Audit Reveals Violations in the Purchase Processes at the Pedagogical University

The Republic of Armenia's State Audit Office has conducted a study on the financial activities of the "Khachatur Abovian Armenian State Pedagogical University" foundation for the period from 2016 to 2019. This was reported by the State Audit Office.

The study focused on procurement processes, calculated salaries, and the management of property belonging to the foundation and the state. The foundation's sole founder is the Republic of Armenia.

The procurement processes involving AMD 705 million conducted by the foundation were examined. Violations totaling AMD 315 million were identified in the purchasing processes.

In particular, in two procurement processes, the companies declared winners submitted allegedly forged documents that granted them the right to be recognized as winners, resulting in contracts worth AMD 127 million being signed with them. There was a significant quantitative discrepancy between the volumes of services provided by one company and its workforce resources. There are reasonable suspicions regarding the provision of services by unregistered workers who were allegedly in actual labor relations, resulting in around AMD 14 million in income tax not being paid to the state budget.

A service provider company delivered services that did not meet the technical specifications; however, the foundation did not impose a penalty of AMD 3 million as stipulated in the contract. Some of the televisions supplied to the foundation did not meet the technical specifications of the contract but were accepted by the foundation. The price for delivering the televisions was approximately double the acquisition cost, but no violations were found in the purchasing process.

A foreign legal entity was paid AMD 13 million more (including value-added tax) than its price offer. The foundation calculated additional salaries (bonuses, extra payments, and rewards) without establishing legal acts defining the rules, cases, and amounts specified in Article 178 of the Labor Code of the Republic of Armenia. Nevertheless, disproportionate and subjective allocations of additional salaries were not recorded.

A state-owned land area with a gross balance value of around AMD 100 million and a loan of AMD 60 million was provided free of charge to a company established by the foundation. However, due to ineffective management and the absence of proper oversight by the foundation over the company’s operations, the company incurred losses, and dividends were not recorded in the foundation’s budget. Additionally, the company made approximately AMD 47 million in expenditures that did not align with the foundational objectives.

The State Audit Office has presented several recommendations to the foundation. The report compiled as a result of the study has been forwarded to the Prosecutor's Office of the Republic of Armenia to verify the existence of criminal activity.