The auditors have concluded that no significant changes and improvements have been achieved in the operation of KM in the management of capital companies. 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 capital companies, 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 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. It cannot be taken for granted that services in this area are the best for state capital companies.
“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 capital companies’ activities, especially because in the last two years on average 70% of the total revenue of KM capital companies is made up 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,” states State Audit Council member Inga Vilka.
After the 2018 audit, the State Audit Office recommended that the Ministry of Internal Affairs improve the process for obtaining and collecting 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 explains that after looking at the latest evaluation 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 2017 regulations on the collection of statistics in the field of culture, the implementation of which is supervised by the Ministry of Culture, are still valid. If these rules were followed, the Ministry of Education would also have data on the field of professional theater and music arts.
In 2022, the evaluation of the Ministry of Internal Affairs on the preservation of the state’s participation in its 14 capital companies allows us to conclude that the ministry has tried to use the principles of good management practices of state capital companies in the evaluation of state participation, however, it does not consider all the conditions in order to give the public confidence that the participation of a public person in a capital company is the most effective a way to ensure the availability of cultural offerings for every resident of Latvia.
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Every year, KM concludes contracts with its capital companies, 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 capital companies – to achieve a specific amount of revenue from ticket sales and to ensure accessibility to the public. 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. In the opinion of the State Audit Office, this does not contribute to the availability of the provided services.
The free ticket policy set for capital companies is ill-conceived: they may issue more tickets for representation purposes than for charity, the auditors emphasize. As a result, most capital companies in 2022 devoted more resources to the promotion of services than to charitable purposes (accessible cultural events for people who cannot afford them).
Theater, opera, ballet and circus arts are concentrated in Riga – the Ministry of Culture for Riga theaters, VSIA “Rīgas cirks” and VSIA “Latvian National Opera and Ballet” set a low indicator – the number of performances outside the permanent premises, even though one of the tasks of cultural policy is to ensure the accessibility of culture in the regions. For example, in 2022, Riga theaters provided 4% of the total number of performances outside the permanent premises.
Every second administrative employee of KM capital companies 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 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.
Taking into account the above, the State Audit Office 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 by the State Audit Office after these inspections. These recommendations are closed, and four new recommendations have been made to the MoC, including an updated recommendation that was closed as not implemented.
The new recommendations are aimed at obtaining and compiling data on the field of professional theater and music arts 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 administrative resources of KM capital companies
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