No. 1




Presentation of the Auditor General in the Riigikogu Reporting on the “Use and Preservation of the State Assets”

  • Juhan Parts

    Minister of Economic Affairs and Communications, Pro Patria and Res Publica Union

In his presentation in the Riigikogu on 22 September 1999 Auditor General Juhan Parts dealt with four topics:

First, he talked about the main problem in the financial management of the state, which is defining the objectives of state expenditure. The State Audit Office is of the opinion that in the case of every item of expenditure we have to ask ourselves what we want to achieve with it, and then we can ask what we actually did achieve and what it cost for the state. This presumes that the whole process of drawing up the budget and the whole governance of the state should be results-oriented.

Second, Auditor General stressed the need for a state balance sheet. The balance sheet gives an overview of the financial standing of the state, its liabilities and their possible sources of coverage. Compiling and arranging of such data into a balance sheet is necessary for the planning of long-term activities, the assessment of what has happened during the year, and for estimating the effect of what has been planned for the subsequent year.

Auditor General also addressed the problems of internal control. According to him, there is currently no effective system of internal control in Estonia. Mr Parts stressed that although the existence of a financial control system is required by the European Union, it should first and foremost be a national priority as an element in raising the quality of management.

The quality of management was also stressed in relation to the fourth topic – the bankruptcy of the Maapank – an event that was also partly a result of wrong management decisions. Auditor General drew the attention of MPs to the conclusions of the Danish expert Eigil Molgaard, who had said that it is important for the state to create a management culture that meets the conditions of the market economy.

Full article in Estonian