Audit of Business Finland’s coronavirus funding completed

Business Finland’s model for the internal control of coronavirus funding is comprehensive and well organised. Business Finland has succeeded well in communications and in providing clear and adequate instructions and advice to beneficiaries of aid. It has also continued to develop its internal guidelines and communications. The resources for processing the final reports were sufficient at the time of the audit, and there were no backlogs.

These are the conclusions of a further audit of Business Finland’s coronavirus funding, which concerns the payment and use of funds and their monitoring. BDO Audiator Oy conducted the audit on behalf of the Ministry of Economic Affairs and Employment. The audit covered the preliminary assessment for funding in disruptive circumstances and funding for business development in disruptive circumstances.

The audit is a follow-up to an audit carried out in May 2020 concerning the application and funding decision phase of Business Finland’s coronavirus support. 

Recommendation on further measures after on-the-spot checks

The audit was carried out using Business Finland’s systems, with the help of analytical methods and sampling. The audit sampled 120 cases related to the final reporting of projects and payment of funding. In addition, the auditor conducted interviews and examined documents. The audit shows that the monitoring process works. 

However, it was not possible, based on the sampling, to fully verify the development activities and the actual use of funding by the beneficiaries.  

Business Finland has already agreed on measures to strengthen the resources for the on-the-spot checks recommended in the audit.

The audit also recommends that if similar emergency funding is implemented on a short notice in the future, its long-term consequences on, for example, the functioning of markets and competition must also be considered. Authorities should also have uniform procedures in place, such as common information sources and systems for the allocation of funding.

Reporting of Business Finland’s coronavirus support under way – very few claims for recovery

The large number of applicants for Business Finland’s coronavirus funding shows its necessity. Based on the audit, there have been only few claims for recovery of funding.

A total of 11,485 applications were received for the preliminary assessment of funding, of which 8,010, or approximately 70%, were approved. As of 18 February 2021, final reports had been provided on 6,356 approved projects, or around 80%. There were 37 cases leading to claims for recovery, which represents about 0.6% of the final reported projects.

A total of 17,331 applications were received for business development funding, of which 11,982, or approximately 69%, were approved. As of 18 February 2021, final reports had been provided on 2,505 approved projects. There were 14 cases leading to claims for recovery, which represents about 0.5% of the final reported projects.

Ongoing reviews of coronavirus support 

The Ministry of Economic Affairs and Employment will commission external audits on the appropriate use of central government funds during the coronavirus crisis. These audits will focus on the COVID-19 support provided by Business Finland and the centres for economic development, transport and the environment (ELY Centre), support for sole entrepreneurs and self-employed persons granted by municipalities, and support for businesses in the food and beverage service sector granted by the Development and Administration Centre for Centres for Economic Development, Transport and the Environment (ELY) and Employment and Development (TE) Offices (KEHA Centre). 

The audit covers the whole process from application to granting, payment, use and supervision. An audit, which covered the application process and the decision phase of Business Finland’s funding, was completed in May 2020. An audit of the support to sole entrepreneurs was completed in February 2021. 

Short and long-term impacts of COVID-19 subsidies to be reviewed separately

In addition to the audits, the Ministry of Economic Affairs and Employment will commission an assessment of the impacts of the coronavirus support. The first stage involves assessing the short-term effects of the COVID-19 support. Areas under special scrutiny include the allocation of subsidies, their ability to prevent bankruptcies, and their impact on reinvention and productivity. The Research Division on Business Subsidies, an independent body operating under the auspices of the Ministry of Economic Affairs and Employment, is responsible for the project. The Division conducts its own assessments independently and selects organisations to perform background research through competitive tendering. 

Two separate reviews of the long-term effects of COVID-19 financial support will be conducted in 2021–2023.

Inquiries:
Juha Pekka Niemi, Audit Counsellor, Ministry of Economic Affairs and Employment, tel. +358 29 504 8038 
Sampsa Nissinen, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 29 504 7189