02.09.2014

"A concurrent large scale audit of the first level spending units (FLSU) was performed by 17 teams of the State Financial Inspection Agency (SFIA) and by 17 teams of the internal audit units of the ministries in the period 17-27 August 2014", Deputy Minister of Finance Temenuzhka Petkova announced at a press conference in the Ministry of Finance. A Summary Report has been prepared reflecting the results of the financial inspections and internal audits of all ministries and the Council of Ministers. The report contains analyses and data on the budget implementation as of 31.07.2014, the receivables and liabilities in arrears, the fulfilment of contracts concluded, as well as an analysis of the planned by the FLSU public procurements for the period from 1 August until the end of the year.

The audits are in pursuance of one of the main priorities announced by the caretaker government and the reports have already been submitted to the ministers. Deputy Minister Petkova specified that the aim of the audit was to present a summarised picture of the budget implementation by ministry and at the Council of Ministers in order to identify the risks and to make the optimum management decisions.

The main conclusions as of 31.07.2014, pointed out by Deputy Minister Petkova, are: the revenues of the ministries and of the Council of Ministers are on track, underperformance is established at the Ministry of Agriculture and Food (MAF), the Ministry of Education and Science (MES) and the Ministry of Environment and Water (MEW); the reported budget expenditures are also on track with the exception of the Ministry of Regional Development (MRD), the Council of Ministers (CM) and the Ministry of Interior (MoI); some of the ministries have reached comparatively high level of the limits on commitments for expenditure and new obligations which poses a risk the limits to be exceeded. The reports on the cash implementation of the budget of the Ministry of Health, MAF and the Ministry of Foreign Affairs (MFA) as of 30.6.2014 do not provide information on commitments for expenditure and new obligations and this makes impossible to take adequate decisions. In some ministries, the CM, the Ministry of Labour and Social Policy (MLSP) and the Ministry of Culture (MC) personnel expenses are ahead of the expected budget implementation; the receivables in arrears amount to BGN 136.44 million. The pending by the end of 2014 payments under contracts concluded by the ministries and the CM in 2014 and in previous years total BGN 1.44 billion, while the financing provided for 2014 is BGN 1.176 billion; the financing of pending payments to the amount of BGN 267.33 million by the end of 2014 is not provided, the greatest share of financially not secured contracts being in the Ministry of Defence (MD) - BGN 103.60 million, of which BGN 98.78 of the Military Medical Academy, BGN 76.06 in the MRD, including BGN 76.04 for the Road Executive Agency (REA), BGN 42.58 in the MoI. The public procurements planned by the end of 2014 by the ministries and the CM are 3,593 with total forecast value of BGN 3.047 billion; the not provided for financing in the 2014 budget for these public procurements totals BGN 1.005 billion Temenuzhka Petkova announced that the conclusions drawn from the audits are the following: it is probable the ministries and the CM not be able to fulfil the commitments made under already concluded contracts; there is risk the amount of financially not secured pending payments under already concluded contracts to increase; a negative trend is being observed in some ministries to assume obligations for expenditure for which the financing is not provided for in the annual budget and this would lead to indebtedness of the ministries and to increasing arrears. There is also a real risk the ministries not to be able to implement their main policies by the end of the year and it is possible these obligations for expenditure to be carried forward to the next budget year which will have a negative impact on the 2015 budget too.

As regards the planned public procurements by the end of this year Deputy Minister Petkova expressed an opinion that the not secured financing posed risk for assuming additional obligations that would seriously worsen the parameters of the relevant ministries budgets for the current year. Therefore, an analysis to minimise the risk by ministry is required. "The needs of the ministries for specific public procurements should be analysed and which of them can be postponed", Petkova commented. The suspension of the funds by the EU under operational programmes also worsens the budget implementation parameters of the ministries. 

"The imperious 2014 state budget revision will reflect these audit recommendations and a solution will be sought for each ministry", Deputy Minister Petkova assured. She further stated that discussions were on going at the moment with the ministries under the 2015 budget procedure and all issues would be discussed in order to find an adequate solution.