The Court of Accounts Identifies Irregularities at Moldsilva

The Court of Accounts Identifies Irregularities at Moldsilva
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11 May 2020 | 06:26

Moldova’s Court of Accounts found several irregularities at Moldsilva, the central public administration institution on state policy in forestry and hunting in the country. The court identified irregularities in the evaluation, accounting, and management of forest fund lands. According to the court, Moldsilva undervalued the value of forest fund lands by about €710.5 million (13.63 billion lei), undervalued the income related to the payment for the lease of the forest fund by 63,000 euros (1.2 million lei), and failed to collect revenues liable for collection from the forest fund lease in the total amount of €2.23 million (42.8 million lei).

The Court of Accounts performed an audit at Moldsilva, the central public administration institution on state policy in forestry and hunting in the country. Following the audit, the Court identified several irregularities.

In 2019, the agency managed capital goods amounting to €1.74 million (33.4 million lei), current assets amounting to over 10,000 euros (200,000 lei), total revenues amounting to over 865,000 euros (16.6 million lei) and total expenses amounting to €1.01 million (19.4 million lei), and the financial result for the current year was around 146,000 euros (2.8 million lei).

The agency prepares financial reports according to the requirements of the budget system submitted to the Ministry of Finance, and financial statements – according to the requirements of National Accounting Standards, applicable to the corporate sector, submitting them to the National Statistics Office.

“This double reporting led to the undervaluation of assets and liabilities by around €1.26 million (23.9 million lei), the undervaluation of actual revenues by over 985,000 euros (18.9 million lei) and the underestimation of actual expenditure by around 949,000 euros (18.2 million lei),” the Court of Accounts states.

In the context of the Forest Fund’s land management, the Court of Accounts notes that:

  • On December 31, 2019, Moldsilva had 337,600 ha land. The agency didn’t apply the provisions of the Methodological Norms, related to the budgetary arrangements when evaluating and accounting the managed lands and underestimated the value of forest lands by over €710.5 million (13.63 billion lei).
  • The agency underestimated the revenues by 47,000 euros (900,000 lei) because it included the value-added tax in the amount of the basic pay for the lease of the forest fund. 
  • The agency ignored the provisions of the legislation in force, regarding the issuance of authorizations for wild boar hunting. Although there is no legal framework to allow free of charge hunting authorizations, the agency issued them based on an internal order. This led to an underestimation of revenues by 15,000 euros (300,000 lei). In 2017-2018, the agency did the same mistake, losing around 42,000 euros (800,000 lei).
  • In 2016, the state approved a new price for the lease of the forest fund, from around 200 euros (4,100 lei) to around 1,000 euros (19,100 lei) for one ha. However, the agency didn’t review and renew the leasing contracts according to the new changes in the legislation. Subsequently, the agency lost around €2.23 million (42.8 million lei).

The audit mission also identified deficiencies in the assets managed by Moldsilva:

  • The agency didn’t register 302,400 ha of forest land, which could lead to the alienation of the state property and failure to ensure the integrity of the state goods. 
  • The agency didn’t report 337,600 ha of land to the Public Property Agency, which involves distorting the data in the state register of public property.
  • The agency also didn’t take any measures, over several years, to develop rules for the assessment and accounting of plants and vegetation. This process, according to Moldsilva Agency estimates, can take at least four years. The lack of an accounting policy framework on vegetation assessment and accounting rules makes it impossible to assess the impact on the value of assets under management and, as a result, on the completeness of the information included in the audited financial statements.
  • Moldsilva Agency keeps records of the register of leases, which contains insufficient information, not including the area of ​​land leased, from which forest areas are given leased areas, the term of leasing in years, etc. The lack of designation of a person responsible for keeping the Register of leases does not ensure the completeness of the information entered, as well as the possibility to monitor and control the data in the register.

In the Court of Auditors’ view, the accumulated audit evidence is sufficient and appropriate to serve as a basis for the audit opinion, determined by the effect of material misstatements, and that the financial statements do not, in all material respects, provide a fair and accurate picture of the financial position of the Moldsilva Agency for the financial year ended 31 December 2019, in accordance with the applicable financial reporting framework.

After the Court of Accounts of Moldova informed about several irregularities following the evaluation of the financial reports of Moldsilva, the representatives of the agency came with a public reaction stating that some aspects invoked by the court were presented distorted in the media.

According to the agency, the Court of Accounts came with proposals and didn’t find irregularities. 

AUTHOR MAIL eng.zdg@gmail.com
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