Organisations’ support processes are largely appropriate but the use of concepts should be harmonised

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The National Audit Office (NAOF) has audited subsidies paid from the state budget to non-profit organisations. In the same connection, the NAOF also audited cases where tasks relating to discretionary government transfers had been delegated to actors other than public authorities.

Support is granted from the state budget to a variety of non-profit organisations, including private institutions, organisations, associations and foundations, as well as certain institutions operating under public law, such as the Finnish Institute of Occupational Health and the Finnish Forest Centre. The NAOF audited six types of subsidies paid to non-profit organisations. In 2018, the subsidies paid from these items amounted to 128 million euros. The aim of the audit was to examine whether the applicable regulations had been followed in the application for and the granting and payment of government subsidies, and in the supervision of the use of the subsidy, and whether the internal control of support processes is appropriately arranged.

Overall, the processes are appropriately organised and no actual cases of abuse were detected. The audit revealed that there are inconsistencies between different forms of subsidies regarding the use of concepts. This can result in differing interpretations, which may impact the subsidy decision and the amount of subsidy.

‘For example, employment policy project support should not be granted for business activities, but there is no explicit definition of what constitutes business activities. Differing interpretations may impact the subsidy decision and the amount of subsidy. To ensure equal treatment between applicants, it would be important to define the concept of business activities in the guidelines applied to the employment policy project support,’ says Tea Grönlund, Principal Financial Auditor at NAOF.

The audit revealed some individual irregularities in three types of subsidy. For example, support had been granted contrary to the relevant regulations and there were some deficiencies in the supervision of the use of subsidy. A few deficiencies in internal control were also detected.

‘In addition, the Act on the Operation and Financing of the Institute of Occupational Health and the related Decree are in many respects outdated and insufficient. Therefore, the NAOF recommends that the provisions concerning the Institute of Occupational Health be updated,’ Grönlund says.

The audit also examined three cases (Business Finland, Motiva Oy and Finnish Wildlife Agency) where tasks relating to discretionary government transfers had been delegated to actors other than public authorities.

A public administrative task may be delegated to another actor than public authorities only by an act or by virtue of an act if this is necessary for the appropriate performance of the task and if the requirements of good governance are not endangered. However, tasks involving significant exercise of public powers can only be delegated to public authorities.

At the beginning of 2018, the Finnish Funding Agency for Innovation Tekes became the Finnish Funding Agency for Innovation Business Finland, and Finpro Oy became Business Finland Oy. The Finnish Funding Agency for Innovation manages the company, and the company operates under its ownership steering. The tasks delegated to the company have not been defined and specified sufficiently accurately in legislation. The public administrative tasks delegated to Business Finland are currently being investigated by the Deputy Parliamentary Ombudsman.

Read the publication: Supporting non-profit organisations, and certain exceptional procedures

Read more about good governance and the audits conducted by the NAOF: www.vtv.fi

Further information about supporting non-profit organisations: Tea Grönlund

Further information about the audit concerning Business Finland Oy: Jaakko Eskola

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