1 Incorrect categorisation and incomplete accounting
Investment decisions were brought by the representative body in each and every case in line with legal regulations. Due to the incorrect categorisation of business shares and the lack of accounting the capital reduction of 2015 and 2016 the report of the municipality failed to present a true picture of the value and change of invested public asset. Stock-taking of shares has not been completed in spite of the legal requirements.
2 Insufficient controls
Risk: integrity issues
Controls established to ensure organisational integrity were insufficient to meet the risks; thus, the development of integrity and the establishment of further controls is needed. Main integrity controls have been established by the municipality; however, the operation of controls strengthening integrity have not reached a high level.
The SAO audit addressed whether the establishment and operation of internal control system of Rudabánya municipality was compliant, whether it ensured compliant use of public funds, regular and responsible management of public funds and national assets and the fulfilment of reporting and data provision obligation. In the framework of the audit the SAO also evaluated the fullness of integrity controls for the management of corruption risks linked to the municipality, whether integrity approach has been applied and whether the establishment of the internal control system related to certain investments is in compliance with the legal requirements.
In accordance with its strategic goals, the SAO – pursuant to the authorisation set out in Act LXVI of 2011 on the State Audit Office of Hungary – performs audits of the responsible management of public funds and assets owned by the state and local governments, as well as audits of compliance with the accounting rules and the operation of internal control system of local governments. Furthermore, it supports the establishment of the integrity-based, transparent and accountable use of public funds. In the case of organisations managing public funds, the SAO assigns priority to auditing the adequate operation of internal control systems.