The Ministry of Culture has a tool at its disposal to implement the Latvian cultural policy, that is, 14 state-owned enterprises (SOEs) in which the Ministry of Culture holds 100% of capital shares and which operate in the field of professional theatre and music arts. The amount of the state budget subsidy granted to SOEs of the Ministry of Culture increases every year and it totalled to 40 million euros in 2023, which is 63% of their total revenue. When updating the issue of the management of SOEs of the Ministry of Culture, the State Audit Office of Latvia conducted a follow-up to explore how the Ministry of Culture succeeded with the implementation of the recommendations made in the audit concluded in 2018.
BRIEFLY
- The Ministry of Culture should improve the acquisition and compilation of data on the market situation in the field of theatre and music arts.
- In 2023, the state budget funding allocated by the Ministry of Culture for its 14 SOEs was 40 million euros that was 63% of the total revenues of these SOEs of the Ministry of Culture.
- The Ministry of Culture should make more targeted use of the achievable performance indicators set for the SOEs and analyse their financial indicators.
- The assessment by the Ministry of Culture does not provide confidence that the participation of a public entity in a SOE is the most effective way to ensure the availability of cultural offerings for every resident of Latvia.
It must be concluded that no significant changes and improvements have been achieved in the actions of the Ministry of Culture as regards management of the SOEs. The Ministry of Culture should improve the supervision over the execution of the tasks delegated by the state administration and the use of resources by SOEs by linking it to the cultural policy tasks and government priorities, as well as the acquisition and compilation of data on the market situation in the field of theatre and music arts.
To justify that the public gets the best possible product from the implemented cultural policy and the correspondingly allocated state funding, the Ministry of Culture should have comprehensive, transparent and comparable information and data not only about its 14 SOEs but also about other non-governmental sector organizations in the field of professional music and art. It cannot be taken for granted that SOEs are the best in providing the services in this area. “Actions of the Ministry of Culture is necessary not only to justify the existence of SOEs but also to determine, evaluate and inform the public about performance of those SOEs especially because 70% of the total revenue of the SOEs of the Ministry of Culture is made up of public funding on average in the last two years. At the same time, the population of Latvia, including the number of cultural consumers has a tendency to decrease, and the state administration has already been invited to evaluate the possibility of merging SOEs that have similar goals and tasks,” stated Ms Inga Vilka, Council member of the State Audit Office of Latvia.
After the audit in 2018, the State Audit Office of Latvia recommended the Ministry of Culture to improve the process for obtaining and collecting data so that the planning and implementation of cultural policy would be based on complete data on the actual situation in the market. Also in 2020, similar problems were identified in the study ordered for the investigation of the Ministry of Culture. “After looking at the last evaluation of the Ministry of Culture on the preservation of the state’s shareholding in its SOEs, we can conclude that the problems with the data are still relevant and that the Ministry has not fully used the study to describe the market situation,” emphasised Ms Vilka. She also adds that the Cabinet Regulation of 2017 on the collection of statistics in the field of culture are still valid, the implementation of which is supervised by the Ministry of Culture. If these rules were followed, the Ministry of Culture would also have data on the field of professional theatre and music arts.
The assessment approved by the Ministry of Culture in 2022 on the preservation of state’s shareholding in its 14 SOEs allows us to conclude that the Ministry has tried to use the principles of good management practices of SOEs in the evaluation of state participation, however, it does not consider all the conditions in order to give the public confidence that the shareholding of a public entity in a SOE is the most effective way to ensure the availability of cultural offerings for every resident of Latvia.
Every year, the Ministry of Culture concludes contracts with its SOEs by allocating funding from the state budget to perform certain tasks and achieve specific results. In the opinion of the State Audit Office, the Ministry sets contradictory requirements for SOEs to achieve a certain amount of revenue from ticket sales on one hand and to ensure accessibility to the public on the other hand. An increase in the amount of own revenues means higher ticket prices, while accessibility means a ticket price that can be paid by target groups of society with different incomes. At the same time, SOEs of the Ministry of Culture have different approaches to selling tickets at reduced prices. For example, there is a SOEs that almost does not grant discounts to various target groups of society. It does not contribute to the availability of the services provided.
The free ticket policy set for SOEs is ill-conceived: they may issue more tickets for representation purposes than for charity. As a result, most SOEs devoted more resources to the promotion of services than to charitable purposes (accessible cultural events for people who cannot afford them) in 2022.
The art of theatre, opera, ballet and circus is concentrated in Riga; the Ministry of Culture sets a low indicator for Riga theatres, state-owned “Rīgas cirks” (Riga Circus) Ltd and state-owned “Latvijas Nacionālā opera un balets” Ltd (Latvian National Opera and Ballet), id est, a number of performances outside the permanent premises, although one of the tasks of cultural policy is to ensure the accessibility of culture in the regions. For instance, performances outside the permanent premises of Riga theatres constituted 4% of the total number of performances in 2022.
Every second administrative employee of SOEs of the Ministry of Culture works in several jobs. Data from the State Revenue Service (SRS) on employment show that 56% of the administrative staff have from one to seven additional jobs. Perhaps the administrative capacity and workload in the SOEs should be reassessed. The auditors remind that the recommendation given in the 2018 audit regarding the optimization of the administrative functions of two SOEs is still relevant and the optimization of administrative activities should be evaluated more widely in other SOEs as well.
Recommendations #PēcRevīzijas
- Seven recommendations were made to the SOEs of the Ministry of Culture after the audit in 2018. Of them, three were already recognized as implemented, one was closed as not implemented. The State Audit Office of Latvia can recognise none of the other three as implemented after this follow-up. These recommendations are being closed, and four new recommendations have been made to the Ministry of Culture, including an update of the recommendation that was closed as not implemented.
- The new recommendations are aimed at (1) obtaining and compiling data on the field of professional theatre and music arts in Latvia, (2) availability of transparent and comparable financial and non-financial information about the SOEs of the Ministry of Culture, (3) availability of the services provided by the SOEs of the Ministry of Culture to various target groups of society and (4) assessment of the capacity of administrative resources of the SOEs of the Ministry of Culture.
More detailed information:
- Audit report summary
About the State Audit Office of Latvia
The State Audit Office of the Republic of Latvia is an independent, collegial supreme audit institution. The purpose of its activity is to find out whether the actions with the financial means and property of a public entity are legal, correct, useful and in line with public interests, as well as to provide recommendations for the elimination of discovered irregularities. The State Audit Office conducts audits in accordance with International Standards of Supreme Audit Institutions of the International Organization of Supreme Audit Institutions INTOSAI (ISSAI), whose recognition in Latvia is determined by the Auditor General.
100 years of AUDIT STRENGTH
On 16 August 2023, the State Audit Law turned 100 years old. With the adoption of this Law, the State Audit Office from a formal de facto institution founded on 2 December 1918 became a de jure independent, collegial supreme audit institution of the Republic of Latvia. The State Audit Office is one of the independent state institutions enshrined in the Satversme (Constitution) of Latvia. The Constitution was signed by Roberts Ivanovs as the secretary of the Constitutional Assembly, who was then confirmed as the Auditor General. He worked as the first Auditor General for 12 years. His signature confirmed the text of our Constitution alongside that of Jānis Čakste.
Additional information
Ms Signe Znotiņa-Znota
Head of PR and Internal Communication Division
Ph. + 371 67017671 | M. + 371 26440185 | E-mail: signe.znotina-znota@lrvk.gov.lv