary approvals, which determined the company to make unjustified payments amounting to 175,274,000 lei."

The court says that considering the context in which the operations took place, there were no serious errors in the healthcare area, except for the defective procurement practiced by CN UNIFARM SA, the non-existence of medical stockpiles that led to purchases at uncompetitive prices, and the legislative process specific to the state of emergency that had some gaps that were filled "on the fly."

Among the general conclusions of the report is the one according to which "the Romanian Government acted quickly and took timely measures to contain the coronavirus, so that the declaration of a state of emergency made the number of cases in Romania under the lockdown to be rather low when compared with other European countries (Italy, Spain, the UK), and the health system to cope with the diseases."

The Court of Auditors has made a series of proposals and recommendations, including the development of a national action plan that clearly and explicitly regulates the activities and procedural steps to be followed in the event of emergencies; the establishment of action and funding procedures in emergency situations; shortening intervention times; identifying and establishing mechanisms to motivate the staff directly involved in securing fundamental activities during the state of emergency/alert; strengthening the internal management audit system.

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