Fund and Asset Management at the Kaunas Remand Prison

Having conducted an audit at the Kaunas Remand Prison, the National Audit Office found a number of significant weaknesses and cases of negligence in all examined areas.

Audit results have shown that the financial and other information of the Kaunas Remand Prison failed to provide a basis for sound decisions regarding funds and the management of assets; budgetary funds and assets were used irresponsibly; and internal control, including financial control, failed to ensure that activities be implemented in accordance with the procedure specified in legislation, and funds, assets and commitments to third persons be protected from fraud, embezzlement, misappropriation and other illegal acts. Auditors noted that the situation at the Prison confirmed the conclusions of the audit of the public sector internal control systems performed by the National Audit Office in March, that the internal control systems developed by the heads of institutions were often ineffective and failed to lead to improvements in performance.

According to the auditors, the accounting system of the institution fails to ensure appropriate financial information regarding assets and commitments: the data is unreliable and not based on the data of stock-taking; accounting information provided in financial reports is not traceable, appropriate, comparable or comprehensive; while unused assets are not written off, liquidated or otherwise realised.

It has been determined that the institution had disposed of its assets irresponsibly by renting them out, thereby failing to receive any income from the utilisation of assets; had paid for the expenses of a private legal person incurred due to the use of assets; and provided a private legal person with the opportunity to obtain benefit under non-competitive conditions. The institution had also used its budgetary funds irresponsibly, thereby incurring damage to itself by, e.g., procuring assets while there was no need for them, increasing their residual three-fold, and paying a full price (57,000 Eur) to suppliers for unreceived assets in advance without having been obligated to do so.

According to the auditors, the repair planning and implementation system of the institution is defective and leads to imprudent and irrational use of funds and assets. Repairs are planned inappropriately and their implementation is uncontrolled and not based on any documentation. Warehouse documents fail to represent the real quantity of goods.

The National Audit Office has recommended the Prison Department to conduct a stock-taking of all assets, reserves and commitments of the Kaunas Remand Prison, determine correct accounting data, and take measures to identify the persons responsible and recover all damages incurred to the Prison from said persons. The Kaunas Remand Prison was recommended to reorganise its personnel structure in order to reduce the costs of management.

The National Audit Office had informed the Ministry of Justice about the audit results. The actions taken by the Ministry in addressing the situation will be assessed by monitoring the areas of management assigned to the Minister of Justice in preparation for future audits. Issues identified during the audit were also submitted to the Special Investigation Service which is currently conducting an investigation into  abuses at the Kaunas Remand Prison.

When conducting the audit of 2016 set of consolidated financial statements of the state and state budget execution, the National Audit Office assesses the management of public funds and assets in other prisons as well. In total, there are 10 prisons in the country where over 6,000 convicted persons are serving their sentences. In 2016, 51.5 million Eur were assigned to the maintenance of prisons. Results of the aforementioned audit will be published in October.