The State Audit Office reveals problems in the management of capital companies of the Ministry of Culture – BNN

More than half or 56% of the administrative staff of capital companies of the Ministry of Culture (MoC) work in one of seven jobs, the State Audit Office (VK) concludes in the audit.

VK states that revenue service data on employment show that 56% of the administrative staff have from one to seven additional jobs. The SC allows that the administrative capacity and workload in capital companies should be reassessed.

The auditors remind that the recommendation given in the 2018 audit regarding the optimization of the administrative functions of two capital companies is still relevant and the optimization of administrative activities should be evaluated more widely in other capital companies as well.

In VK’s view, the policy of free tickets established for capital companies is ill-considered: they may issue more tickets for representation purposes than for charity. As a result, in 2022, most capital companies devoted more resources to promoting services than to charitable purposes. The SC also draws attention to the fact that theater, opera, ballet and circus arts are concentrated in Riga – the CM sets a low score for Riga theaters, Riga Circus and the Latvian National Opera and Ballet.

VK emphasizes that the number of performances outside the permanent premises, although one of the tasks of the cultural policy is to ensure the availability of culture in the regions. For example, in 2022, Riga theaters provided 4% of the total number of performances outside the permanent premises.

VK explains that every year KM concludes contracts with its capital companies, allocating funding from the state budget,

to perform specific tasks and achieve specific results. In the opinion of the State Audit Office, the Ministry of Finance sets contradictory requirements for capital companies – to achieve a certain amount of revenue from ticket sales and to ensure accessibility to the public.

VK states that 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, KM capital companies have different approaches to selling tickets at reduced prices. For example, there is a capital company that almost does not grant discounts to various target groups of society. This does not contribute to the availability of the provided services, VK concludes.

In the audit, the Ministry of Culture states that the Ministry of Culture has an instrument at its disposal for the implementation of Latvia’s cultural policy – 14 capital companies in which the Ministry of Culture holds 100% of the capital shares and which operate in the field of professional theater and music arts. VK emphasizes that the amount of the state budget subsidy granted to KM capital companies increases every year, and in 2023 it was 40 million euros, which constitutes 63% of their total revenues. Updating the issue of the management of KM’s capital companies, the SC conducted a follow-up – how KM has done with the implementation of the recommendations made in the audit completed in 2018.

The SC summarizes that no significant changes and improvements have been achieved in the operation of the KM in the management of capital companies. In the opinion of the SC, it is necessary to improve the supervision over capital companies’ performance of tasks delegated by the state administration and the use of resources, linking it to the tasks of cultural policy and government priorities, as well as the acquisition and compilation of data on the market situation in the field of theater and music arts.

In order to justify that society gets the best possible product from the implemented cultural policy and the correspondingly allocated state funding, KM should have comprehensive, transparent and comparable information and data not only about its 14 capital companies, but also about other non-governmental sector organizations in the field of professional music and art. The fact that the services in this area are the best for state-owned capital companies cannot be taken for granted, says VK.

VK Council member Inga Vilka notes that KM activity is needed not only to justify the existence of state capital companies, but also to determine, evaluate and inform the public about the results of the activities of capital companies, especially because in the last two years, on average, 70% of the total revenue of KM capital companies consists of public funding. At the same time, the number of inhabitants in Latvia, including cultural consumers, tends to decrease, and the state administration has already been invited to evaluate the possibility of merging capital companies that have similar goals and tasks.

After the 2018 audit, the SC recommended to the KM to improve the process for obtaining and compiling data, so that the planning and implementation of cultural policy is based on complete data on the actual situation on the market. Also in 2020, similar problems were identified in the study ordered for the study of the situation of the Ministry of Education and Culture. Vilka emphasizes that, after looking at the last assessment of the Ministry of Internal Affairs on the preservation of the state’s participation in its capital companies, it can be concluded that the problems with the data are still relevant and that the ministry has not fully used the research to characterize the market situation.

She also adds that the regulations of the Cabinet of Ministers 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 fulfilled, then the Ministry of Culture would also have data on the field of professional theater and music arts, provided by the Ministry of Culture.

In the part of recommendations, the SC reminds that seven recommendations were made in the 2018 audit on KM capital companies. Of them, three were already recognized as implemented, one was closed as not implemented. None of the other three can be recognized as implemented in VV after these tests. These recommendations are closed, and four new recommendations have been made to the MoC, including an updated recommendation that was closed as not implemented.

VK explains that the new recommendations are aimed at obtaining and compiling data on the field of professional theater and music art in Latvia, the availability of transparent and comparable financial and non-financial information about KM capital companies, the availability of KM capital companies’ services to various target groups of society and the assessment of the capacity of KM capital companies’ administrative resources.

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