Duties of the Court of Accounts
The Court of Accounts oversees the establishment, management and use of state and public sector financial resources, submitting reports on the use and management thereof to Parliament and to the deliberative public authorities of the administrative territorial units.
In cases where, during audit, deeds are detected that are likely to have breached criminal law, and that have caused a loss to public funds or assets, the Court of Accounts notifies the competent bodies to ensure that such findings are followed up, and also informs the audited entity in this respect.
The audit report drafted by the Court of Accounts constitutes notification of the criminal prosecution bodies, representing both the means of notifying the judicial body that a criminal offence has been committed, and the legal grounds for initiating a criminal prosecution against the deed in rem.
Obligation to enforce legal procedures for the recovery of loss
If the audit indicates that a loss was caused, the Court of Accounts shall order the recovery thereof, and the audited entity shall be liable to enforce legal proceedings for loss recovery.
Therefore, in order to recover the loss, the management of the audited legal entity must file an action in tort against the individuals that participated in the decision-making process through which the legal entity incurred the loss.
The non-recovery of the loss, as a result of the entity management’s failure to take or follow up on the measures required by the Court of Accounts, shall constitute an offence as per the provisions under Article 64 of Law No. 94/1992.
High-risk cases
When, following the audit, it is determined that an agreement was executed that is ineffective for the activity of the legal entity subject to the audit, but that it is not in breach of the law, we are dealing with an atypical case.
In such a case, the audited entity is required to initiate legal proceedings for the recovery of the loss caused by executing the ineffectual agreement, by filing an action in tort against the guilty individuals. Such action must fulfil all the criteria for determining tort liability, i.e. existence of tort, loss, causality and guilt. If any of the four criteria is not met, the action in tort shall be dismissed.
Potential criminal consequences
To conclude, the audited entity’s management may be found criminally liable, at least in theory, for its failure to recover the loss, if the audit report does not include the text of the law that was breached, leading to the identification of the tort, which is an essential requisite in filing an action in tort.
However, as a preventive measure, the entity’s management must act in good faith when filing the action in tort, and make every effort to recover the loss determined by the Court of Accounts’ audit.
Alexandru GOGONEAȚĂ, Associate Specialising in Criminal Law with Țuca Zbârcea & Asociații