The Office of the Auditor General has not approved the Norwegian Armed Forces’ accounts for 2003, because of poor routines in connection with internal control, reconciliation of accounts and audit trail and violations of applicable regulations. Several of these issues were also raised in the annotations concerning the Central Government Financial Statements for 2000, 2001 and 2002. The Office of the Auditor General takes a negative view of the fact that weaknesses and deficiencies in the Norwegian Armed Forces’ accounts are so extensive and pervasive that the accounts cannot be approved.
Many agencies still make significant errors when procuring goods and services. It is particularly unfortunate that major actors in the market, such as the Norwegian Armed Forces, the Norwegian Defence Estates Agency and the Directorate of Labour (Aetat) do not have satisfactory routines to ensure compliance with the regulations.
The Office of the Auditor General has critical comments concerning management of subordinate agencies in the Ministry of Labour and Government Administration and the Ministry of Finance. This concerns preparation of the annual management documents, which, in the Office of the Auditor General’s opinion, provide inadequate grounds for the Ministry’s management dialogue and the agencies’ internal management.
In Document no. 1, a total of 29 matters were raised: 16 annotations, which are the most serious cases, and 13 cases submitted for information. No matters were raised under the Ministry of Fisheries, the Ministry of Health, the Ministry of the Environment and the Ministry of Transport and Communications.
Ministry-by-Ministry overview of the annotations:
The Ministry of Labour and Government Administration
The Office of the Auditor General has critical remarks concerning the Ministry of Labour and Government Administration’s management of subordinate agencies. This concerns preparation of annual management documents, which, in the Office of the Auditor General’s opinion, provide inadequate grounds for the Ministry’s management dialogue and the agencies’ internal management. The Office of the Auditor General calls particular attention to the importance of the Ministry contributing to better co-ordination of priorities, joint presentation of management signals and improved management dialogue in relation to the County Governors.
The Office of the Auditor General has detected several errors and deficiencies in the procurement process in Aetat and in documentation in connection with procurement of labour market training courses.
The Ministry of Children and Family Affairs
The Office of the Auditor General has audited a number of grant schemes under the Ministry of Children and Family Affairs, including grants for day-care facilities. The Office of the Auditor General has found that the Ministry of Labour and Government Administration and the Ministry of Children and Family Affairs have not co-ordinated their management signals to county governors sufficiently and that there is inadequate reporting from the county governors. It seems unlikely that the Ministry has received sufficient information to be able to assess the degree to which objectives have been met in some areas.
The 2002 accounts of the Office of the Consumer Ombudsman were not approved. The accounts for 2003 have been approved, but there is still much room for improvement.
The Ministry of Finance
The Office of the Auditor General has critical remarks on the Ministry of Finance’s management of subordinate agencies. This concerns preparation of annual management documents, which, in the Office of the Auditor General’s opinion, provide inadequate grounds for the Ministry’s management dialogue and the agencies’ internal management.
Several weaknesses were raised linked to the Customs and Excise Administration’s use of the Central Motor Vehicles Register (Autosys) as a pre-system to the accounting system. These weaknesses may lead to errors in calculation of charges, and have been raised by the Office of the Auditor General previously. The Ministry of Finance is criticised for not having ensured that the Customs and Excise Administration has secured correct information and calculation of charges.
The Ministry of Defence
The Office of the Auditor General has not approved the Norwegian Armed Forces’ accounts for 2003 because of inadequate internal control, poor reconciliations, the lack of audit trail and violations of applicable regulations. The Office of the Auditor General takes a negative view of the fact that there are so many consistent weaknesses and deficiencies in the Norwegian Armed Forces’ accounts that they cannot be approved. It also warrants criticism that the first part of the ERP implementation programme, Program Golf Delivery Project 1, has not provided a system that satisfies the requirements in the financial management regulations for the central government. Some of the deficiencies could have been avoided had the implementation been better planned and carried out. The Office of the Auditor General has noted that the Ministry of Defence takes a serious view of the indicated matters, and that several of the problems have been rectified. For example, deadlines have been set for concrete measures that together are to help satisfy the requirements in the financial management regulations and ensure good quality and efficient financial management.
The Norwegian Defence Estates Agency is criticised for late submission of its accounts, violation of regulations in connection with procurements linked to operations, and a loss of revenue – partly due to faulty invoicing and recovery routines for outstanding rent claims. The Office of the Auditor General has noted that measures have been implemented that are intended to ensure that accounts are submitted on time, to improve procurement routines and prevent loss of revenues.
The Ministry of Justice
The Office of the Auditor General has indicated violations of the rules for public procurement in the Directorate for Civil Protection and Emergency Planning. It also points out that the Directorate has not complied with the VAT legislation, entailing inadequate calculation and reporting of value-added tax.
The Ministry of Local Government and Regional Development
The Office of the Auditor General criticises the Ministry for not having introduced measures to ensure that the Directorate of Immigration has a proper overview of refugees that have returned to their native country and later re-immigrated to Norway and that these refugees pay back the grant they received in connection with repatriation, as required. Aspects of the system of repatriation support were also criticised in the annotations concerning the Central Government Financial Statements for 2000.
The Office of the Auditor General also raises the issue that the Directorate of Immigration does not follow up financial and administrative matters at refugee reception centres sufficiently. This applies to monitoring that reception centres receive correct payment and that residents receive the financial help they are entitled to. A number of circumstances in connection with follow-up and monitoring of reception centres were also raised in the annotations concerning the Central Government Financial Statements for 1999.
The Ministry of Local Government and Regional Development admits that its follow-up ought to have been better in several areas.
The Ministry of Culture and Church Affairs
Through its involvement in the subsidiaries Fabelaktiv AS and Spillverden AS, Norsk Tipping AS has received more than NOK 40 million in financial support over a four-year period. This has led to a reduction in profits from the state lottery. The Office of the Auditor General takes a critical view of the fact that central issues related to management and monitoring are decided informally in communication between the Ministry and the administration of Norsk Tipping AS, without involving the board. It is also pointed out that it is unfortunate that Norsk Tipping, which is a monopoly, may be at risk of cross-subsidising a commercial subsidiary.
The Church Property Endowment Fund is to promote church goals through administration of assets and financial capital. The Office of the Auditor General has found weaknesses and deficiencies in terms of documentation, audit trail and internal control linked to the accounts for 2003. It is queried whether the board has followed up the administration’s work sufficiently.
The Ministry of Trade and Industry
Several matters have been raised linked to development of a case-processing and financial system in GIEK (the Norwegian Guarantee Institute for Export Credits). There have been serious delays, and the system has cost almost twice the original estimate. Major delays and cost overruns indicate inadequate management and follow-up of the project.
The Ministry of Social Affairs
The National Insurance Service has reorganised its accounting work. The audit revealed that the service’s managers need to clarify in more detail the distribution of responsibility and labour between the different sections within the service. Weaknesses have previously been discovered in the computer systems for payment of old-age and disability pensions. Follow-up demonstrates that control measures in case processing routines do not function as intended.
The Ministry of Education and Research
The Ministry of Education and Research has developed a new accounting standard for universities and colleges that facilitates more efficient management and control. However, there is still uncertainty concerning the distinction between state allocations and commercial funds. Funding of higher education is based on data about activities reported by the institutions in the sector. The Office of the Auditor General is critical of the fact that several institutions do not have strategies to assure the quality of the data.
Many units in the university and college sector still fail to comply with the rules for public procurement. At nine institutions, violations have been registered of the procedures for public procurements over NOK 200 000. Breaches include lack of competition, poor documentation and inadequate announcement of acquisitions.
This report 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.
Deferment of publication of public documents linked to the Central Government Financial Statements for 2003 ceases to be effective from 4 November 2004.