VI. EUROSAI Training Event Better Auditing of Public Aids and Subsidies November 2006, Prague1 SUPREME AUDIT OFFICE CZECH REPUBLIC Audititing of State Aids and Subsidies Discussion Group 1

Audits of funds spent on cleaning-up flood damages Audit of the management of supports was carried out at Ministry of Transport, Transport Infrastructure State Fund, Ministry of Agriculture, Ministry of the Environment and selected beneficiaries. three typical response: – Acceptance of finding audits; Adoption of remedial measures; Rejection of finding audits

Audit of state budget finances spent on the provision of investment incentives and investment aid The audited entities were the Ministry of Finance and Ministry of Labour and Social Affairs. The audited beneficiaries were commercial enterprises. Monitoring of impacts showed that the audited ministries do not respect in all cases audit conclusions.

Tax subsidies Attitude to the fiscal policy in Germany Regulatory Impact Assessment for Tax Subsidies VI EUROSAI Congress –EUROSAI Project – coordinated audit of tax subsidies

The Audit of Subsidies by the Court of Audit Spain Comprehensive summary about state policy of subsidies Study case: „Audit of subsidies granted for the development of Plans related to training actions to improve the professional capacity of workers“ Main results

VI. EUROSAI Training Event Better Auditing of Public Aids and Subsidies November 2006, Prague6 Importance of activity State Aids and Subsidies 1. Ministries need to be encouraged to improve and strengthen their own internal control  Example from the Czech SAO in relation to Flood Damages

VI. EUROSAI Training Event Better Auditing of Public Aids and Subsidies November 2006, Prague7 Inportance of activity State Aids and Subsidies 2. Legislative Frameworks are Incomplete  Examples include gaps in the legislation, imperfections  Lack of definitions  Lack of compliance with laws, regulatios, directions

VI. EUROSAI Training Event Better Auditing of Public Aids and Subsidies November 2006, Prague8 Importance of activity State Aids and Subsidies 3. Unclear Objectives for Subsidy Programs  Examples in relation to Investment Incentives – contract annexes allowed additional funds to be spent but no changes to the goals or targets. Therefore, expenditure will bring no futher benefits for the State

VI. EUROSAI Training Event Better Auditing of Public Aids and Subsidies November 2006, Prague9 Importance of activity State Aids and Subsidies 4. Hidden subsidies – or Silent Subsidies  The Kiel University Institute for world economic affairs estimates that if all subsidies, of which tax subsidies are a large part, were abolished, German federal revenue would increase by 32%  These are not subject to the same scrutiny as other expenditures  These need to be scrutinised by both Parliament and by Auditors

VI. EUROSAI Training Event Better Auditing of Public Aids and Subsidies November 2006, Prague10 Importance of activity State Aids and Subsidies 5. Issues for Auditors to consider  Follow up  Can be very useful in ensuring changes happen  Cooperation with other audit institutions and auditors  We all have had similar experiences  Joint audits, collaborative audits, sharing experience  Attribution  Not easy to prove the subsidy was responsible for all changes

Thank you for your attention Hana Hykšová