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Information on the 2012 activities of the State Audit Office of Hungary

2013. 05. 02. 13:03
There is a need for the debt management of local governments, the investments realised with EU subsidies pose a risk, the loan package borrowed from international organisations worsened the Hungarian debt structure – these are some of the facts the State Audit Office of Hungary pointed out in 2012. It is an important step forward that, in compliance with the new Act on SAO, last year the audited entities already had to prepare an action plan in relation to each report.
n 2012 the State Audit Office of Hungary (SAO) published 112 reports, in contrast to the 72 reports of the previous year. The increase is primarily due to the fact that SAO completed the audit on the financial situation of the 63 local governments of towns – representing the totality of the Hungarian towns –, thus gaining a unique overview of the local government system’s finances. 

Our reports on local governments pointed out that such measures are needed that can prevent the reproduction of the local governments’ total debt. It came clear that one of the underlying reasons behind the indebtedness of local governments was the lack of own resources providing coverage for the co-financing requested in case of EU-investments. We pointed out that the country is lagging behind in terms of the utilisation of EU grants and the tardiness of the tendering system significantly worsens the efficiency of utilisation. Our audit experience is reflected in the new act on local governments and the debt management programme of local governments alike, while our findings were also taken into account during the renewal of the strategy for the utilisation of funds. 

In harmony with the Fundamental Law, in 2012 the SAO paid particular attention to the issues of the sustainability of public finances and the risks related to debts. Besides our opinion on the draft budget bill and our report on the execution of the budget, also our report examining the trends in public debt focused on this area. In its report on debt, SAO pointed out that the foreign currency credits borrowed from the International Monetary Fund and the European Commission worsened the composition of the total debt stock. 

Our audits conducted in 2012 drew attention to the fact that in order to be able to overcome the financial problems, Hungary has to change over to a growth path that does not entail the depletion of our and our children’s future. SAO findings were referred to during two-thirds of the parliamentary session days and 13 of our reports were put on the agenda of parliamentary committees. The regulations on postal 
services
, the sharing of revenues in the capital, and organ transplantation, as well as the act on disaster management were renewed on the basis of SAO’s findings. With its analyses SAO contributed to the fact that in 2012 the Fiscal Council took all its decisions by consensus, as well as to the fact that in the course of their decisions related to the budget both the Government and the National Assembly took into consideration several recommendations of the Council. 

In 2012 the era of audits without consequences finally came to an end in Hungary, as it was the first full year when the new Act on SAO was in force, thus all of our last year’s reports were accompanied with a plan containing concrete actions. This is a significant step forward, as before the Act on SAO took effect, hardly half of the recommendations resulted in consequences reflected in concrete actions. 

In order to keep the balance of the budget and public finances, last year the State Audit Office of Hungary renounced the utilisation of HUF 216.6 million chapter reserves improving balance and that of residues worth HUF 219.3 million. With its more efficient operation the State Audit Office of Hungary saved public funds amounting to HUF 435.9 million in 2012, which means that it could contribute to the improvement of the general government balance with more than 6% of its budget.