From the report of the Supreme Court of Auditors on the Contributory Fund, in addition to the legal assessment, there are also other conclusions of greater concern for farmers.
The Supreme Audit Office (NIK) has described the management of the assets of the Farmers’ Social Insurance Contribution Fund (in short, the Contribution Fund, FS) as wasteful. This practice has manifested itself in the form of inefficient use of assets, incorrect and inefficient management, purchases of illegal and at the same time unprofitable investments, poor management of real estate, which contributed to the losses suffered by the enterprises, commissioning of tasks without an appropriate legal basis, the amount of the subsidy granted was not adjusted to a substantive assessment, the subsidized tasks were not preceded by an analysis of the effectiveness of the objectives and the methods of their implementation.
The Farmers’ Social Security Fund under the magnifying glass of the Supreme Chamber of Control
For example, inefficient and illegal investments of the Contribution Fund during the analyzed period amounted to almost PLN 36 million. In turn, economic activity in 2017-2020 generated more than PLN 8 million in losses. Without a proper legal basis, the Fund awarded more than PLN 50 million in grants to other entities, most often professional farmers’ organisations. All these millions are irretrievably lost and irrecoverable.
The Supreme Court of Accounts, within the framework of the identified illegal activities, submitted to the competent public prosecutor’s offices a total of four notifications on a justified suspicion of having committed a crime by persons managing organizations receiving grants from the Contribution Fund.
A secure future
The case is not trivial, because the amount of 94 million PLN is impressive. Furthermore, it concerns a particularly important area, namely accident, sickness and maternity benefits, which are financed solely by the contributions of insured farmers collected in the Contribution Fund.
The most important thing for farmers is the financing structure. Well, the FS is based on self-financing. In the absence of money, the Fund can take out a loan from a bank, the repayment of which – as the Supreme Court of Auditors points out in its report – is taken into account to determine the amount of the insurance premium. Fortunately, such a shortage has not yet occurred.
In view of the wastes identified and the assumption of self-financing of the Contribution Fund, it becomes clear that the final cost of covering the loss suffered will be reflected in the premiums paid by the farmers. It is not a small amount that can be rolled up quickly and easily. In addition, the macroeconomic environment in the form of rising prices of goods and services (including medical goods and services), rising inflation and further rising interest rates, the idea of increasing the premium is very open, not to say certain.
Why is the Contribution Fund not working?
Another problem raised by the Supreme Court of Auditors is the poor execution of the surveillance, even the tolerance and promotion of this pathology. The Chamber forwarded the requests to the Minister of Agriculture and Rural Development and to the Supervisory Board of the Contribution Fund.
In the case of the first agency, he requested a review of the reinstatement of the rescinded regulation setting the limit of capital available to FS, beyond which funds should be allocated to increasing benefits or reducing insurance premiums. He asked the supervisory board of the NIK fund to exercise increased supervision over it.
Even more applications, up to 14, have been submitted to the Fund’s Board of Directors. Their material impact shows that it is this body, and more particularly the management, which committed a certain number of negligence described in the report. It is important to note that the illegal or unnecessary activities concerned not only the sphere of the functions of the Board of Directors, but also a kind of consent to irregularities in the entities receiving grants from the Contribution Fund, which were decided by the Board administration. Therefore, the NIK also made 31 requests to entities cooperating with the CF to eliminate harmful practices, for example, in the field of accounting, carried out during the implementation of the tasks of the Fund.
Trust is good, control is better
The old adage says that when the cat is away, the mice play. The waste procedure described by the Supreme Court of Auditors confirms this received idea. To realize the importance of the problem, it should be borne in mind that the Supreme Court of Auditors only examined the years 2017-2020. These four years have cost farmers almost 100 million PLN of loss, which – as already written – will never be recovered. It is also easy to imagine if this money was spent on medical services that farmers and their family members certainly needed at that time.
In practice, the results of the report of the Supreme Court of Auditors have opened a discussion among farmers on the question of whether the Social Fund, which should be emphasized, operates on the principle of self-financing, should be based on existing trust or on the trust built into greater control. The mechanism describes waste, illegality, incompetence, recklessness and recklessness, according to the principle that what is public is neither ours nor mine, is terrifying in its magnitude.
For farmers, it’s about knowing that every cash draw reduces their budgets for personal and investment purposes. Every penny to penny you collect gives you a measure in time. Thus, any need to compensate for losses diverts them from the objectives of their activities. It is in farmers’ interests to decide whether they want a fanciful social security system with the prospect of possible wastage, or a guarantee and insurance system. Audited by the Supreme Court of Auditors, the four years of operation of the Contribution Fund lead to the conclusion that trust is good, but control is even better.
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