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Attachment to press release Doc no 1 (2007-2008): Overview of the most important comments on the various ministries’ management and implementation of the budget for 2006

The Office of the Auditor General (OAG) has issued 211 concluding audit letters without comments and 19 with comments for the 2006 accounting year. The remarks relate to the submitted accounts and/or the implementation of the financial dispositions upon which the accounts are based. In addition the OAG has audited 42 wholly-owned limited companies, 37 partly-owned limited companies, 5 regional health authorities, 5 state enterprises, 4 companies organised through separate legislation, and 26 student unions. The OAG has no major comments to the management and implementation of the budget for 2006 with respect to the Ministry of Local Government and Regional Development and the Office of the Prime Minister.
Published 11/23/2007 3:49 PM

Ministry of Labour and Social Inclusion
The OAG is once again critical of the Sami Parliament’s management of grants. There are still considerable weaknesses in the routines for the processing of grants. Guidelines are not followed, despite repeated comments from the OAG.

The Labour and Social Welfare Directorate (NAV) is implementing a major reform, while at the same time users’ current needs have to be met. The reform makes considerable demands in terms of new competencies in encounters with users, and the OAG states that there are no concrete plans for a general development of competencies in NAV. The OAG is concerned that users may not be offered a sufficiently good service by the new NAV.

NAV does not have an adequate overview of technical aids in stock and out on loan. The Directorate has made procurements in conflict with the procurement rules with regard to ICT and contractor agreements and in the administration of the aids. The Directorate also had problems when they introduced a new system for collecting maintenance payments. Users experienced poorer service and delayed payment transfers.

There are challenges associated with presenting complete accounts for the new agency. A key case processing system used by the Directorate in the management of grants has substantial weaknesses, which increase the risk of irregularities and errors in disbursements to recipients of benefits.

Ministry of Children and Equality
There are still considerable weaknesses in the Ministry of Children and Equality’s management of the Directorate for Children, Youth and Family Affairs. Although the Directorate is in its third year of operations, satisfactory internal control systems and routines have still not been established. Key performance targets are not being attained by the Directorate, and there are unclear management signals and reporting requirements.

There are a number of weaknesses associated with the Ministry of Children and Family Affairs’ management of grants to crisis centres and church family protection offices. As a result of unclear follow-up and supervisory responsibilities, the Directorate for Children, Youth and Family Affairs has not achieved the targets which were the assumption on which the Storting based grants to crisis centres. This has consequences for the measures put in place for users such as the disabled, immigrant women, and children, and reports are not being submitted about key targets..

Nor has the Ministry of Children and Family Affairs drawn up clear criteria for the management of the grant scheme for church family protection offices. The result is varying regional practice in the Directorate with respect to the allocation of the grant.

The Child Welfare Service lacks a sound, reliable system for ensuring satisfactory management, follow-up and control. The Service’s control system ODA for electronic registrations has weaknesses as a result of which reporting can be unreliable. There is a lack of management and control systems designed to ensure that private child welfare institutions are run in a financially correct manner. As a result institutions are not monitored systematically, and the Service cannot ensure that the same range of offers and programmes are provided throughout Norway.

The Service continues to purchase a significant proportion of private institutional places, which is still not in line with the procurement regulations.

Ministry of Finance
It is undesirable that large tax evasions in Oslo are not reported because the police and public prosecutor lack capacity and fail to prioritise this area. The OAG stresses that the Ministry of Finance is responsible for ensuring that all cases receive equal treatment irrespective of geographical location.

There is still not satisfactory risk management in all agencies, including the Directorate of Customs and Excise. The Ministry of Finance is also criticised for failing to follow up and establish the duty to preserve documentation, specifically documentation of payments made via post offices in shops to the Directorate of Customs and Excise.

The OAG regards it as unfortunate that the development of Aus2sys (the Directorate of Public Roads’ new information system for vehicles and driving licences) is delayed, and that the Customs Administration still has to fix taxes on vehicles on the basis of information from the old Autosys, which has weaknesses. The OAG has been taking up the question of weaknesses in Autosys since 1999, and expects the Ministry of Finance, which has the ultimate responsibility for ensuring that motor vehicle taxes are correctly fixed and entered in the accounts, to ensure that the new Au2sys is completed as soon as possible.

The OAG has significant comments to make regarding the financial dispositions upon which the accounts of the Tax Administration are based. There are still weaknesses associated with internal control of employees’ access to their own, their colleagues’ and their families’ assessment data, and the audit revealed one case of an assessment being unlawfully altered. The AOG has reported similar cases before, and finds it blameworthy that the Ministry has not followed up the matter adequately. The OAG also levels criticism at the Ministry of Finance for not checking that the Tax Administration has taken the necessary steps to ensure that procurement takes place in compliance with the public procurement regulations. Nor has the Tax Administration maintained satisfactory monitoring of access to its own network.

Ministry of Fisheries and Coastal Affairs
Both the Directorate of Fisheries and the Norwegian Coastal Administration have made procurements that are in conflict with the public procurement regulations. The OAG expects the Ministry of Fisheries and Coastal Affairs to follow this up in the ordinary management dialogue with the agencies.

Ministry of Government Administration and Reform
So far, the Ministry of Government Administration and Reform has not established a satisfactory framework for systematic assessment of risk and materiality and long-term plans. The OAG expects the Ministry to give priority to the work of putting this in place.

Criticism is expressed of the fact that the Ministry of Government Administration and Reform and some county governor offices still do not fully comply with the public procurement regulations. Nor has the Ministry defined the geographical scope of the procurement regulations with respect to other countries.

It is also the responsibility of the Ministry of Government Administration and Reform to ensure satisfactory internal control which underpins the management model and meets the need for interaction between the ministerial areas and the county governor offices. The OAG’s survey of goal achievement and efficiency in the county governor offices (Document no. 3:14 (2006-2007) showed that in a situation with limited resources there are several offices that do not meet important performance requirements in the area of health and social welfare and within child welfare, education, public security and contingency planning.

It is a serious matter that it takes a long time to put disaster and emergency preparedness plans in place. The OAG also stresses the importance of good ICT security.

The Norwegian Public Service Pension Fund has not succeeded in achieving satisfactory reconciliation of premium revenues. The OAG regards this as an undesirable situation.

Ministry of Defence
The number of recruits and non-commissioned officers has not grown as foreseen in the plan period 2005-2008. This may have consequences for the operational capability of the Defence Forces. It is a challenge to assure adequate and appropriate personnel competencies and composition, so that the Defence Forces can discharge their duties.

The manning of the new frigates is highly demanding in terms of expertise and training. The OAG cannot see that there are concrete plans for training personnel for the new frigates.
The OAG considers it serious that the Armed Forces Logistics Organisation (FLO) has reduced its stocks of goods and materials by NOK 276 million in order to make up the financing shortfall between FLO and the various branches of the Defence Forces.

The OAG has significant remarks to the accounts of the Armed Forces’ military organisation for 2006 again, but has also noted improvements on previous years.

The OAG takes a serious view of the fact that delayed deliveries of important material may lead to military units not being operational by planned deadlines. The OAG is critical about the materials accounts not being up to date, and points out that similar matters have been taken up by the OAG several times previously.

It is important that the Defence Forces satisfy the intentions of competition, equal treatment and verifiability in their practice of the procurement regulations. The OAG takes a serious view of the large number of invoices that had fallen due at the end of 2006, and points out that developments in this respect took a negative turn in 2006. The OAG also notes that there are still a considerable number of cases of incorrect wage payments in the Defence Forces.

Ministry of Health and Care Services
The OAG levels criticism at the Ministry of Health and Care Services for not having adequate routines for verifying the county governors’ follow-up of contingency planning, among other things in environmentally oriented health care, protection against infection, and accident and nuclear contingency measures. There are also considerable regional and local discrepancies in the updating of plans and contingency programmes. The consequence, in the event of a crisis situation, may be endangerment of life and health.

The OAG finds reason to criticise the Ministry of Health and Care Services’ management of the Norwegian Institute of Public Health. A lack of traceability between goals, activities and reporting makes the Ministry’s and the Institute’s management by objectives and results difficult.

There are still weaknesses associated with the Directorate of Social Affairs and Health’s management of the Norwegian Registration Authority for Health Personnel. Inadequate ICT systems and routines at the Authority may lead to non-compliance with the Storting’s requirement regarding efficient, thorough case processing.

The regional health enterprises
The Ministry of Health and Care Services does not have the necessary overview of the regional health enterprises’ needs with respect to maintenance of hospital buildings. The low priority given by the health enterprises to maintenance is at the expense of the working environment and safety. The OAG points out that there are few plans for maintenance, and that deprioritising of maintenance may have serious safety consequences for employees, patients and family, and in the long run may generate unnecessarily high costs.

The Ministry of Health and Care Services stipulated that the regional health enterprises, with the exception of the Central Norway Regional Health Authority, should achieve a financial balance in 2006. There are considerable discrepancies between requirements and financial results achieved in all regional health authorities, with the exception of the Eastern Norway RHA.

The adjusted financial results of the Western Norway, Central Norway and Northern Norway RHAs have deteriorated substantially. The failure of these regions to achieve targets was not reported to the Ministry until the end of 2006. The adjusted financial result for the Southern Norway RHA is an improvement on that in 2005.

The regional health authorities are still not achieving the goals set for them in a number of central areas such as habilitation and rehabilitation, mental health care and substance abuse. Among patient groups with a right to individual plans (child habilitation and ADHD), a large proportion of the patients still lack such plans. This may lead to inadequate treatment options for some patient groups, for example patients with serious head injuries. It may also result in longer waits, failure to start treatment by stipulated deadlines, and failure to grant the right to necessary health assistance.

There are major discrepancies between the legally allocated number of medical specialist positions and the actual number of positions at a number of health enterprises. Of ten health enterprises that were investigated, four had a 100 more doctors employed than the legally allocated positions for doctors. This may affect the wage costs of the health enterprises, undermine financial control, and exacerbate the imbalance in the market for doctors. It may also lead to senior registrars in positions not covered by the quotas not having their specialist training recognised.

The regional health enterprises do not have an overview of the prioritisation of the roughly 1600 private-practising specialists in medicine and psychology who have an agreement with one of the health regions. This may lead to patients with the right to necessary medical help not receiving priority as stipulated in the regulation.

The regional health enterprises have little overview of employees with secondary occupations in the pharmaceuticals industry, and the guidelines for employees with secondary occupations that were adopted in 2003 are not yet well enough implemented. Inadequate follow-up and overview may lead to an increased risk of an undesirable mixing of roles and to partiality, and may undermine confidence in the integrity of health personnel.

Ministry of Justice and the Police
Violations of the public procurements regulations have been found in the justice sector despite the fact that the OAG has been pointing out inadequate compliance with these regulations for a number of years.

In connection with the fundamental reform of civil procedure law, a new case-processing system was implemented in the police districts and by the four execution and enforcement commissioners. During the introductory phase, the system has been characterised by poor functionality and technical problems, and it is a matter of concern to the OAG that the case-processing time became longer and backlogs increased in 2006. This has happened despite a decline in the number of cases and the employment of more personnel.

Ministry of Culture and Church Affairs
In 2006 weaknesses were again found in the management of the Ministry of Culture and Church Affairs and subordinate agencies. The weaknesses are associated with the absence of internal governing documents, and the fact that a structured and documented system for assessing risk and materiality has not been established.

The internal control of a number of subordinate agencies has made little contribution to compliance with the procurement and financial management regulations. The OAG stresses that the Ministry has the ultimate responsibility for ensuring that subordinate agencies have satisfactory internal control.

Comments have been made on the accounts of Norway’s touring theatre, Riksteatret, whose deficiencies include incorrect reporting to the central government accounts and weak internal control.

Ministry of Education and Research
The OAG is highly critical of the fact that three of six universities, the University of Oslo, the University of Stavanger and the University of Life Sciences received serious comments on their accounts. The same applies to Hedmark Regional College, which received serious comments for similar matters for the second time in three years.

Oslo University did not have satisfactory operating stability, and had a large number of serious defects and deficiencies in its new payroll and personnel system. The other institutions all had weaknesses, deficiencies and violations of rules relating to externally financed activities. Weaknesses were also found in the routines associated with the annual report of Hedmark Regional College and the payroll routines at the University of Life Sciences. Although the university and regional college sector has acquired greater freedom through special powers, it is important that the Ministry of Education and Research has control systems that reveal weaknesses in the financial management of the agencies.

It is a serious matter that risk assessments in connection with the planning phase are not in place in the Ministry of Education and Research and subordinate agencies and that the sector does not have a shared understanding of defined goals. This would enable them to orient their activities towards goal achievement and would form a foundation for the Ministry’s management of the sector.

The time frame for introducing a new ICT system into the State Educational Loan Fund has been altered. The OAG is of the view that the Ministry and the loan fund should have known how complex a new ICT system would be when the contract was announced. The consequences of the delay in upgrading work, coming on top of a substantially more expensive system, will be that the loan fund will be unable to introduce mandatory changes to the same extent. There is also a risk that the users will experience poorer service quality.

The OAG levels criticism at the Ministry for not having verified that the county governor offices supervised undertakings pursuant to the Day Care Institution Act in 2006.

A number of student unions engage in business and have stakes in companies with commercial objectives that are not related to students. It is therefore uncertain whether the resources that are allocated to the student unions are used in accordance with their purpose, which is student welfare.

Ministry of Agriculture and Food
In 2006, as in 2005, both the Food Safety Authority and the Veterinary Institute made procurements in conflict with the public procurements regulations. The OAG expects the Ministry of Agriculture and Food to abide by its own intention to maintain a special focus on procurement activities in general and the situation in the Food Safety Authority and the Veterinary Institute in particular.

Ministry of the Environment
Materials management in the Norwegian Polar Institute and the Norwegian Mapping and Cadastre Authority is inadequate. The Norwegian Polar Institute (NP) manages large quantities of valuable and/or readily marketable material in connection with its expeditions. This includes research equipment and weapons. The OAG’s audits show that NP does not have a satisfactory materials system in which all materials are registered. The OAG has also revealed that the Mapping and Cadastre Authority does not comply with established routines for registering ownership interests. Nor can the OAG see that the Authority has double-checked what was registered before 2006.

The Ministry of Trade and Industry
The Norwegian Patent Office does not comply with the regulations for public procurements. They have inadequate internal control and deficient management and monitoring of ICT security.

Five of the six subordinate agencies that were inspected were found to have made procurements and failed to comply with the public procurement regulations. The consequences of the violations may be that the procurements have been more expensive than was necessary. The choice of procurement procedure involves some limited degree of insight into the processes, and insight is regarded as important for preventing corruption and irregularities.

Ministry of Petroleum and Energy
Material aspects of the management of Enova SF are not discussed in the annual letter of allocation.

Ministry of Transport and Communications
Major deviations from the standard agreement have been found in the Public Roads Administration’s agreements with the road toll collection companies. This means that the Administration’s monitoring of the toll collection companies’ financial management is deteriorating, and that the function of the agreement as a means of control for the Administration is of less value. It has also been discovered that some toll collection companies spend 20-30% of the toll income on administration.

The OAG is highly critical of the fact that toll income is being spent on ownership interests and an annual fee to an umbrella organisation (Norvegfinans) that is not subject to supervision by the Public Roads Directorate. The OAG criticises the failure of the toll companies to comply with the public procurement regulations with respect to putting administrative services out to tender. The OAG has also found a mixing of roles in the management, operation and control of the toll collection companies.

The OAG is critical of the fact that the instructions for selling were not complied with in connection with the sale of a property in Melhus, and points out that the state has incurred a substantial financial loss.

The OAG is critical of the Public Roads Administration’s follow-up of construction contracts and operation and maintenance contracts. The OAG also levels criticism at the Administration for violation of the public procurement regulations. The same circumstances were also pointed out in 2004 and 2005.

The Civil Aviation Authority has not established satisfactory routines for invoicing of fines by account and the OAG has also noticed that it can take two years from the time measures are implemented by those supervised until the Authority verifies that they have actually been carried out.

The State, represented by the Ministry of Transport and Communications, owns 100 per cent of the shares in Norwegian rail transport company NSB AS. At the same time, the Ministry administers a scheme of state purchases from NSB of the transport of private individuals. The OAG regards it as serious that in connection with the negotiations process with NSB AS for this purchase of transport services by train, the Ministry of Transport and Communications has mixed its roles as purchaser and owner. This weakens NSB AS’s negotiating position. It also creates confusion with respect to the division of responsibility in connection with the company’s entry into contracts.

The Ministry of Foreign Affairs
In the field of development aid there are weaknesses in the Ministry of Foreign Affair’s management of foreign service missions, particularly reporting routines and routines for report processing and reporting suspicion of corruption and violations. Weaknesses have also been detected in performance and target achievement and the management of budget support. The sustainability of projects after support has ended has also been questioned.

The Ministry of Foreign Affairs’ management, control and follow-up of resources granted for cooperation projects with Russia has not been satisfactory.

The OAG has questioned whether the Ministry of Foreign Affairs’ monitoring of grants in connection with the tsunami disaster in South-East Asia in December 2004 has received enough priority, in view of the special nature of the disaster and the size of the appropriation.

The OAG has commented on the Ministry’s management and supervisory routines with respect to the administration and operation of foreign service missions. For example, weaknesses were noted in connection with revenues, the registration of works of art, a cooperation agreement with the Directorate of Public Construction and Property (Statsbygg) and the integration of the state-owned Innovation Norway into the foreign service.

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