Inventory of state-owned assets

The most normal thing in the world?

The Dutch central government does not have a full inventory of its assets or know what their current value is. An inventory of the assets and associated management, maintenance and replacement budgets should be the most normal thing in the world. But an audit by the Netherlands Court of Audit has found otherwise.

All ministries have assets. Unlike other public and private organisations such as hospitals, municipalities and companies, however, ministries are not required by law to prepare balance sheets and disclose the current value of their assets. The Court of Audit recommends that they should. State-owned assets, after all, are worth hundreds of millions of euros. 

State-owned assets range from real estate to cultural heritage, from roads and bridges to stocks of medicinal cannabis, vaccines, oil and gas and from defence materiel to ICT systems. All these assets were originally purchased with public money. 

What are our recommendations?

We recommend that the ministers use the statements presented in our report on each ministry as a basis for the further completion, updating and permanent upkeep of their asset inventories. They could further use the statements to provide information externally on their assets and their maintenance status, for instance by means of a recurring section in their annual reports. We recommend that the ministers value their assets and keep the valuations current so that they know and can explain how much public money is tied up in assets. We further recommend that parliament use this information to assess the ministries’ budgets and accounts and to ask such questions as: Are the agreed goals feasible given the available assets and their maintenance state? Do budgets make sufficient allowance for necessary maintenance and upkeep expenditure? Has the minister correctly fulfilled his or her statutory duty to manage the assets?

Why did we audit state-owned assets?

State-owned assets have a considerable financial value and are of great public importance. They also play a leading role in the implementation of policy and the ministries’ operational management. Ministries and other public bodies, for instance, are housed in state-owned buildings, defence materiel is necessary to carry out military missions, dykes protect us from high water, IT systems are used to deliver public services. State-owned assets must therefore be properly managed.

What audit methods did we use?

The Court of Audit wants its report to contribute to the evaluation of the government’s reporting and accounting system that began in 2021. The report includes an overview of state-owned assets based on the Court’s own audit. At the report’s heart are indicative statements of each ministry’s assets, with a note on each item. The asset statements summarise the assets held by each ministry and by each budget fund, agency, service and shared service organisation that fall under a ministry’s responsibility. The indicative asset statements do not disclose amounts in the form of book values. We confined the report to the important first step of drawing up an overview of the assets and discussing the added value of that information.

What data did we use in our audit?

We obtained information on each ministry’s assets from public sources, such as the ministries’ budgets, annual reports, policy documents and websites. We also used the ministries’ answers to a questionnaire we prepared. We further drew on other sources, such as our own audits. We defined state-owned assets as assets where beneficial ownership is vested in the legal personality of the government. In other words, an asset is state-owned if the state enjoys the benefits and bears the disbenefits, regardless of the legal ownership.

Current status

The Minister of Finance responded to our findings and recommendations on behalf of the government. He agrees with their importance and will take a first step by concentrating on the ministers that make the largest investments. In its afterword, the Court of Audit notes that further steps will be necessary.

The audit report was sent to the House of Representatives and the Senate and to all ministers on 1 December 2021. It has also been published on the Court of Audit’s website.