Poor bookkeeping and inadequate internal audits at the transport ministry and the Road Transport Department have led to a situation where the government doesn’t have a handle on what its liabilities are, a report released by the Audit Office on Tuesday said.

The sub-par accounting was flagged in the dossier, covering the years 2022 and 2023. The report documented shortcomings in payments systems and in calculating compensation owed by the state, while receipts were a shambles.

The first category of findings related to old contracts concluded between the state and providers of public transport over the 2010 to 2020 period. Here, five contractors have filed lawsuits against the government, claiming compensation totaling over €59 million.

Beyond these, there are other compensation claims against the transport ministry, but the government is not in a position to quantify the state’s overall dues.

In addition, the audit found that the same person at the ministry calculated the amounts due, checked their accuracy and then also made recommendations to administrators – breaching the principle of division of responsibilities and heightening the risk of untraceable errors.

Regarding the new public transportation contracts – covering the period 2020 to 2022 – these concern amounts in the hundreds of millions of euro.

For example, for Nicosia district the contract was worth €175 million, for Larnaca €78 million, Limassol €123 million, and Paphos €55 million.

Here, the issue was that despite the fact the concessionaires – such as bus companies – were obliged to file quarterly financial reports, they either failed to do so or made the submissions belatedly.

Although the contracting authority could sanction the concessionaires for these delays, the financial penalties were applied haphazardly.

From a sample of payments examined, it turned out that the state overpaid providers of public transportation by €67,000 and €35,000 during 2022 and 2023, respectively.

Although the margin of error was relatively small, it pointed to systemic flaws.

Moreover, the use of Excel to calculate what the state owes is deemed “high risk”, as the worksheets are fully editable and thus prone to intentional or inadvertent changes.

Problems were also identified on the amounts receivable side. For instance, repeated errors were spotted in the use of a system that calculates the fees imposed for late payment of road tax.

The late penalty is calculated as a percentage of the annual road tax fee, even where the road tax is renewed for a period less than one year. As a result, many car owners got overcharged when it came to the penalty.

According to the auditor-general, the overall picture emerging is one of deficient checks and monitoring of expenses and receipts.