Analytics, Estonia, Financial Services, Legislation

Accounting in state agencies, foundations controlled by the state and public undertakings is predominantly well organised and the financial statements are predominantly free of material misstatement, the National Audit Office said on Friday.

The National Audit Office finds that the state's most significant economic transactions were performed according to the State Budget Act, the 2016 state budget that was adopted as an act and the act for its amendment.

The revenue collected by the state in 2016 according to the State Budget Execution Report amounted to 8.58 billion euros, which exceeded the revenue of 2015 by 590 million euros. The expenditure incurred and the investments made by the state amounted to 8.55 billion euros, which exceeded the expenditure of 2015 by 210 million euros. The state's assets totaled 16.5 billion euros at the end of 2016 and the majority of the assets are fixed assets -- forest, roads, buildings, machinery, etc.

Compared to the previous period the value of assets has increased by 171 million euros. The state's liabilities totalled 7.4 billion euros at the end of 2016, which means that they have decreased by 338 million euros compared to the previous period. Long-term liabilities in the amount of 4.88 billion euros comprise the majority of liabilities. The state's has loan payables in the amount of 2.9 billion euros and they have not changed considerably compared to the previous period. The state's pension payables amount to 2 billion euros.

The audit revealed that, similarly to 2015, the Ministry of Finance has used the money of the Health Insurance Fund and Unemployment Insurance Fund deposited with the ministry in 2016 for making the state's payouts in addition to the settlements of the two funds, because the state did not have enough available funds. The National Audit Office is of the opinion that the State Budget Act, the Estonian Health Insurance Fund Act or the Unemployment Insurance Act do not stipulate clearly whether the Ministry of Finance has been granted the permission to do so.

The National Audit Office advised the Ministry of Finance to initiate the amendment of the relevant acts to guarantee legal clarity in whether the money deposited with the Ministry of Finance can be used to manage the state's liquidity, and to review the liquidity risk management model used throughout the state to guarantee that the funds in the State Treasury are sufficient to cover liabilities at all times. The Ministry of Finance disagreed with the observations made by the National Audit Office.