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STATE AUDIT OFFICE REPUBLIC OF LATVIA
AUDIT REGULATIONS
STATE AUDIT OFFICE AUDIT REGULATIONS
Public bodies, public enterprises and officials, as well as local government bodies, enterprises (hereinafter called "the auditable bodies") and persons, if they have a right to use and have possession of government property, either are financed from government guaranteed funds or fulfil government orders and deliveries, shall be subjected by Audit by the SAO.
During Audit it shall be the duty of the SAO to ensure that the used and receipt of state and special budget resources, as well as transactions with government property are legal, effective and proper.
Audits shall be initiated by the Auditor General or heads of audit departments of the SAO.
(1) Audit reports shall be based on reviewing documents or carrying out the audit itself. Audit conclusions shall be made on the basis of audit findings and review of documents.
(2) The effectiveness of a transaction shall be examined by the SAO only after its execution.
The SAO has the right, if necessary, to hire experts or specialists.
(1) The required audit documentation and information shall be submitted to the SAO within two weeks, if the request does not specify a shorter term.
(2) Failure to comply with the requirements set out in Article 1 of this Act initiates penalties as per existing legislation.
If the requested audit documentation and information has not been submitted, audit conclusions are made on information available.
Secret files of auditable bodies which include, according to legislation, government secrets shall be inspected by auditors specially authorised by the Auditor General. The Auditor General shall advise the auditable body’s management of the name of the authorised auditor prior to commencement of the audit.
The SAO shall advise bodies’ managers or the Prosecutor’s Office in cases where the audit funds contravention of legislation by responsible officials.
A decision by a court of law is binding to auditable bodies, as well as the SAO. A court decision does not eliminate audit findings of losses to the State and consequent recovery procedures based on audit documentation.
Agreements entered into by auditable bodies without prior approval by the SAO are not binding on the SAO, providing audit conclusions.
SECTION I GENERAL REGULATIONS
(1) Documental audit shall be carried out in two ways:
(i) examining revenue and expenditure;
(ii) examining transactions with government property and funds.
(2) On examining revenue and expenditure, the SAO shall determine property turnover an status, as well as the correctness of accounting entries.
(3) Examining transactions with government property and funds, the SAO shall ensure that these transactions are legal, effective and proper.
Examining public revenue, the SAO shall ensure that all revenue due is collected and received by due date, that outstanding amounts are appropriately accounted for, and the necessary follow-up actions are taken to enforce collection of overdue debts and penalties. In addition the SAO must ensure that extensions of payments and rebates have a legal basis.
The SAO shall form an opinion whether expenditure has a legal basis and is correct and effective.
Examining auditable special budget organisations, the SAO shall also ascertain that all shown amounts are properly accounted for as special budget revenue and all received funds are accounted for and used as per appropriation.
Auditing deposits, the SAO shall pay particular attention to the fact that receipts do not contain amounts which should be accounted for as government revenue or special budget revenue. Checking repayments of deposits, the SAO shall ensure that regulations have been complied with, the repayment has been made to the appropriate person.
Checking accounts for acquisition and construction of assets, the SAO shall ensure that the use of manpower and materials is legal, effective and proper, that work is completed as per approved projects, estimates and contracts, as well as the Government has not suffered any losses due to failure to comply with approved projects and contracts.
Checking recurrent expenditure of public bodies and enterprises, the SAO shall ensure that financial transactions have a legal basis and accounting entries correspond to actual turnover of cash and materials, as well as the principle of effectiveness is observed.
The SAO has the right to audit not only questions prescribed in this Act, but also any questions concerning the status of and transactions with government property.
Auditable bodies shall submit to the SAO their regulations, directions, orders and other documents related to government revenue and expenditure or transactions with government property and timely advice of any amendments to the above.
(1) The audit report is signed by officers of the SAO, who have taken part in the audit, and representatives of the auditable body. If representatives of the auditable body consider the findings in the report to be improper, then signing the report, they have the right to explain in writing the reasons for their objections.
(2) The signed audit report shall be submitted to the relevant audit department of the SAO for review.
Reports signed by representatives of the auditable body and the SAO can not be contested after their reviewing by appropriate institutions of the SAO, except for cases when these reports are regarded as falsified or a possible mistake has occurred.
According to the Renewal of the State Audit Act of 2nd August 1923 Article 5 employees of the SAO, whose position is not lower than an auditor, have the right to demand any explanations necessary.
Issues regarding losses found during the audit are dealt with in terms of Article 57 in this Act.
(1) In auditing the SAO evaluates internal control and, if necessary, suggests appropriate improvements. The SAO also forms an opinion on the effectiveness of internal audit as an important part of internal control.
(2) The SAO has the right to give binding instructions to public bodies how to improve audit programmes and introduce internal audit.
(1) Pre-audit is an audit of a project or approval documents on economical activities which have not yet occurred. The effectiveness of economic activities which have not yet occurred is not to be taken to account.
(2) The purpose of pre-audit is to preclude illegalities and losses in government economy.
(3) In pre-audit the SAO:
(i) expresses opinion on projects and plans for transactions with government property;
(ii) review accounting documents before payment is made;
(iii) sends its representatives to meetings and committees of public bodies where economic issues are resolved and increases of government expenditure are proposed.
The SAO expresses its opinion to the head of the auditable body within seven days, but in the case of a motivated request - within three days beginning with the day of which their request is received. If the necessary documents are not appended to the project, the SAO is obliged to request them. If the necessary documents are not submitted, the project is sent back to the auditable body without any opinion.
The auditable body can carry out projects which have been submitted to the SAO, but not approved. The SAO must be advised accordingly.
If the SAO has not provided its opinion or has not approved the project submitted by the auditable body, the activities of the body shall be audited after the event.
The SAO can change its opinion on Audit only in case of discovering new facts which were not known before the expression of the opinion.
The SAO informs appropriate institutions of transactions which will be subject to pre-audit. The Finance Ministry is informed on timing and methods of payment for these transactions.
When the opinion is provided, the appropriate institutions send to the SAO payment vouchers for authorisation. If these documents are not certified by the SAO, transactions are not payable.
The SAO’s opinion on pre-audit confirm or veto payments on approved projects.
Payments confirmed by pre-audit shall be checked after the event in respect of effectiveness. If any new facts, which were not known before the expression of opinion, are discovered, payments shall be completely audited after the event.
(1) Documents not approved by pre-audit shall be audited after the event.
(2) Before invoices are paid the above mentioned payment documents can be represented for review, if reasons not allowing their approval are eliminated.
(1) Accounting documents for final accounts shall be reviewed within seven days. If a motivated notice on urgency has given, these documents shall be reviewed within three days.
(2) If circumstances do not permit finalising the audit within the time limits mentioned above, the SAO shall notify the appropriate institutions.
All necessary accounting documents shall be appended to the payment vouchers. If some documents have been submitted before, an itemised list of those documents shall also be submitted.
If the SAO and the appropriate institution have not reached agreement of different procedure, the SAO shall send certified payment vouchers together with accounting documents to the auditable body.
The SAO shall be given timely notice on the time and place of meetings at which public bodies and committees resolve issues on government budget, as well as the status and transactions with government property and funds.
At meetings where a representative of the SAO has a consultative voice his absence is not regarded as a reason to postpone any decisions.
Objections and opinions expressed by representatives of the SAO during the meetings shall be included in the minutes
Copies of confirmed minutes shall be send to the SAO within seven days, but in urgent cases within three days.
Objections by the SAO’s auditors shall not stop the concrete action by the auditable body. Nevertheless, the SAO shall be informed on these actions at all times. If the concrete action by the auditable body corresponds to the opinion expressed by an auditor of the SAO, it binds the SAO in the future in similar cases:
(1) if not new facts are discovered which were not known to the SAO during the previous certification;
(2) if the SAO did not have any objections before the concrete action.
SECTION III AUDIT
(1) Audit is an audit of past economic activities on the basis of accounting and approval documents;
(2) In Audit the SAO ensures that submitted documents are as required by an appropriate legislation and regulations.
The decision on surcharge taken by the collegium board of the audit department of the SAO shall be send to the auditable body within seven days.
Actual audit shall be carried out by the SAO according to legislative requirements or on its own initiative.
On actual audit the SAO has the right:
(1) to physically ascertain on the status of government property and its conformity to documents, as well as on the proper and safe keeping of the property;
(2) to audit the economic activities of auditable bodies and their branches;
(3) to collect the necessary data for Audit, including internal data from internal auditors;
(4) to get explanations from officials or private persons in order to clear up issues on Audit.
The duty of an auditable body is to support representatives of the SAO in respect of successful performance of their tasks. This means providing office space, as well as all other necessities.
The duty of an auditable body is to give notice to the SAO of losses of the State during Audit, if losses have exceeded 25Ls.
In auditing a representative of the SAO can totally or selectively examine the status of government property, its quantity or quality, as well as ensure that materials have been bought properly and works have been done correctly. In addition to the above mentioned the SAO can examine the activities of the auditable bodies and officials.
Government property shall be audited by the SAO in the presence of the official or the authorised person who is directly responsible for government property. Reports on audit results shall be signed also by these persons.
Cash of the auditable body shall be checked in the presence of the official who is directly responsible for cash and transfers cash, comparing it with the cash book.
Decisions on surcharges shall be taken by collegium boards of audit departments of the SAO on the basis of audit reports and conclusions, as well as taking into account explanations by responsible officials. SAO’s collegiate decisions shall be carried out without any appeal rights.
Surcharges shall be applied to the auditable bodies set out in Article 1 of the Act, if they have resulted losses to the State by improper and illegal transactions with government property, funds and securities, either they have illegally collected amounts or illegally taken possession of the property for the State whether payers have not objected.
All surcharged amounts shall be accounted for as public revenue.
Decisions on surcharges taken by collegium boards of audit departments of the SAO shall be carried out:
(1) by the Finance Ministry. According to these decisions the Finance Ministry decreases to state budgetary bodies government funds to the extent of surcharged amounts;
(2) in other cases - by court debt-collectors.
(1) If the collection of surcharges for losses to the State has been made, the auditable body has the right to collect surcharged amounts from responsible officers as per Article 129 of Latvian Labour Code and from persons who have illegally obtained benefits due to causing losses of the State as per Civil Law.
(2) Heads of public bodies and enterprises are responsible for enforcement of collection of surcharged amounts. In addition the collection shall be checked over by the head of the appropriate institution.
The fact of surcharges collected before does not acquit the auditable body of performance of contractual obligations for transactions, safeguarding of government property and fulfilment of government orders and deliveries.
Audit departments of the SAO examine audit results and complete the audit itself or in a month’s time collegium boards must review audit reports and finalise the audit.
The results of audits which have not been finalised are confidential.
If the collegium Board of the audit department of the SAO decides that the audit has not been fully completed, the collegium board orders to carry out the additional audit and specified the time and reason.
In the case of finalisation of the audit, that is, when surcharge has been made, the decision must show the reason and the amount.
A finished audit can be renewed only in particular cases. Besides it can be renewed only by the decision of the SAO’s Council, if new facts become known which were not known during the audit.
The SAO shall notify in writing the auditable body and the appropriate institution of finalisation of the audit and its results.
The Act adopted by the Saeima on 7th September, 1993 26th September, 1995. This means providing office space, as well as all other necessities.
