ORDER OF THE GOVERNMENT OF THE REPUBLIC OF MOLDOVA

of May 8, 2008 No. 580

About approval of the Regulations on financial monitoring of the state/municipal companies and commercial societies with completely or mainly the public capital

For the purpose of realization of provisions of article 21 of the Law on management of public property and its privatization N 121-XVI of May 4, 2007. (The official monitor of the Republic of Moldova, 2007, N 90-93, Art. 401) DECIDES: the Government

Approve Regulations on financial monitoring of the state/municipal companies and commercial societies with completely or mainly by the public capital it (is applied).

Approved by the Order of the Government No. 580 of May 8, 2008

Regulations on financial monitoring of the state/municipal companies and commercial societies with completely or mainly the public capital

I. GENERAL PROVISIONS

1. The regulations on financial monitoring of the state/municipal companies and commercial societies with completely or mainly the public capital (in dalneyshempolozheniye) are developed based on the Law on management of public property and its privatization N 121-XVI of May 4, 2007.

2. This Provision establishes procedure for the organization and carrying out financial monitoring, processing and use of information for the purpose of consolidation of financial discipline and increase in efficiency of use of public property.

3. The purpose of financial monitoring is submission of information available to potential investors, about financial position of the state/municipal companies and commercial societies with completely or mainly the public capital, about indicators and capital movement (property), structure of assets and sources of their forming, and also about their changes.

4. Financial monitoring of activities of the state companies and commercial societies with completely or mainly the state capital is performed by the Ministry of Finance, and activities of the municipal companies and commercial societies with the capital, completely or mainly to the belonging administrative and territorial units, - bodies of local public authority.

5. Action of this provision extends to the state/municipal companies and commercial societies with completely or mainly the public capital (in dalneyshempredpriyatiya).

II. BASIC CONCEPTS

6. Within this provision the main determinations mean the following:

financial monitoring - the processing of information confirming evolution of financial and economic activities of the companies and management of public property for certain period of time;

documentary check - the element of financial monitoring consisting in comparison of indicators of financial statements and other information which the body performing monitoring has;

the financial statement - summarized information on condition and change of property and financial situation, movement of equity and money of the company for the accounting period;

assessment - determination of results of activities of the companies reflecting the most significant indicators, and determination of influence of these indicators on activities of the companies, and also generalization of information for persons involved in realization of activities of the companies.

III. ORGANIZATION OF FINANCIAL MONITORING

7. Financial monitoring is performed on basis:

a) the given financial account of the companies provided to National bureaus of statistics;

b) information from the Register of the public property on the companies, public property and its movement provided by the Agency of public property under the Ministry of Economy and Trade (further - the Agency of public property);

c) information on the tax liabilities and tax benefits provided by the Main state tax authorities;

d) information on credit debts, received from internal and/or external sources, and also under guarantee of the state, provided by the Ministry of Finance.

IV. IMPLEMENTATION OF FINANCIAL MONITORING

8. Financial monitoring of activities of the companies is made using qualitative indexes, and assessment - using reporting indicators and is performed in the following procedure:

a) the number of the companies which submitted financial statements is compared with data of the Register of public property;

b) the general indicators reflecting financial and economic activities of the companies are determined;

c) tables, information notes and other necessary information for creation of financial monitoring are constituted;

d) the data on the tax liabilities and tax benefits represented by the Main state tax authorities are checked;

e) data on credit debts, received from internal and external sources, and also under guarantee of the state, represented by the Ministry of Finance are checked.

V. CREATION OF FINANCIAL MONITORING

9. Based on the summarized information the analytical note about results of financial monitoring of the companies in general, and in case of need - on the separate companies which includes is annually constituted:

a) analysis of evolution of financial and economic indicators of the accounting period and corresponding period of last year, including:

sales returns, expenses and results of operating, investing and financial activities, and also net profit (loss), profitability;

assets: tangible assets, intangible assets, financial assets, inventory stocks, debt on trading accounts and other debts, financial investments, classification of assets and debts, return on assets;

equity (net assets), structure and change of equity;

debts (obligations) of the company: financial liabilities, condition of the credits obtained from internal and external sources and also under guarantee of the state, commercial debts, charges according to obligations, including debts to the government budget, budgets of administrative and territorial units, the budget of the national social insurance, funds of compulsory medical insurance;

b) determination of tax risks of the companies based on the analysis of excess of the size of the current assets over short-term debts and sources of financing of assets;

c) solvency analysis of the companies for the purpose of determination of the insolvent companies;

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