Assessment of 2020 set of National financial statements and data on public debt and its management

The National Audit Office presented in the Seimas auditor‘s reports on the national set of financial statements and financial and budget implementation reports of the state and five resource funds — Compulsory Health Insurance, State Social Insurance, Guarantee, Long-term Work Benefits and Reserve (Stabilisation) Funds for 2020. These auditor’s reports are produced annually by the National Audit Office as part of its constitutional obligation. As stated in the auditor‘s reports, the implementation of the budgets is reported properly, but data on the financial positions are not reliable.
  
Unqualified opinions were expressed on all sets of budget implementation reports. According to the auditors, the cash-based reporting for the implementation of the budgets has no significant weaknesses, which means that the use of the funds is correctly accounted for. A qualified and adverse auditor’s opinion is issued when material misstatements are identified, and they were identified in all sets of financial statements: the adverse opinions were issued on the sets of the national and the state consolidated financial statements, and qualified opinions were issued on the sets of financial statements of all resource funds. As reported by the auditors, data misstatements are due not only to ongoing errors, but also to the volume of atypical activities in the public sector related to the management of the consequences of the pandemic. 

“Better quality data on public finances and their opening make public sector work more efficient, increase government transparency and encourage citizens’ involvement in decision-making. Unfortunately, for the nine consecutive years, we have found material misstatements in the sets of the national and the state consolidated financial statements, and in 2020 we observed a worsening situation: the data does not present the true value of our state-owned assets, liabilities and income. For this reason, the data of the reports are not a reliable source of information when making governance decisions", - says the Auditor General Mindaugas Macijauskas.

The auditor’s reports on the above-mentioned financial and budget implementation reports are presented in the autumn, although the government has already reported on its performance in the spring. As part of the implementation of the recommendations issued by the National Audit Office, a new version of the Law on Public Sector Accountability was adopted in 2020, the provisions of which will oblige financial data linked to performance to be prepared and submitted to the Seimas much earlier — during the spring session. The new arrangement was due to enter into force from 2022, but preparations have taken time and its entry into force is proposed to be postponed by one year. 

In order to reduce the extent of misstatements detected in the accounts of public sector entities, we make recommendations to public sector entities each year after carrying out our audits and, having identified the most common causes of errors, we recommend that the Ministry of Finance take measures to eliminate them.

• Assessment of 2020 set of National financial statements and data on public debt and its management (Summary)
• Assessment of regularity of 2020 sets of State consolidated financial and budget execution reports (Summary)
• Assessment of regularity of 2020 sets of consolidated financial and budget execution reports and legality of management, use and disposal of property and funds of the State Social Insurance Fund (Summary)
• Assessment of Regularity of 2020 sets of consolidated financial and budget execution reports and legality of management, use and disposal of funds and property of the Compulsory Health Insurance Fund (Summary)
• Assessment of regularity of 2020 sets of financial and budget execution reports and legality of management, use and disposal of funds and property of the Reserve (Stabilization) Fund
• Assessment of regularity of 2020 sets of financial and budget execution reports and legality of management, use, and disposal of funds and property of the Guarantee Fund
• Assessment of regularity of 2020 sets of financial and budget execution reports and legality of management, use and disposal of funds and property of the Long-Term Employee Benefits Fund