Financial management is problematic at most Dutch ministries; Hasty policies a big issue

The financial management of the national government is still inadequate, with 10 of the 12 ministries rated as being insufficient in keeping their affairs in order last year, the Court of Audit wrote in its accountability audit on Wednesday. The audit is released annually to give insight into whether the government handles taxpayer money with due care. It found that the rapid changes to policy is among the most serious problems, the the Ministry of Health, Welfare and Sport (VWS) is dealing with “structural weaknesses,” and the Ministry of Defense is facing many security issues.

Monitoring and accountability for new laws and regulations is becoming more difficult, because new policies are being created with too much haste, the Court said. It often happens that “ministries renew existing policy or introduce new policy, while the implementation has not yet been properly thought through.” As a result, accountability to Parliament “comes under greater time pressure every year.”

This is mainly reflected in problems in the accountancy. “The administration of the departments are not always in order, there is insufficient knowledge, the regulations are too complex or are not sufficiently automated supported.” Financial departments “who have to help the implementation with expertise and supervision” are often also “paper thin,” according to the Court of Audit. It sometimes happens that internal accountants have to step in, but that also creates problems for the independent position of, and the time pressure on, these auditors.

The Court of Audit saw some bright spots. While the margin of error was higher than permitted for both government expenditure and government commitments in the audit of 2021, during 2022 the primary concern was a high margin of error for government commitments only. Moreover, the overrun was much less than in 2021. On the other hand, the number of shortcomings has increased, the regulator said.

Properly accounting for expenditure and commitments is not just about keeping receipts, and is “more than a paper matter,” the Court emphasized at the start of its report. “Being able to properly explain how taxpayers’ money has been spent by ministers is the basis for citizens’ confidence in their political administration.”

Serious problems remain at the Ministry of Health, Welfare and Sport

The VWS ministry was a negative outlier, and has been singled out for the third year in a row. Once again, this concerns billions of expenditures, the legitimacy of which is under discussion. The Court of Audit asked Finance Minister Sigrid Kaag to step in and assist Health Minister Ernst Kuipers.

The Court of Audit still speaks of “structural weaknesses” at the Ministry of Public Health, Welfare, and Sport. There are, among other things, problems with the settlement of advances provided during the coronavirus crisis. The department could not guarantee the legality of 5.1 billion euros in advances. The Court called that a “serious deficiency.”

According to the Court, organizations that had received large amounts of advances were, in some cases, unable to demonstrate “whether all goods and services for which the Ministry paid have actually been delivered.” The fact that the legality of billions of advances provided is under discussion is “a serious finding,” the Court stressed. “Because it concerns money from citizens and companies, who assume that the right amount has ended up in the right place.”

The Ministry of Public Health has taken measures to improve its financial management, but the administration was not yet in order in 2022, the Court concluded. The program that was supposed to continue to improve the situation came to a halt at the end of last year. “We are concerned that the pace is slowing down while the problems in financial management are persistent.”

According to the Ministry of Public Health itself, the problems are “largely due to the measures that the Ministry had to take during the coronavirus pandemic in 2020 and 2021, and were completed in 2022.” Last year, the Ministry “put an enormous amount of energy” into accounting for expenditure. But that was not successful in all cases, the ministry conceded.

“This does not mean that this money has disappeared, but that the applicable rules have not always been followed properly,” a spokesperson for the Ministry stressed. The Ministry hopes to improve accountability next year.

Defense Ministry still facing financial management and security issues

In response to the Court of Audit’s findings last year, Kaag set up a special task force to improve financial management in the national government. In a sense, that has helped somewhat, but some ministries are nevertheless experiencing a deterioration. For example, the number of errors increased at the Ministry of Defense.

Security at the Defense Ministry is also not in order, the Court said. It has examined the security of military objects and concluded that it is “substandard.” It is not the first time that the surveillance of property, including barracks, has been shown to be insufficient.

A team from the Court of Audit tested the security of eight military items, such as aircraft and data centers. Security was not in order in half of the cases. The test team managed to climb over fences and slip through an electrically operated entrance gate. Passing soldiers did not ask any questions.

“If the test team had wanted to, they could have damaged or stolen these objects. We saw organizational, structural and electronic shortcomings,” said the Court of Audit. It also pointed out that an increased level of vigilance applies at Defense locations in connection with the war in Ukraine.

In the past, the military has often been embarrassed because journalists managed to penetrate barracks. Defense Minister Kajsa Ollongren said she will draw up a plan of action. Measures have also been taken to improve security.

Budget adjustments remain problematic

The Court of Audit once again drew attention to the large number of interim adjustments to the budget. This makes the budget process “unclear for parliament and the ministries.” In 2022, there were once again an exceptional number of incidental supplementary budgets: the budget was adjusted 51 times.

The Ministry of Economic Affairs was the biggest culprit. “It is remarkable that ministers already changed their approved budgets starting a few weeks after Prinsjesdag 2021,” according to the Court of Audit. Eight adjustments to the budget had already been submitted before 2022 had even started.

Reporting by ANP

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