In the report, Rigsrevisionen concludes that the state accounts for 2010 is overall true and fair, and overall appropriate business procedures and internal controls have been established to support correct financial transactions. Rigsrevisionen has assessed the results of the audit of government enterprises under 19 ministerial remits that are included in the state accounts for 2010. The report includes a paragraph on each ministerial remit, in which the results of the assessment of accounting and administration are presented and the most significant audit cases are summarized.
In the opinion of Rigsrevisionen, the enterprises have come far in their efforts to implement the accounting reform and have become familiar with the new accounting rules that follow from the reform. The accounting rules have also in selected areas been simplified and thereby also easier to apply for the enterprises. The enterprises have managed to rectify many of the errors and inadequacies that Rigsrevisionen has pointed to in recent years, which has improved administration. To this should be added that also the Financial Service Centre under the Danish Agency for Governmental Management has implemented various improvements in the course of 2010 resulting in better quality of services provided to the clients and well specified distribution of responsibilities between the Service Centre and the clients and these improvements are reflecting on the accounting.
Some enterprises are still challenged in relation to the accounting and financial management, and Rigsrevisionen has qualified its opinion on three enterprises and inserted emphasis of matter paragraphs on six occasions on enterprises included in the state accounts. The interim auditor general has only on one occasion included an emphasis of matter paragraph in a report on a financial statement.
The qualifications and emphasis of matter paragraphs are not reflecting a general trend. Yet, the comments made to the ministerial remits seem to indicate the nature of the challenges that face many of the enterprises in respect to the accounting and financial management. The audit for 2010 showed that many enterprises can enhance their quality assurance and internal control including reconciliation of debtors and creditors and reconciliation of balance sheet accounts. Rigsrevisionen recommends that the enterprises should utilise fully the monthly accounting statements that are provided by the Danish Agency for Governmental Management and which on several occasions have drawn attention to irregularities caused by inadequate reconciliation. Improved on-going follow-up will ensure that errors are detected and addressed earlier and the enterprises will be kept up to date on their financial latitude. Rigsrevisionen is of the opinion that management needs to devote more attention to the issue, and the departments should focus on the underlying enterprises' follow-up on accounts.
As a result of the financial crisis, the financial management in the public sector needs to be improved to ensure better prioritization and management of public expenditure in the financially tight years ahead. In the future it will be essential that the enterprises are able to document that they provide services efficiently and at a high level within the financial framework at hand and in compliance with the objectives set for the enterprises. To achieve this, the basic accounting functions of enterprises must be in place to ensure that budgets are followed up continuously. The enterprises are also required to link expenditure with activities and outcome. Rigsrevisionen has pointed to some of the challenges that face the enterprises in terms of improving financial management, but many government enterprises are in fact generally in an excellent position to improve their financial management, because their accounting management provides an excellent basis for financial management.
The last section of the report presents the key numbers of the state accounts and provides background information on the audit performed.
Read the report (PDF)