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12/05/2020   In performing the consolidation of the business supervisory institutions, it is important not to repeat the mistakes of the past

At the end of 2019, the activities of economic operators in Lithuania were supervised by 54 institutions, including the State Tax Inspectorate, State Food and Veterinary Service, State Territorial Planning and Construction Inspectorate, State Labour Inspectorate, Customs Department, State Data Protection Inspectorate, and others.

In improving public administration, supervisory institutions have been consolidated and the objectives have been set: to optimise functions, reduce the burden of business supervision, and increase the efficiency of the use of budget funds allocated for the organisation of activities of supervisory institutions. Decisions to reorganise the system of the supervisory institutions are important, nevertheless, significant changes in this area have not been achieved. This is evidenced by the audit “Consolidation of Institutions Responsible for Supervision of Activities of Economic Operators” performed by the National Audit Office of Lithuania (NAOL). The supervision of economic operators must be purposeful, efficient, and effective. Each year, such supervision costs more and more: comparing 2019 and 2016, the costs increased by 30 per cent and amounted to about EUR 300 million according to preliminary estimates of auditors. This amounts up to 3 per cent of the total State budget appropriations. As the cost of the supervision of economic operators to the State has not been counted so far, during the audit, data were collected and preliminary estimates were made using the data provided by the institutions on the part of the activities including business supervision functions (in per cent), and the State budget appropriations allocated to institutions.

“Decisions to reorganise the system of institutions supervising the activities of economic operators are necessary, nevertheless, significant changes in this area have not been achieved. They must be grounded on data, therefore, in order to achieve the objectives of the reorganisation, it is important to perform not only a qualitative but also a quantitative assessment of the current situation, to determine the desired result and clear indicators by which the results will be measured. However, this has not been done”, says Sandra Ragėnaitė, Chief Advisor of the Economic Audit Department of the NAOL. The most recent audit of the NAOL shows that there were no cases of the assessment of the supervisory burden on the economic operators in the consolidation plan of the institutions supervising the activities of economic operators  , while the costs and benefits of consolidation were not counted in 6 cases out of 10. At the national level, it has still not been assessed whether the supervisory functions performed by the supervisory institutions remain relevant and whether it is purposeful that the functions are further performed by the public institutions. The focus is often placed on reducing the number of institutions rather than reviewing the supervisory functions. No proper preparation was made for the consolidation, and, as a result, it is being implemented on a smaller scale than planned, and not respecting the planned deadlines.The audit also draws attention to the NAOL audits performed in 2019, which show that the systematic assessment (scoreboard) of the progress of supervisory institutions performed by the Ministry of Economy and Innovation, high-ranking supervisory institutions do not perform their activities as well as they are assessed.

 

Responsible for the information Communication Division
Last updated on 16 September 2020

National Audit Office of Lithuania

Pamėnkalnio St 27, LT-01113 Vilnius, Phone: + 370 5 266 6793, + 370 5 266 6752, Email: nao@vkontrole.lt.