Audit activities: A Safe, Healthy and Affluent Society

The audits conducted in the impact area A Safe, Healthy and Affluent Society focus on assessing the functioning, efficiency, and indirect financial impacts of the different areas of an affluent society and their interconnections.

Permanently stronger public finances require measures to support economic growth. The impact area will focus on the appropriateness and coordination of social security benefits and related services, as well as on issues related to measures to promote employment and economic growth. These areas are characterized by multi-channel financing, where the state is one of the key providers of financing.

We provide reliable information on complex issues through our audits: we focus our resources on topical issues that are significant for society and utilize different audit types, the competence of our personnel, as well as external data and specialist services in a versatile manner.

Social security

We will audit the knowledge base of central government finances and financial management on which the decisions concerning the social security reform are based by

  • identifying risks related to central government finances and the state’s financial management,

  • assessing the interconnections between benefits and services, their appropriateness, and their impacts on each other and the targets set,

  • providing information on systemic interdependencies for the preparation of the social security reform,

  • assessing the link between social security expenses and the development of general government finances.

When the objective has been balanced central and general government finances, several governments have aimed at increasing the incentives to work through taxation, social security, and enforcement. The preparations of the social security reform are also centred around various incentives and incentive traps. By auditing the interconnections between social security benefits and the systems interacting with them, we can produce material and timely information on the functioning and success of different reforms made so far.

An audit completed at the end of 2021 examined how various legislative measures had succeeded in removing the incentive traps related to social security, enforcement, and taxation. The audit focused on four legislative measures aimed to increase the incentives to work or start a business. When incentive traps are removed, it is important to examine unemployment, income, bureaucracy, and information traps as a whole. The implementers’ expertise and the existing knowledge base should be utilized as widely as possible in the legislative drafting.

An audit is also underway to examine the extent to which the objectives set for the reforms of student financial aid in 2011, 2014, and 2017 have been achieved, whether the reforms have had unforeseen impacts, and on what kind of knowledge base the impact assessments of the reforms have been based. As a result of these reforms, the conditions for student financial aid have been tightened, incentives for the use of student loans have been increased, and students have become eligible for the all-year housing allowance scheme. The audit will be completed in spring 2022.

An audit of the general housing allowance is also underway in 2022. The audit aims to assess the problems and potential corrective actions related to the current Act on General Housing Allowance.

Health and social services, and rescue services reform

According to the legislation adopted in summer 2021 (Section 128 of the Act on Wellbeing Services Counties; Section 2 of the Act on the National Audit Office), the National Audit Office has the right to audit:

  • the legality and appropriateness of the financial management of the entities and foundations belonging to a wellbeing services county group,

  • other entities, foundations, and institutions where the wellbeing services county – together with one or more wellbeing services counties, one or more municipalities, or the state – exercises control over the state funding, and

  • as regards the state funding, the legality, appropriateness, and effectiveness of the activities and financial management of the City of Helsinki health and social services and rescue services, and the entities that have been established to perform these tasks and are controlled by the City of Helsinki (Section 23 of the Act on Organising Healthcare and Social Welfare Services and Rescue Services in Uusimaa).

The right to audit enables the NAOF to target audits at the wellbeing services counties and to provide Parliament and the Ministries with impartial and independent information on the finances and activities of the counties, the steering mechanisms of their finances, and the substantive issues jointly assigned to the counties. Our objective is to ensure that Parliament is able to oversee the organization of the services that are defined in legislation and financed mainly by the state. The National Audit Office is the only actor that can audit the activities of both the Government and the wellbeing services counties as a whole in so far as state funding is used for the activities.

During 2022, we will prepare the foundation for auditing the wellbeing services counties, which will start their operations on 1 January 2023, by compiling an up-to-date knowledge base and an overview of the structures, financial management, and activities of the counties. The NAOF will establish monitoring practices to enable a regular annual or a periodic audit of the financial management of all wellbeing services counties. When planning the auditing of the services and activities falling within the scope of the counties’ organizing responsibility and the related state and financial steering, we will take into account the laws and projects that are relevant to the organization of health and social services and rescue services and that are being prepared to support the implementation. In 2022, we will launch two audits related to the preparation of the wellbeing services counties. In one of the audits, we will assess, for example, how the rescue services reform has supported the start of the counties’ operations and improved the knowledge base used in the funding of the rescue services. The other audit will focus on the grounds for the costs of changes and investments in ICT projects within health and social services, as well as on the preparation, awarding, and monitoring of government grants to cover the ICT change costs in the reform.

Employment and entrepreneurship

The Government Programme of Prime Minister Marin states that the Government will

  • diversify the business structures and create opportunities for sustainable growth,

  • increase the number of growth-oriented SMEs with growth potential throughout Finland and in all sectors,

  • promote employment and wellbeing comprehensively throughout Finland,

  • increase Finland’s attractiveness so that competent foreign employees and students will want to find employment or act as entrepreneurs in Finland.

In 2022, we will complete an audit related to the promotion of the growth and competitiveness of regional trade and industry. In the audit, we will assess whether the implementation of the regional development decision 2020–2023 has provided sufficient conditions for business activities. In addition, we will assess how the changes in the operating environment have affected the implementation of the decision and the operating conditions for business activities in different regions. The audit will also examine the preparation and implementation of the regional stimulus measures resulting from the Covid-19 crisis, as well as the fulfilment of the conditions set out in the national decisions on business subsidies related to the Covid-19 crisis.

Another audit that we will conduct in 2022 relates to the business service system. In this audit, we will provide an overall picture of public business services and the cash flows in the service system. We will also assess how the system supports the objectives set out in the Government Programme and the needs of customers. In addition, we will launch an audit of certain measures to promote employment. These are measures that are developed or revamped during the government term and that have preliminarily shown to have positive impacts on employment.

Research, development, and innovation

The aim of Prime Minister Marin’s Government is to secure long-term funding for research and development (R&D), strengthen Finland’s investment environment, and improve companies’ investment capacity. One of the objectives is to increase Finland’s R&D expenditure by 2030 from the current 2.8% to 4% in relation to GDP. Achieving this objective would annually mean additional R&D investments of nearly EUR 600 million, of which public sector funding would cover approximately EUR 200 million.

In the first half of 2022, we will complete an audit of the management of the utilization of research data in health sector business. In this audit, we assess the effectiveness of the support, steering, and improvement of research data utilization both in strategies and programmes and through financial instruments.