Municipal Control and Audit Office's role in the field of municipal borrowing. September 11, 2014 Vilnius

Transcription

1 Municipal Control and Audit Office's role in the field of municipal borrowing September 11, 2014 Vilnius

2 Municipal control and audit office SAVIVALDYBIŲ KONTROLIERIŲ ASOCIACIJA In the Lithuania: 60 municipalities 58 of the Control and Audit Offices 2 Controller 280 employees Founded in 1999, the Association of Local Government Controllers 2007 membership in the EURORAI

3 Auditing Borrowing limits of Municipalities. Current Challenges status of municipal debt amounted to 1.95 billion Lt and in ten years increased by about 4 times. Annual net borrowing over a year municipalities increased by 9 times (from billion Lt 0,925 to billion Lt). During the current year expected to repay the loan and interest amount in ten years increased over 200-fold (from thousand Lt to thousand Lt).

4 Auditing Borrowing limits of Municipalities. Current Challenges Municipal debt is growing. During the ten years of municipal income and debt ratio in the percentage has more than doubled (from percent to 55.7 percent.)

5 Municipal borrowing Legal Basis and Restrictions Local Self-Government of the Republic of Lithuania Law on No. I-533 (as amended). Structure of the Budget of the Republic of Lithuania Law on No. I-430 (as amended). The Republic of Lithuania in 2013 the state budget and local budgets Financial Indicators of the Law No XII- 65 th. Government of the Republic of Lithuania Resolution No "On approval of rules for municipal borrowing" (Resolution No version). Municipal Council in Decision on 2013 Municipal Budget Approval.

6 Municipal borrowing Legal Basis and Restrictions Local Self-Government of the Republic of Lithuania Law on Article 16, paragraph 1, point 27, The exclusive competence of the municipal council - the decision taking of loans and guarantees to the adoption of long-term loans; these loans are used only to finance investment projects in accordance with the procedure established by the Government in accordance with the statutory borrowing limit and with the controller of the municipality (municipal control and audit services) conclusion. According to the Republic of Lithuania in 2013 the state budget and local budgets Financial Indicators of the provisions of Article 12 of the Law, municipal borrowing limits are calculated from the approved 2013 municipal budget revenues (excluding the municipality of the state budget allocated to the Special Purpose Grant in 2012 and unused municipal budget). Municipalities can borrow only after audit the conclusion that the municipality does not exceed the statutory borrowing limits.

7 Municipal borrowing Legal Basis and Restrictions Short-term loans to municipalities may charge the Ministry of Finance for temporary working capital shortfall and must be repaid by the end of that year. Long-term loans - municipal borrowings from credit institutions to finance investment projects. (The debt is not only recognized as a municipal budget deficits, but also calculated the Lithuanian public finances deficit and public debt. Lithuanian legislation is sufficiently tightly regulates municipal borrowing). The provision of guarantees for joint-stock companies taken long-term loans. These loans are used only to finance investment projects in accordance with the procedure established by the Government.

8 Audits on the borrowing and providing guarantees. Objectives, the scope and methods Purpose of the audit - to assess whether the municipalities of the Republic of Lithuania within the respective state and municipal budgets Financial Indicators of the statutory lending limits, and have the opportunity to take a long-term / short-term loan or give a guarantee for loans taken from commercial banks, in return of the. Audit of the application of the assessment criteria - compliance with legislation governing municipal borrowing in 2013.

9 Audits on the borrowing and providing guarantees. Objectives, the scope and methods Audit evidence is obtained using the following audit procedures: examination of the documents, inquiry, calculation, analytical procedures. In key areas of audit conducted consistent full-scale debt balances in December 31, 2012 and the municipal budget for 2013 income, which influence borrowing parameters, determining the amount of borrowing estimations independent audit procedures.

10 Audits on the borrowing and providing guarantees. Objectives, the scope and methods Restrictions. Legislation of the Republic of Lithuania does not regulate municipal controller s provided Conclusions on the municipality to take the form of a loan, the scope and content, no such techniques. It is therefore the preparation of audit reports and findings make limited i.e., in terms of the legality of the assessment Municipalities evaluated lending compliance peremptory rules (mandatory requirements).

11 Results of audits 30 SKAT prepare audit reports and audit findings. The auditor's opinion is given on the audit conclusions; 22 SKAT does not prepare audit reports and auditor's opinion states only audit conclusions; 1 SKAT does not prepare the audit report and the auditor's opinion states only report; 1 SKAT debt audit procedures carried out in the consolidated statements as part of the audit and the auditor's opinion presented in a separate annex to the conclusions; Birzai district municipality could not take long-term loans for investment projects because they were not taken to the controller.

12 Results of audits In 2013 year 55 SKAT has audit procedures and prepared: 68 audit reports on the possibility of taking out long-term loans, 20 audit findings on the possibility to take out short-term loans, 26 audit reports on the provision of a guarantee for the repayment of loans, 1 audit opinion on the credit line increasing, 2 audit reports on the possibility of borrowing from the state budget Of all of the findings: - one is negative The possibility of extending the guarantee of loans repayment (SKAT Plunge) - and one wrong The possibility to take short-term loans (SKAT Lazdijai).

13 Results of audits Due to the wrong conclusion of Lazdijai Control and Audit Office Controller for his deputy in 2013 made an official sanction - a note.

14 Cooperation with the State Control The Challenge (New process of cooperation both sides) The Partnership (advice, strategies, coordination, exchange of information, assistance under the competence) The Trust (Among others) The Result (The opinion on the consolidated statements and the national budget) Public image (Cooperation between the two institutions has strengthened external influence of public audit in the community, communities and politicians, among others).

15 Findings Municipal Administration, asking for a loan for investment projects, artificially increases the list of projects to be implemented in order to obtain a higher amount of borrowing (SKAT Kupiskis). The municipal administration of long-term loans to non-investment funds used for projects, but to pay for services and works (Telsiai SKAT). 14 of budgetary institutions in 2013 amounted to promissory notes and debentures have not been specified in the report (SKAT Alytus).

16 Examples of good practice Marijampolė Control and Audit Office as part of the audit for issuance of a guarantee for company "Marijampole bus park loans, assessed ability the company to repay the loan. Palanga, Kedainiai, Panevezys, Sakiai SKAT performed thorough assessment of the evolution of municipal debt. Palanga SKAT performed assess whether projects meet the investment requirements.

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