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Document no 1 (2007-2008): Still many infringements of the public procurement regulations

Violations of the public procurement regulations, poor ICT security and weaknesses in the management of a number of grant programmes. These are some of the main comments resulting from the review conducted by the Office of the Auditor General (OAG) of the Norwegian ministries’ management and implementation of the budget for 2006. “We have been pointing out these conditions for a number of years without seeing any appreciable improvement, and this is cause for concern,” says the Auditor General, Jørgen Kosmo.
Published 11/23/2007 3:43 PM

The OAG’s audit report on the Central Government Financial Statements for 2006 – Document no. 1 (2007-2008) – was submitted to the Storting on 16 October 2007. The document contains the OAG’s comments on the ministries’ management and implementation of their budgets and the cabinet ministers’ management of state ownership interests in companies. Material weaknesses have been found in the accounts of nineteen agencies. This is less than in the previous year.

Weaknesses in the ministries’ management and performance reporting are a recurring feature. A number of agencies have not established satisfactory internal control, which has resulted in many violations of the public procurement regulations. Nor do a number of agencies have satisfactory ICT security and contingency plans. Weaknesses have also been found in the management of a number of grant programmes.
“It is the ministries’ responsibility to ensure that subordinate agencies comply with the regulations,” stresses Kosmo.

The Auditor General is particularly concerned about the failure of government administration to comply with and practice the public procurement regulations. Many of the same government agencies received virtually the same comments regarding violation of these regulations as they did in the last audit report. The attention focused on this area by both the OAG and the Storting’s Standing Committee on Scrutiny and Constitutional Affairs has not resulted in any particular improvements.

“This is particularly serious in view of the substantial resources involved – the public sector makes procurements for NOK 275 billion annually,” says Kosmo.

Areas towards which the OAG is particularly critical:

Shortages of personnel and materials may pose a threat to defence capability
The number of recruits and non-commissioned officers has not grown as foreseen in the plan period 2005-2008. It is a challenge to assure adequate and appropriate personnel competencies and composition so that the Defence Forces can discharge their duties. Among other things, it has been questioned whether the Defence Forces will be able to man the new frigates. The OAG also takes a serious view of the possibility that delayed deliveries of important material may lead to military units not being operational by scheduled deadlines.

“In sum, this means that the operational capability of the Defence Forces can be called into question,” says Kosmo.

Inadequate follow-up of contingency planning at county governor offices
The Ministry of Health and Care Services does not have adequate routines for verifying the county governor offices’ monitoring of contingency planning, including in environmentally oriented health care, protection against infection and accident and nuclear contingency plans. There are also considerable regional and local variations in the updating of plans and contingency programmes.

“The consequence could be a threat to life and health in the event of a crisis situation, and we take a very serious view of this,” says Kosmo.

Poor maintenance of hospital buildings
The Ministry of Health and Care Services does not have the necessary overview of the health enterprises’ needs with respect to maintenance of hospital buildings. The OAG points out that there are few maintenance plans.
“The deprioritising of maintenance may have serious consequences for the safety of staff, patients and family, and in the longer term may also lead to unnecessarily high expenses,” says Kosmo.

Still substantial weaknesses in the Directorate for Children, Youth and Family Affairs
There are still substantial 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. Child Welfare Services lack a good, reliable system for ensuring sound management, follow-up and control. Among other things, this results in poor monitoring of the private child welfare institutions. The directorate cannot provide an equal service level and programmes throughout Norway.

“This may affect the weakest members of our community, and we therefore regard it as very serious,” says Kosmo.

The Tax Administration – once again
The OAG had a number of critical comments to make on internal control in the Tax Administration. For example some employees have access to their own, their colleagues’ and their families’ tax assessment data, and one case has been found of an assessment being illegally altered. The OAG has reported similar matters previously.

“I find it very reprehensible that the Ministry of Finance has not followed up these situations, and lets them go year after year,” says Kosmo.

Vehicle taxes fixed on an uncertain basis
The OAG regards it as unfortunate that the development of Aus2sys (the Directorate of Public Roads’ new information system for motor vehicles and driving licences) is delayed, and that the Customs Administration still has to fix taxes on motor vehicles on the basis of information from the old Autosys with its accompanying weaknesses. The OAG has been taking up the weaknesses associated with the use of Autosys since 1999, and expects the Ministry of Finance to ensure that the new Au2sys is completed as soon as possible.

“The recent news that developments have come to a complete halt because of major overruns is of particular concern,” says Kosmo.

Poor management of development aid projects
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 processing reports and reporting suspicions of corruption and irregularities. Weaknesses have also been detected in the achievement of objectives and results in the management of budget support. Moreover, the sustainability of projects after support has ended has been questioned.

“We are talking here of substantial resources that can easily go astray. Sound reporting systems, particularly with respect to suspicion of corruption and irregularities, are crucial for maintaining control of spending in this area,” says Kosmo.

Many deficiencies at universities
The OAG regards it as highly reprehensible that serious deficiencies have been found in the accounting of three out of six universities. Oslo University did not have satisfactory operating stability, and had numerous serious defects and deficiencies in its new payroll and personnel system. Weaknesses, deficiencies and violation of regulations for externally financed activities were revealed at the University of Stavanger. Among the deficiencies detected at the Norwegian University of Life Sciences are weaknesses associated with payroll routines and externally financed activities.

“I was surprised and disappointed that these universities, which administrate substantial public funding, proved to have poor management of systems and routines,” says Kosmo.

Annex: The most important comments on the various ministries.

The document in Norwegian can be ordered from Akademika booksellers, tel. +47 22 18 81 23.

The provision concerning delayed public access to documents that are compiled by or sent to the Office of the Auditor General in connection with Document no. 1 (2007-2008), cf. Section 18, paragraph 2 of the Auditor General Act, has been repealed.

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