Report on the monitoring of the funding of political parties in 2017

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The Act on Political Parties contains mandatory provisions aimed at promoting the transparency of funding for political parties and party associations.

The aim of the provisions is to increase the transparency of party funding, particularly taking into consideration the recommendations made to Finland by the Council of Europe’s Group of States against Corruption (GRECO). According to the recommendations, the public should have adequate information on the funding of parties’ basic activities and election campaigns so that the possible ties can be evaluated.

The National Audit Office monitors compliance with the provisions set out in the Act on Political Parties concerning financial support, the disclosure of election campaign costs and funding, and the preparation and submission of related documents by monitored entities. From the beginning of 2016, the National Audit Office has also been responsible for supervising the party subsidies referred to in the Act on Political Parties.

Financial statements for 2016 of political parties, associations referred to in a party subsidy decision, and entities affiliated with a party have been sent to the electronic party funding register.

Contributions totalling over EUR 21.3 million received by parties, party associations and affiliated entities were reported to the party funding register in up-to-date disclosures between 2011 and 2017.

Contributions totalling more than EUR 2.9 million were reported during 2017. The information supplementing the disclosures also apply to earlier years so that the additions made during 2017 totalled approximately EUR 0.4 million (for 2016) and EUR 0.1 million (for 2015). At least some of the information supplementing the disclosures result from audits of political party funding.

A total of 50 audits were conducted on the monitored political parties and their district organisations in 2017. On the basis of the audits, the up-to-date disclosures concerning political party funding together with supplements are correct in essential respects and provide correct information on the financial support received by the audited entities in essential respects.

The auditors discovered a number of cases where the recipient had not always filed up-to-date disclosures of the contributions that it had received. As in the previous audits, it was found out that it is not possible to obtain a reliable overall picture of party funding simply by examining income funding and the proceeds entered into the financial statements. The audited political parties and other entities have different types of accounting transactions that are regarded as pass-through items. Determining their content nevertheless has significance from the perspective of financial support as referred to in the Act on Political Parties.

The focus of the audits of party funding conducted in 2017 was on reviewing the procedures concerning candidate’s contributions and MP’s contributions. The related decision-making and contractual practices vary by political party. Some district organisations of political parties collect from their MP candidates a candidate’s contribution, which is approximately EUR 1,000. Similarly, local associations may also collect candidate’s contributions from their municipal election candidates. The monthly MP’s contribution varies between EUR 100 and 400. One political party collects from its MPs and MEPs an annual contribution of EUR 700, and another party collects from its MEPs a compensation of EUR 3,000 for their election campaign expenses twice a year.

The National Audit Office has recommended that the up-to-date declaration referred to in the Act on Political Parties be also submitted of candidate’s contributions and MP’s contributions. However, not all the monitored entities have complied with this recommendation. Thus, the related contributions are not entered as subsidy in the party funding register.

As a rule, the monitored entities’ accounting has been managed properly so that monitoring compliance with the provisions in the Act on Political Parties has been possible on the basis of the accounts.

As in previous years, there were again inadequacies in the manner in which the monitored entities had prepared their auditor’s reports. Furthermore, the auditors have at times failed to include the statements required under section 9c of the Act on Political Parties in their auditor’s reports. In recent years, there has been improvement in the reporting by the auditors, but the statements issued in the auditor’s reports have not always been sufficient or unambiguous.

In the audits of party subsidies, the cost accounting procedures of a total of approximately 150 recipients with the obligation to keep accounts were examined. Where necessary, the recipients were requested to correct their accounts or to submit additional information about their procedures. The party- or party organisation-specific audit memorandums issued of the audits of party subsidies contain findings regarding the party subsidy procedures applied. The memorandums also draw attention to the allocation of party subsidies to entities other than the associations referred to in the Act on Political Parties.