Latvia’s membership in international organisations relates to the implementation of our national foreign policy goals and international cooperation in various sectors primarily. However, it is important to remember that such membership also entails corresponding state budget expenditure on membership fees, participation fees, various other contributions, and other liabilities. Therefore, the State Audit Office calls to develop procedures for assessing liabilities before Latvia’s accession to international organisations, to present those liabilities in the annual consolidated financial statement of the state (ACFSS), and safeguard the availability of aggregated information on all international organisations where Latvia is a member state.
Already during the previous audit of the ACFSS, the State Audit Office called on the Ministry of Finance, as the entity responsible for the drafting of the ACFSS, to provide information on how one assesses the calculation and presentation of liabilities in the ACFSS in connection with Latvia’s membership in international organisations. Unfortunately, in the audit conclusions of the ACFSS 2019, the State Audit Office must admit that such an assessment is not performed and liabilities are not presented in the ACFSS, hence true and reliable information on the state’s financial position is not provided.
In co-operation with the National Audit Office of Finland, the State Audit Office has obtained information on the liabilities of the Republic of Finland for post-employment benefits of international organisations for 1.4 billion euros (liabilities to cover pensions, pension benefits, post-employment life insurance, medical care, and other expenses of the employees of international organisations). Therefore, one has no reason to believe that the Republic of Latvia does not have such obligations in proportion to the extent of membership.
The audit has also found that no institution collects information on all international organisations where Latvia is a member state, and such information is not available together in one place. Publicly available information is incomplete and even misleading. One can find information on membership in 120 international organisations in the explanatory notes to the 2019 budget and on the websites of the state institutions, although not all of them are of that status under international public law.
When assessing the amount of expenditure related to membership in international organisations, the State Audit Office has established that expenditure continues to increase. Therefore, identifying the amount of expenditure and planning expenditure in a timely manner are especially important. However, one does not always plan expenditure in a timely manner. For example, in 2019, the membership fee of 1.6 million euros in the Organisation for Economic Co-operation and Development (OECD) was covered from contingency funds, while the membership fee of 1.3 million euros in the European Space Agency was found through the redistribution of funds allocated to provide free lunches to students from grade 1 to 4.