CURRENCY MANIPULATION PROBLEM - LEARNINGS FOR VIETNAM
4. RESEARCH RESULTS
4.1. Actual situation through data from reports
The deducted budget to implement the Priority for SAV’s cadres, civil servants, public employees (referred to as the 5% budget) is considered as a specific revenue based on the audit results of SAV to give priority to SAV in order to reduce pressure on the State Budget when it does not have to provide additional funding and encourage SAV’s activities, improve the quality of audit. Therefore, it is necessary to estimate, manage and finalize the deducted funds according to the following process:
- Annually, at the time of making estimates of State Budget revenues and expenditures; SAV bases on the implementation of the amount of money which was discovered and recommended
by the SAV agency until that time to estimate the 5% deducted budget of the plan year; to work out the cost estimates for the budgeted portion of the plan year; Summarize in the estimates of budget revenues and expenditures of agencies and units, and send them to the Ministry of Finance for general synthesis into the State Budget estimates for submission to competent authorities for decision.
- The cost estimate is deducted from the 5% budget, which is noted separately in the annual budget revenue and expenditure estimate of the State Audit.
- Handling the difference between the deducted fund and the estimated fund: Based on the report on the results of the implementation of the State Audit’s recommendations, which has been confirmed, the Ministry of Finance will consider and settle the difference between the amount of money deducted from the confirmed findings and recommendations and the amount given in the State Audit’s expenditure estimate as the following:
+ In case the amount deducted from the findings and recommendations certified is higher than the amount already arranged in the annual estimate, the missing amount will be included in the estimate of the following year of certification. In case of necessity, the State Audit Office of Viet Nam will make a written request for additional funds to be deducted and make a detailed estimate, enclosed with a written certification of documents on implementation of the State Audit’s recommendations, submit to competent authorities for additional funds deducted as prescribed.
+ In case the amount deducted from the confirmed findings and recommendations is lower than the amount already arranged in the annual estimate, the excess difference will be deducted from the amount to be arranged in the following of certification.
Table 2: Estimated data and budget use 5% of the State Audit Office for the period 2016-2020
Unit: million VND and %
Year Unit 2016 2017 2018 2019 2020
Estimated budget for the year
(million
VND) 450,653 500,547 536,872 560,870 595,432
Used budget during the year
(million
VND) 450,653 493,087 536,570 489,902 586,798 Unused budget carried
forward to next year
(million
VND) - 7,460 302 70,968 8,634 Rate of implementation of
the estimated Budget (%) 100.00 98.51 99.94 87.35 98.55
Source: Author’s compilation from the State Audit [8-3]
The implementation of the 5% budget estimate of the State Audit for the period 2016-2020 is shown in the following figure:
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Unit: million VND
Source: Complied by the author from the State Audit [11]
Figure 1: The implementation of the 5% budget estimate of the State Audit for the period 2016-2020
According Table 1 and Figure 1, the estimate of 5% budget from 2016-2020 has increased rapidly over the years. In 2016, the estimate of 5% budget is 450,653 million VND, in 2017 was 500,547 million VND, there was an increase of 11.07% compared to 2016; in 2018 it was 536,872 million VND, up 7.26% compared to 2017; in 2019 was 560,870 million VND, showing an increase of 4.47% compared to 2018 and in 2020 this estimate is 595,432 million VND, equaling to an increase of 6.16% compared to 2019.
The rate of implementation of the estimate also reached a high rate, in 2016 it was 100%, 2017 it reached 98.51% followed by 99.94% in 2018, standing in the forth place was the year of 2019, it reached the lowest rate of 87.35% because the estimate for the year was still increased compared to 2018 but the number of implementations decreased, leading to the implementation rate is low. In 2020, it increased again and the figure was 98.55% for 2020. Unused funds of each year was carried over to the following year.
4.2. Actual situation through surveys and interviews
The author sent a 14-question survey to collect opinions of 50 officials working in State Audit agencies to ask for their assessment related to the issue of management and use of the deducted fund to implement the Priority for the State Audit. The number of votes collected is 50, reaching 100%, the results are as follows:
Table 3. Summary of survey results
No Survey content Number of choices according to 5 levels Total number
of votes Average
Management of deducted items 1 2 3 4 5
1 Increases in State Budget revenues from
taxes, fees, charges and other revenues - 28 21 1 - 50 2,46
2
The items actually spent in the wrong budget and remitted to the State budget
2 29 19 - - 50 2,34
3
Proposed items to reduce payments, reduce budget estimates for the next period and next year
1 35 14 - 50 2,26
4 The estimated budget allocations exceed the allocated norms and are from the wrong source
- 33 17 - 50 2,34
Managing the use of deducted funds
5 Salary defined by grades, position - 31 19 - 50 3,38
6 Position allowance - 2 35 12 1 50 3,24
7 Allowance for excessive - 2 29 16 3 50 3,40
8 Preferential allowances by profession - 5 36 9 - 50 3,08
9 Increase investment expenditure on
Office construction - 7 29 14 - 50 3,14
10 Additional steering training, refresher
training, conferences and seminars - 5 31 14 - 50 3,18
11 Additional spending on professional
activities in service of auditing - - 35 11 4 50 3,38
12
Expenditure on scientific research, spending on information technology, spending on implementing policies to attract talent workers
- 2 41 7 - 50 3,10
13
Expenses for settlement of complaints and denunciations in the implementation of conclusions
2 6 42 - - 50 2,80
14
Expenses for encouraging collectives and individuals who have actively coordinated in the implementation of the State Audit’s conclusions and recommendations
1 9 40 - - 50 2,78
If the average value of an item reaches any level of the Likert scale, the item can be classified as receiving the rating value on the Likert scale.
- Question 1 to 4 mentions 04 items on management of deductions are assessed as “less effective/appropriate” due to having a low average score of less than 2.50 (from 2.26 to 2.46). This represents the opinions of staff that manage the SAV has yet effective / appropriate for the items deducted from the recommendations of the SAV, the actual rate of SAV proposed implementation period 2011-2015 is 67% and increased in the period 2016-2020 but only reached 73.6%. The management of deductions partly depends on the coordination of the audited units because the number of deductions is calculated on the actual amount paid, so in the condition that the units intentionally delay when making the audit recommendation, there would be significant impact on SAV’s allocated funds. At the same time, the process of collecting documents and making final settlement with the Ministry of Finance still has under long time of administrative procedures,
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which are not convenient and appropriate... even that a lot of money has been remitted into the State Budget by the audited unit but they are not specified with the content “Remitted to the State Budget at the request of the State Auditor” , leading to the situation that they will be disallowed, not included in the amount already made to deduct 5% of the benefit.
- Question 5 to 12 address 08 items on management of the use of deducted funds, the assessment is “effective/appropriate” due to a relatively high average score, above 3.00 (from 3.06 to 3.40). This is the mainly use of this funding source, spending to encourage and reward SAV’s officials, public servants, public employees. The remaining funds are used to invest in facilities and strengthen the operational capacity. Since almost all payments for individuals are paid by SAV via bank account and forwarded the Statements forms for comparison, review and feedback if there are any errors. These payments are usually fixed on a monthly basis and are transparent, so the management of these expenditures was assessed as quite effective/appropriate by the survey staff.
- Questions 13 and 14 diving into 02 items on management of the use of the deducted funds, including expenses for settlement of complaints and denunciations in the implementation of conclusions and expenses for encouraging collectives and individuals who have actively coordinated in the implementation of the conclusions and recommendations was assessed as “less effective/appropriate” due to the relatively low average score below 3.00 (2.78 and 2.80). The use of funds to spend on these two contents accounts for a low proportion, mainly used for the above 08 contents, if there is excess funding, it will be used for these two contents. The fact that SAV has not focused on using the 5% budget on encouraging the implementation of petitions, complaints and denunciations is one of the reasons leading to the downslide that this task has not been thoroughly handled in recent years, and many petitions and complaints have not been resolved for many years.
4.3. Achieved results, limitations and causes 4.3.1. Acquired results
- When receiving the decision on allocation of State Budget revenue and expenditure estimates and additional funding sources in the year, SAV will allocate and assign detailed estimates to each budget-using unit according to the total allocation estimates in the Decisions and in accordance with the assigned financial resources. The Finance Department of SAV Office publicizes the allocation and adjustment of State Budget revenue and expenditure estimates and promptly guides level III estimate units to comply with the allocated estimates.
- The agency has changed from allocating the budget according to the approved total budget to allocating according to the estimate, from assigning detailed cost estimates by item to assigning estimates by item groups, etc... Thereby, administrative procedures in the stage of budget allocation have been drastically reformed, which saves time and effort for level I estimate units; at the same time, spending units are soon allocated and assigned estimates to actively spend right from the first days of the budget year.
- Administrative processes, methods and procedures in the stages from making estimates to complimenting estimates and finalizing the State Budget have been improved, simplifying administrative procedures and reducing unnecessary affairs. necessary, which saves time and cost of State Budget management, while still ensuring the requirements of State Budget management
and administration. State Budget management and control; Inspection and audit have been strengthened and focused, so it has gradually improved financial discipline in the management of the State budget.
- In terms of SAV’s specific revenues from the 5% annual budget, they will be compared and settled specifically with the Ministry of Finance. The difference due to increase in State Budget revenue and decrease in State Budget expenditure is transferred by the audited units to the State Budget with sufficient documents, ensuring the content “submitted to the State Budget according to the proposal of SAV”, this is the basis for calculating and finalizing the 5% budget of SAV.
4.3.2. Limitations and causes
In addition to the State Budget for regular operations, SAV also has a revenue of 5% of the amount discovered and recommended by SAV. The number of expenditures made from the budget source 5% of the years accounted for a large proportion of the total recurrent expenditures in the year, specifically: in 2016 the proportion of recurrent expenditures from this source was 47.1%, in 2017 it was 51 .39%, 54.02%, 52.31% and 56.86% in 2017,2018,2019 and 2020, respectively. This amount of annual funding depends on the number of SAV detected and the audited units have paid up to estimate the budget to be deducted in the plan year. In fact, the management of this funding source is facing a range of challenges:
- The base for deducting the budget for the plan year is the actual amount collected into the State Budget or the actual amount of expenditure reduction from the State Budget after the audit agency has performed its duties. Thus, many audit findings have been proposed to be submitted to the State budget, but the audited units have been slow to implement or have submitted but not fully or on time. Normally, according to SAV’s recommendation, in about 3 to 6 months, the audited entity must strictly implement SAV’s recommendation, but there are many units that do not strictly implement it, but so far, there is still no legal document with a sanction clause on the late implementation of SAV’s recommendations. Although the implementation rate of SAV’s recommendations in the period 2016-2020 has increased compared to the previous period (67% in the period 2011-2015), it merely reached 73.6% of SAV’s recommendations.
- In Circular No. 16/2019/TT-BTC dated 18/3/2019, it clearly stipulates the responsibilities of audited, collated units and related agencies to confirm the auditor’s recommendations. When implementing the proposal of SAV, the unit that pays money to the State Budget will receive an official letter from SAV to the unit, on the document specifically stating: “remit into the State Budget at the request of SAV in the annual finalization report”. However, the receipts of payment to the State Treasury of many units do not show the content of money payment in accordance with the provisions of this document, causing difficulties in the comparison between SAV with the State Treasury and the Ministry of Finance. Therefore, a lot of the amount actually paid by the unit to the State Budget is not recorded as the number of implementation of SAV’s recommendations for the purpose of deducting 5% of the budget.
- In addition to reporting on the implementation of audit recommendations at the request of the State Auditor, when making the annual final settlement report. The audited units, based on the audit recommendations or certifications of the relevant units, shall make reports on the amount of
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the audit recommendations made in the year and send them to the superior management units, the audited units. The upper management shall summarize and report on the implementation of the audit proposal (detailed to each document, implementation content) and send it to SAV and the Ministry of Finance.
- The use of 5% of the budget on 02 items which are Expenses for settlement of complaints and denunciations and Expenses for encouraging collectives and individuals who have actively coordinated in the implementation of conclusions and recommendations still account for a low proportion. Therefore, timely encouragement to promote the role of employees in the implementation of recommendations, complaints and denunciations in the process of participating in the performance of tasks has not been given.