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Court of Auditors Warns Social Security

The Court of Auditors (TdC) has again warned of “many inadequacies and weaknesses” in the supervision of support granted by Social Security in Madeira.  The report aims to alert the future Government to the situation of accounts in the Autonomous Region.

The report, released today, aims to be a “contribution to the improvement of public management and the sustainability of public finances of the Autonomous Region of Madeira” (RAM) at the beginning of a new legislature after the regional elections on Sunday gave victory to the PPD/PSD-CDS/PP coalition.

In the document, the TdC highlighted that the delay of the inspection processes increases the risk of uncollectability of credits in the case of companies that received support from the Madeiran Social Security during the extraordinary mechanism for maintaining jobs during the pandemic, but also warned that there is insufficient control in the support granted to Private Social Security Institutions (IPSS) in the region.

The entity that oversees public accounts highlighted the adoption by the RAM, in 2020, of an extraordinary support programme for the maintenance of employment contracts (simplified lay-off) in companies in crisis because of the pandemic, whose application was under the purview of the Institute of Social Security of Madeira (ISSM).

In 2020, companies in crisis (following covid-19) were supported for a total of approximately 28.5 million euros, allocated mainly between March and July of that year, with the aim of maintaining jobs.

Payments to employers totaled 28.3 million euros, 99.5% of the amounts processed in 2020, and were on average made after 37 days.

However, the ISSM inspection actions until the 17th of March 2022 had only focused “on about 2% of the 3,027 employers that benefited from the simplified lay-off measure, involving support in the amount of 2.3 million euros,” the ToC described.

The Court exemplified that a sample of eight cases revealed that the ISSM “took, on average, 625.8 days to complete an inspection process” and stressed that the delay “increases the risks of uncollectability of the claims so determined, either due to creditworthiness issues of the debtors or the expiry of the limitation periods.”

The entity recalled that it has already recommended to ISSM the improvement of internal control procedures and “the articulation between the services involved in the supervision and the recovery of the benefits unduly received by the beneficiaries of the simplified lay-off,” to “minimise the risks of irretrievability of these amounts, namely through the establishment of coercive recovery procedures.”

According to the ToC, between 2016 and 2018, the ISSM granted financial support to Private Institutions of Social Solidarity (IPSS) and similar entities that amounted to about 65 million euros, destined annually to an average of 64 entities, which applied them mostly to support the elderly (about 62% of the support).

But also in this sector were detected “weaknesses in the internal control system associated with the support granted,” which the ToC concluded “is unreliable.”

Among the problems detected, the ToC highlighted the insufficiency of financial control over the implementation of the cooperation agreements with the IPSS, the insufficiency of adequate management of the quality of the services provided, and the suitability of the institutions responsible for the implementation of the agreements and the absence of proactive inspection actions, since “all the supervision carried out between 2016 and 2018 originated in complaints.”

It is noteworthy that about 39.7% of the institutions subsidised by ISSM did not publish their accounts regularly, as is mandatory, and continued to benefit from public support.

The TdC recalled that its section in Madeira has already recommended to the ISSM to ensure improvements in the control of the implementation of the agreements concluded for support to the IPSS, the approval of a proactive audit/inspection plan, and the judicious application of the support.

Moreover, before the renewal of the agreements, the cooperation and contractual values between the State and IPSS be evaluated, as well as the entity’s performance, for the possible “need to correct systematic financing surpluses and to promote the return of the remaining amounts.”

In the report, the ToC also highlighted that, in a 2019 audit, flaws were detected in the process of contracting medical services by the public administration, so it suggested the implementation of mechanisms to control productivity, the attendance of all health professionals, namely through biometric registration systems, and compliance in the Autonomous Region with legislation on overtime work and pay scales.

Samantha Gannon

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