Finland: Audit of ELY Centre COVID-19 subsidies completed

NordenBladet — An audit commissioned by the Ministry of Employment and the Economy of grants made by Centres for Economic Development, Transport and the Environment (ELY Centres) for SME development projects has been completed. The audit sought to provide information on the guidance, oversight and reporting of financing granted due to the COVID-19 epidemic. It was conducted by BDO Audiator Ltd for the Ministry of Economic Affairs and Employment.

“The audit gives us important information on how we can prepare more effectively for future emergencies and improve the guidance, oversight and reporting of grants,” explains Senior Ministerial Adviser Mikko Ojala.Preparations for COVID-19 financing began at the Ministry of Economic Affairs and Employment in mid-March 2020. Applications were open between 30 April and 8 June 2020, with the first decisions issued in early April 2020. More than 33,000 grant applications were submitted to ELY Centres, requesting total grant aid of just over one billion euros. Slightly more than 22,500 favourable decisions were issued, awarding grants totalling EUR 335.3 million.

Subsidy process deployed rapidlyThe audit indicates that the Ministry, the Development and Administration centre for ELY Centres and TE Offices (KEHA Centre) and ELY Centres acted very rapidly in the COVID-19 crisis of spring 2020. The forms of assistance, instructions for applicants and authorities, and an updated information system for requesting and processing COVID-19 grants were all set up in about two weeks.Allowances were made for the emergency conditions in many ways: the terms and conditions for issuing grants were amended, the application process was simplified, and advice was arranged for applicants on grants and how to apply for them.

The rapidly deployed system also needs enhancing
ELY Centres have had no separate quality control for the COVID-19 grant funding process, but quality was retrospectively ensured on the basis of risk and audit findings in spring 2021.This was a long-term form of assistance from a crisis management perspective. The crisis began in spring 2020 and some projects were still unfinished at the time of completing the audit in May 2021.The final reports of some financed projects do not clearly indicate the subsidised operation in the funding application and the results achieved. This has caused some ambiguity in verifying the terms and conditions of financing.Some deficiencies and ambiguities were observed in a small number of projects during the audit. A review of these has begun and been completed in part.The average processing time was long from the perspective of applicants, due to a very large number of applications in relation to ELY Centre staffing.

COVID-19 subsidy audits are ongoing, with impacts also investigated
The Ministry of Economic Affairs and Employment will commission external audits on the appropriate use of central government funds during the COVID-19 crisis. These audits will focus on COVID-19 subsidies granted by Business Finland and ELY Centres, subsidies for sole traders and the self-employed granted by municipalities, and business subsidies in the food and beverage service sector granted by the KEHA Centre.

The audit covers the entire process from application to granting, payment, use and supervision.Short and long-term impacts of COVID-19 subsidies to be reviewed separatelyIn addition to audits, the Ministry of Economic Affairs and Employment will commission an assessment of the impacts of COVID-19 support. The first stage involves assessing the short-term impacts of COVID-19 subsidies. Areas of special scrutiny include the allocation of subsidies, their ability to prevent bankruptcies and promote employment, and their impact on reinvention and productivity. The project is the responsibility of the Research Division on Business Subsidies, an independent body operating under the auspices of the Ministry of Economic Affairs and Employment, which conducts its own independent assessments and arranges competitive tendering for background research.Two separate reviews of the long-term impacts of COVID-19 subsidies are expected in 2021–2023.