A total of 20 matters were raised: 15 annotations and 5 cases submitted for information. No matters were raised under the Ministry of Health, Ministry of Fisheries, Ministry of Culture and Church Affairs, Ministry of Agriculture, Ministry of the Environment and Ministry of Petroleum and Energy.
Six financial statements were not approved
The Office of the Auditor General’s financial audit for the 2002 accounting year comprised 400 financial statements. The Office of the Auditor General also undertakes audits of parts of 18 county road accounts kept by the county roads offices. Audit letters (auditor’s reports) have been sent to the ministries and all government agency financial statements included in the central government accounts. 247 audit letters are without comment, 81 with some comments, 34 with significant comments and six with comments so serious that the accounts could not be approved. This applies to the University of Oslo, Vestfold University College, Telemark University College, Hedmark University College, Norwegian Patent Office and Office of the Consumer Ombudsman.
Furthermore, ordinary auditor’s reports were sent to 10 Nordic agencies and 20 foundations, as well as to Norsk Tipping AS and the Government Bank Investment Fund.
There are still significant errors and deficiencies connected with the central government’s procurements. The deficiencies seem to be in part due to insufficient competence in the area and in part because satisfactory routines have not been established for complying with the current regulations. The Office of the Auditor General regards it as particularly serious that agencies with extensive procurements such as the Armed Forces, Norwegian Defence Estates Agency and Oslo Police District do not have satisfactory routines in this area.
Internal control system
The audit has uncovered failures in the internal control system of several agencies. It is also extremely important that a satisfactory internal control system be established to reduce the risk of errors and deficiencies in the accounts. A good internal control system is also important to prevent irregularities. In this connection it is furthermore important that in their strategy dialogue the ministries concerned emphasise that measures for improvements be implemented and followed up.
Ministry-by-Ministry overview of the annotations:
The Ministry of Labour and Government Administration
For many years the Office of the Auditor General has had comments on the accounts of the Government Administration Services. The comments concern weaknesses in the internal control system, including poor routines in connection with determination, payment and accounting of claims, reconciliation procedures, reminder routines, logging of changes to permanent data, and closing of the accounts after reporting to the central government accounts.
The Office of the Auditor General informed the Storting that the guarantee for the home loan scheme for civil servants, financed via Norwegian Public Service Pension Fund funds, is not included in the central government accounts.
It was stated that the Norwegian Public Service Pension Fund - Government Corporation’s outstanding account with the Treasury was presented in the central government accounts as a debt while in reality it is a receivable.
The Ministry of Children and Family Affairs
The Office of the Auditor General has not approved the accounts for the Office of the Consumer Ombudsman because major weaknesses were uncovered in the internal control system.
In conjunction with its move to new premises, the National Institute for Consumer Research (SIFO) funded a new laboratory through a lease agreement that has been evaluated as being a credit purchase agreement and thus in violation of the appropriations regulations.
The Ministry of Finance
There are still several deficiencies and weaknesses in the accounts of the Norwegian Revenue Service even though the Ministry of Finance and Directorate of Taxes have implemented several measures to improve quality. Among other things, the audit has demonstrated weakness in the internal control system in several areas such as taxes, VAT, special tax and petroleum tax.
The Ministry of Defence
The Armed Forces’ accounts for 2002 have significant deficiencies in the areas of pay, procurements, consultancy services and stockpiles. Among other things, violation of the overtime provisions of the Working Environment Act, violation of public procurement regulations, extensive use of options in purchasing consultant services and mismanagement of returned and surplus materiel from discontinued units were demonstrated.
The Ministry of Defence was also criticised because the Norwegian Defence Estates Agency does not follow current public procurement laws and regulations. The criticism concerns use of amendment and supplementary agreements without them being included in the original tender documentation, and the fact that considerable amounts were disbursed without being formalised through agreements.
The Ministry of Justice and the Police
Weaknesses were demonstrated in purchasing procedures and the overall administration of procurement in the Oslo Police District. This has caused several violations of public procurement regulations.
The Ministry of Local Government and Regional Development
The Office of the Auditor General briefed the Storting about the administration of subsidies in the Sameting (Sami Parliament). The Office of the Auditor General notes that the Financial Management Regulation for the Central Government applies to the Sameting unless specific exceptions have been made.
The Ministry of Trade and Industry
The Office of the Auditor General has not approved the Norwegian Patent Office’s accounts for 2002. The agency’s accounts showed major deficiencies in connection with reconciliations and specifications, division of work and follow-up of receivables. The Office of the Auditor General has also previously demonstrated major weaknesses in the accounts of the Norwegian Patent Office.
Several matters relating to general ICT security at the Brønnøysund Register Centre were raised, including the lack of a disaster and interruption recovery plan. In this connection the Office of the Auditor General has questioned the Ministry’s follow-up of ICT security at the Brønnøysund Register Centre.
Among other things, the Office of the Auditor General has pointed out that guidelines on how the Accounting Act should be practised at the Government Bank Investment Fund have not been prepared and that the Ministry of Trade and Industry has not drawn up instructions for the Ministry’s administration of and follow-up duties vis-à-vis the Fund.
The Ministry of Transport and Communications
The Office of the Auditor General criticised the Norwegian National Rail Administration for having contributed, without the approval of the Storting, to the central government’s incurrence of a considerable financial liability through the company BaneService Prosjekt A/S. The company was established in 2000 with a share capital of NOK 100,000 for the purpose of carrying out the Rail Administration’s contracting operations in Sweden and Denmark. It is owned and managed by the Norwegian National Rail Administration. The company was dissolved at the general meeting on 30 June 2003. The Rail Administration believes the loss will total approximately NOK 18 million.
The Ministry of Social Affairs
The audit of the accounts and benefit schemes of the National Insurance Service still shows deficiencies in the internal control system, and several breaches of public procurement regulations were recorded. The Office of the Auditor General has also pointed out that it views it as important that the mandatory internal audit in the National Insurance Service be established as a control unit independent of the line organisation, in accordance with the Financial Management Regulation for the Central Government and internationally recognised standards.
The Ministry of Education and Research
The Office of the Auditor General has not approved the accounts of the University of Oslo because of unsatisfactory documentation, presentation and classification of the accounts in fundamental areas. Nor have the accounts for Vestfold, Telemark and Hedmark University Colleges been approved, because significant amounts have been recorded incorrectly in relation to cash-basis accounting in the central government.
Ministry of Foreign Affairs
The Office of the Auditor General’s review of the Ministry of Foreign Affairs’ administration of various grants has revealed significant weaknesses in routines and practices. Several of the matters now pointed out are deficiencies that have also been discussed on previous occasions.
The document is available in Norwegian on the Office of the Auditor General’s website – www.riksrevisjonen.no - or can be ordered from the University Bookshop Akademika, tel. +47 22 11 67 70.