After checking the use of EUR 14.5 million provided by the Latvian Ministry of Culture to help the culture sector overcome Covid-19 crisis, the State Audit (VK) concluded that this financing was mostly used appropriately, as reported by VK Fourth Audit Department Director Inga Vilka at a meeting with Saeima’s Public Expenditures and Audit Committee.
She said the culture sector was provided a total of EUR 23.8 million to help overcome the consequences from Covid-19 crisis and EUR 22.9 million of this amount was used. The audit focused on EUR 14.5 million, which was provided by the Ministry of Culture to help stabilize the financial situation of different companies and organise the infrastructure. VK also looked into the use of the grants provided by State Culture Capital Foundation (VKKF).
Vilka said that the government’s imposed restriction on organization of gatherings and events had a negative impact on the culture sector. This means reduced revenue for companies under the Ministry of Culture.
To stabilize the situation in companies under the Ministry of Culture, EUR 5.98 million was provided to 13 such companies to help compensate a portion of expenditures between April 2020 and September 2020.
Three companies – Latvian National Opera and Ballet, Dailes Theatre and Latvian Puppet Theatre – were provided with financing of EUR 962,344 to pay for emergency building repairs and improvements, as well as rent of temporary space and maintenance costs.
According to Vilka, the audit proved the funding of EUR 5.98 million was used appropriately.
The representative of State Audit said remuneration cost compensation estimates include certain untraceable components.
Additionally, the justifications for different distribution of financing across companies were not always clearly explained in documentation. Review and reduction of expenditures of companies under conditions of limited operations were performed without mention of the main principles.
Latvian National Opera and Ballet received EUR 2,440,439 to cover remuneration expenditures and EUR 262,100 to cover infrastructure-related expenditures. Dailes Theatre received EUR 1,005,157 to cover remuneration expenditures and EUR 679,500 to cover infrastructure-related costs.
VK recommended developing comprehensive principles and criteria for allocation of additional financing if the Ministry of Culture were required to provide emergency support in 2021. VK also believes companies under limited operations should review the issue of invitations for representation purposes to promote ticked sales.
Auditors also stressed it was necessary to provide public information on the principles behind the distribution of state aid among the ministry’s companies and results achieved by those companies using additional financing. VK also admits it is necessary to isolate the main infrastructure problems and compile information regarding available finances to help fix those problems.
As for the use of financing provided to VKKF Creative Persons Employment program, Vilka said EUR 2.1 million was used to provide support to self-employed persons to allow them to engage in creative work between July 1 and December 31, 2020.
Aid was provided to 836 creative persons or 70% of the initially surveyed persons. At the same time the aid provision period was extended from 3 to 6 months.
Vilka said the audit uncovered that generally the financing provided to assist with employment of creative persons was used in accordance to the previously declared goal. Nevertheless, some flaws were uncovered as well.
VK reports finding unequal conditions for creative persons with similar income but different sources of income. Auditors also found no appropriate review order for programs. As a result, the expert committee had reviewed 90 projects it had no reason to review because they did not meet administrative criteria.
According to Vilka, as part of this program 80 creative persons received financing of at least EUR 136,652 in cases when their income had exceeded the income limits detailed in the program’s documents.
VK points to the need to improve the organizational procedures for support programs by developing requirements and criteria that would be clear and help trace decision-making and allocation of financial aid. Additionally, when assessing persons’ income levels, it is necessary to ensure all assessment procedures are performed properly.
“Recommendations from VK were aimed at preventing problems as quickly as possible during the program’s implementation in 2021. It should be said that certain recommendations have already been taken into account, because this program has started again,” said VK representative.
In regards to the program implemented by VKKF to support the longevity of culture institutions impacted by Covid-19, Vilka said EUR 2.4 million was used to support people active in the culture sector, associations and foundations.
VK representative said the program was implemented in three stages. Support was provided to 139 entrepreneurs, associations and foundations. Auditors concluded that allotted financing was used mostly in accordance with the previously declared goal.
During the meeting deputy state secretary to the Ministry of Culture Uldis Zarins thanked VK for recommendations. As for support for companies, Zarins said they had state grants and their own revenue.
The ministry’s representative explained that if operations were limited for a long time, companies risked concluding the year in the red. This is why the approach used by the Ministry of Culture was that of trusting information provided by companies.
“Those are organizations the revenue stream of which partially depends on income from ticket sales. This includes Latvian National Opera and Ballet and large state theatres. This means their support should be bigger as well,” said Zarins, adding that the ministry had discussed the report with State Audit.
This program will continue this year because culture activities remain under restrictions.
As for the topic of the program by VKKF to support creative people, Zarins said, creative people “fell through” downtime benefit mechanism due to their different employment principle – when a person was employed quarter-time at a music school or as a dance choreographer in a municipal culture centre, while also working as a self-employed person or micro-enterprise tax payer who received royalties.
“This is why creative people may gain income from multiple sources, making them ineligible for downtime benefits. We receive approval from the work group led by the Minister of Finance to provide creative persons an additional support mechanism that would not look at the aspect of income but would take it into account regardless,” Zarins said. (BNN/Business World Magazine)
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