On recognition as illegal and cancellation of the order to conduct an audit event

No.6001-23-00-6ap/686 dated 09/21/2023

Plaintiff: K LLP

Respondent: The Committee of Internal State Audit of the Ministry of Finance of the Republic of Kazakhstan (hereinafter – the CCGA)

The subject of the dispute: on the recognition of the unlawful and cancellation of the order to conduct an audit event (act on the appointment of an audit) dated November 1, 2022 No. 5.

Review of the plaintiff's cassation appeal.

PLOT: Upon the appeal of the NGO "A" about violations of the law when signing acts of completed works under the public procurement contract, the CCGA issued an order No. 5 dated October 20, 2022 regarding the Ministry of Energy.

Based on the appeal of A.K., received by the CCGA from the Department for Combating Corruption (Anti-Corruption Service) in the Karaganda region, the CCGA appointed an audit against the plaintiff, Act No. 5 of November 1, 2022. The plaintiff challenged this act in the SMAS, which determined that the claim was returned as not subject to consideration in administrative proceedings.

    Judicial acts:

1st instance: the claim is returned.

Appeal: left unchanged.

Cassation: the rulings were annulled, the case was sent to the court of first instance for consideration on the merits.

Conclusions:           As a key argument, the court of first instance pointed out that the Committee's order to conduct an audit against the plaintiff does not realize or restrict his rights and legitimate interests, does not generate any legal consequences for him.

The IAS also believes that the audit order is not a response measure of financial control, whereas an order issued based on the results of audit activities may have adverse consequences for the plaintiff.

In the opinion of this court, in the case under consideration, the order to conduct audit activities does not in itself have any burdensome consequences for the plaintiff, and arguments about disagreement with him are subject to evaluation when challenging the final burdensome act. However, the key conclusion of the local courts that the contested act does not entail any legal consequences for the plaintiff is erroneous.

The competence of the Committee to issue an order for an audit (an act on the appointment of an audit) in relation to the plaintiff is not disputed by anyone. At the same time, such an instruction, as can be seen from the norms of paragraphs 1, 2 of Article 21, paragraph 2 of Article 37, Article 59 of the Law "On State Audit and Financial Control", Article 462 of the Administrative Code:

a) is an administrative act;

b) creates certain rights for the plaintiff and imposes on him the duties established by law;

c) it has negative consequences for the plaintiff in case of non-fulfillment, as it is provided by measures of state coercion in the form of administrative liability.

The Judicial Board also proceeds from the fact that at the time of the appeal of the act on the appointment of an inspection, it had not been completed. Consequently, the defendant did not accept the final administrative act based on the results of the audit.

The return of the claim by the courts would be legitimate in the event that the audit is completed and the final administrative act is issued, since then the act of appointing the audit acquires the status of administrative evidence and it is not subject to separate challenge.

Taken together, the judicial board considers that the courts, in returning the claim, incorrectly applied the norms of substantive and procedural law and issued unlawful judicial acts. This is the legal basis for the cancellation of the court rulings disputed by the cassator.

 

 

 

Attention!   

       Law and Law Law Law draws your attention to the fact that this document is basic and does not always meet the requirements of a particular situation. Our lawyers are ready to assist you in legal advice, drawing up any legal document suitable for your situation.  

 For more information,  please contact a Lawyer / Attorney by phone: +7 (708) 971-78-58; +7 (700) 978 5755, +7 (700) 978 5085. 

 

Attorney at Law Almaty Lawyer Legal Services Legal Advice Civil Criminal Administrative Cases Disputes Protection Arbitration Law Firm Kazakhstan Law Office  Court Cases