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Doc 1 was delivered to the Storting October 22nd

Document No 1 (2009-2010): Poor management of government agencies, inadequate internal control and inadequate coordination of ICT systems

‘This is a general problem in a number of ministries,’ says Auditor General Jørgen Kosmo in connection with the presentation of the Office of the Auditor General’s audit report for the ministries’ administration and implementation of their budgets for 2008.
Published 10/22/2009 12:30 PM

The Office of the Auditor General’s Document No 1 (2009-2010) was submitted to the Storting on 22 October. The document contains the Office of the Auditor General’s remarks on the ministries’ administration and implementation of their budgets for 2008.

The Office of the Auditor General has serious remarks relating to 22 of the 229 agencies. ‘The audit for 2008 shows that the government administration in Norway generally has a good standard. However, there are still some areas that are unsatisfactory,’ says Mr Kosmo.

The audit for 2008 has found weaknesses in the management of agencies in several ministries, including the setting of goals and performance requirements, the stipulation of management parameters, and requirements for reporting and follow-up. The Ministry of Labour and Social Inclusion’s management of the Norwegian Labour and Welfare Administration, the Ministry of Education and Research’s management of the university and university college sector and the Ministry of Transport and Communications’ management of the Norwegian National Rail Administration are examples of inadequate management of agencies. ‘The result is that the reporting is less reliable and not easily verifiable in some cases,’ says Auditor General Jørgen Kosmo.

Poor internal control was found in several agencies. This has resulted, among other things, in violations of the law and important provisions, and errors in several of the agencies’ accounts. Major weaknesses have been uncovered in the internal control of the Norwegian Labour and Welfare Administration (NAV) and the Norwegian Defence Estates Agency, among others.

ICT systems and registers intended for use by several sectors are designed in a manner that reflects the agency that developed them, with the primary emphasis on that agency's responsibilities and goals. The systems and registers are therefore not adapted to other agencies’ requirements to any significant extent. The audit has also found weaknesses in the quality assurance of data entered in various systems. This applies, for example, to coordination between the Ministry of Finance and the Ministry of Labour and Social Inclusion relating to international benefits administration, among other things. ‘There is great unexploited potential for better and more efficient administration here,’ Mr Kosmo underlines.

Several agencies have not established adequate procedures to ensure information security. This applies, among other things, to ICT administration in the Directorate of the Police and the Norwegian Correctional Services. ‘This increases vulnerability and the risk of abuse,’ says Mr Kosmo.

The Office of the Auditor General has reported breaches of the procurement regulations in the government administration for several years. Errors and deficiencies in this field are still reported for several ministries. ‘The Office of the Auditor General has initiated a separate performance audit of this field on the basis of the many breaches of the procurement regulations over a number of years,’ says Jørgen Kosmo.

Individual areas of which the Office of the Auditor General is particularly critical of

The Government Pension Fund – Global (GPFG)

The Office of the Auditor General is critical of the insufficent framework provided by the Ministry of Finance for securities lending and leverage in GPFG. Each of these matters accounts for several hundred billion kroner and the magnitude underlines the need for a clear framework.

In the Office of the Auditor General’s view, has the Storting not been provided sufficient information about the use of GPFG’s leverage, and it fails to see that such use upto 2009 has been in accordance with the decisions and intentions of the Storting.

The Office of the Auditor General is also critical of the fact that investments in American Mortgage Backed Securities were initiated without adequately identifying the operational risk. This is not in compliance with the guidelines for the administration of GPFG.

The Norwegian Labour and Welfare Administration (NAV)

The Office of the Auditor General cannot approve the Norwegian Labour and Welfare Administration’s accounts for 2008. The Office of the Auditor General takes a serious view of this situation considering that the administration’s budget amounts to one third of the national budget and that the accounts largely concern benefits paid to individuals.

Service production in relation to several benefits is unsatisfactory. Case processing times and the backlog of cases have increased in 2008. The audit identified a number of erroneous payments of sickness benefit, transitional benefit and child maintenance payments.

Follow-up of persons on sick leave, a task that the administration is required by law to carry out, is only done to a limited extent. There are also challenges relating to follow-up of users in the qualification programme (education and work training) in accordance with the intentions and the new regulations.

The Norwegian Defence Estates Agency

The Norwegian Defence Estates Agency has failed to establish satisfactory internal control. Among other things, this has resulted in inadequate reporting of reportable payments, violations of the act and regulations relating to public procurements, and in transactions that are not acceptable in terms of the norms and standards that apply to government financial management. The Norwegian Defence Estates Agency has, for example, extended restructuring agreements and placed free housing and cars at employee’s disposal without legal authority. A lack of traceability between invoice and procurement documentation has also been uncovered. A control of operating and maintenance procurements found inadequate documentation for 73 per cent of the invoices checked.

The Nødnett (emergency network) project

There are still substantial delays in the Nødnett project aimed at introducing a new public safety radio network in Norway under the authority of the Ministry of Justice and the Police. The delays concern the development of communication centres in the fire and health sectors in particular. There is great uncertainty about when stage 1 of the programme will be operational in all three emergency services. The delays will postpone realisation of the benefits of a new joint digital public safety radio network.

The Norwegian National Rail Administration

The Office of the Auditor General is critical of the fact that the Ministry of Transport and Communications does not set more specific requirements for the Norwegian National Rail Administration’s registration of disruptions to operations in rail traffic. More and more often, the causes of such disruptions lie with the Norwegian National Rail Administration, and many disruptions are registered with unknown cause. In the Office of the Auditor General’s view, it must be in the best interests of the Ministry, the Norwegian National Rail Administration and the railway companies to clarify roles and responsibilities, thereby facilitating the implementation and coordination of targeted measures to reduce delays.

The Norwegian Public Roads Administration

Although there are signs of improvement, there is still a long way to go before the Norwegian Public Roads Administration can be given a sound bill of health in relation to its procurements and projects. There are also considerable cost overruns in relation to agreed contracts. Of 45 contracts controlled, substantial overruns were found in 22, i.e. nearly half.

The document can be downloaded in Norwegian from this website – www.riksrevisjonen.no – Public institutions can order the document from Government Administration Services, tel. + 47 22 24 20 00/1, publikasjonsbestilling@dss.dep.no, www.publikasjoner.dep.no. Others can order it from Fagbokforlaget AS, tel. + 47 55 38 66 00, offpub@fagbokforlaget.no.

The deferral of public access to public documents relating to the central government accounts for 2008 is set aside from 12.30 on 22 October 2009.

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