Inadequacies in small parties’ disclosures of political party funding – oversight promotes transparency

As a rule, the district organisations of political parties represented in Parliament comply well with the funding legislation. However, the National Audit Office of Finland (NAOF) also found inadequacies and unlawful procedures when examining the disclosures of so-called small parties. Each year, the NAOF audits political party funding and the government subsidies granted to political parties, i.e. party subsidies.

Last year, the National Audit Office audited the funding of altogether 31 district organisations of political parties represented in Parliament and so-called small parties. The term ‘small party’ refers here to such political parties entered in the party register that did not have any MPs at the time of the audit. The NAOF also oversaw the government subsidies granted for political activities, i.e. so-called party subsidies, by examining the accounts and agreement procedures related to them.

“As a rule, political parties comply well with the funding legislation, but this time, when auditing small parties, we found several considerations on which no statutory disclosures had been submitted. Such considerations can be, for example, a considerable bequest or support formed by a forgiven debt. The annual maximum amounts have also been exceeded. In addition, the rent for office premises does not always seem to correspond to the market price, and this difference should be looked into,” says Klaus Krokfors, Principal Financial Auditor at the NAOF.

“After the audits, the political parties have reported several contributions to the system, which has improved transparency. The names of unknown donors of contributions in the virtual currency Bitcoin were also added to the political party funding register after the audit. The party that had received the contributions found out the donors at the auditors’ request.”

The Act on Political Parties does not contain any provisions related to pass-through items or so-called pass-through billing. For reasons of clarity, the National Audit Office has recommended that various advertising revenues and MP’s contributions should be reported to the electronic political party funding register maintained by the NAOF. In 2019, the number of such disclosures filed was actually higher than before.

In 2019, the contributions reported to the NAOF’s register as received by political parties, their district and women’s organisations, other party associations, and affiliated entities totalled about EUR 4 million. The amount is about EUR 1.2 million higher than in the previous year. In addition, about EUR 1 million in total was reported to the register in 2019 as support directed to previous years. A considerable number of the retrospective disclosures resulted from the audits conducted. The contributions reported to the system in 2011–2019 totalled about EUR 29.9 million.

In Finland, there are about 6,000 party associations, of which 150 are overseen by the NAOF. The NAOF is also responsible for the oversight of the government subsidies received by the political parties represented in Parliament, i.e. party subsidies. The parties represented in Parliament received more than EUR 29 million in party subsidies from the budget of 2018. Based on the audit findings, political parties and other entities that had received subsidies adjusted their accounts during the autumn of 2019.

In 2019, the NAOF audited all registered parties that were not represented in Parliament at the time of the audit. These so-called small parties were the Animal Justice Party of Finland, the Feminist Party, the Independence Party, the Citizens’ Party, the Communist Workers’ Party – For Peace and Socialism, the Liberal Party, the Pirate Party of Finland, Seven Star Movement, Blue Reform, Finnish Nation First, and the Communist Party of Finland. In addition, the NAOF audited 20 district organisations of the parties represented in Parliament in the electoral districts of Central Finland, Savonia-Karelia, and Vaasa.

The NAOF examined the overseen entities’ political party funding and accounting for a maximum period of 2011–2019. As in previous years, there is still room for improvement in the accounting of the overseen entities and in the work of their authorised auditors.

The NAOF will continue to conduct audits of political party funding in the autumn of 2020 by auditing again all the parties represented in Parliament. These parties were previously audited in 2018.

Read the publication: National Audit Office’s report to Parliament on the oversight of the funding of political parties in 2019