Document 3:9 (2010-2011) The Office of the Auditor General’s investigation into internal control in the defence sector
was submitted to the Storting on 7 June 2011.
Good internal control is crucial if the Armed Forces are to be able to prevent and uncover irregularities and errors. The Office of the Auditor General’s investigation shows significant weaknesses in the Armed Forces’ internal control. Even though the Ministry of Defence and the Armed Forces have established a good formal framework through regulations and guidelines, the implementation of this framework is inadequate.
The investigation shows that most units in the Armed Forces conduct a monthly review of the unit's internal control based on a checklist. However, the quality of this control is inadequate, for example in relation to verifying compliance with regulations and procurement procedures. The investigation also shows that the control is not generally based on risk assessments. - Risk assessments are necessary to ensure effective control measures, Mr Kosmo points out.
Several violations of the rules have been uncovered in connection with the procurements reviewed in this investigation, for example lacking procurement records, and procurements having been exempted from the competition requirement without grounds being stated. Furthermore, poor invoice verification was uncovered in the Armed Forces’ driving training. Workdays of up to 19 hours have been invoiced without the Armed Forces having questioned this.
The investigation also shows that there are weaknesses in the internal control systems in the procurement area. For example, many of the Armed Forces’ units fail to carry out regular impartiality assessments. Because many do not use the procedure for procurements set out in the Armed Forces' accounting system, there is also a risk of procurements being made by unauthorised personnel.
The investigation also shows weaknesses in connection with the administration of framework agreements. ‘Even though the Armed Forces acknowledge that loyalty to framework agreements is challenging, the control in this area is inadequate,' says Mr Kosmo. The control of whether framework agreement suppliers invoice the correct prices is also unsatisfactory. Poor control entails a risk of framework agreement suppliers overcharging the Armed Forces.
Both in previous investigations and this investigation, the Office of the Auditor General has found weaknesses in the Armed Forces’ materiel management. Materiel is not satisfactorily registered in the administrative system SAP, and there are also weaknesses in the units’ internal control. The Office of the Auditor General will follow up the establishment of central materiel accounts for the Armed Forces.
The Ministry of Defence confirms that the Armed Forces face considerable challenges in relation to the practical implementation of internal control, and states that the ministry will monitor the development through its management of subordinate agencies.
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The deferral of public access to documents prepared by or for the Office of the Auditor General in connection with Document No 3:9 (2010-2011), cf. the Act relating to the Office of the Auditor General section 18 second paragraph, is hereby set aside.