Protection of the client in a dispute with the State Audit Service regarding the appeal of the results of the audit of certain issues of financial and economic activity
The State Audit Service conducted an audit of the activities of our client, the Department of Infrastructure of the Regional State Administration, in terms of the implementation of road restoration works and other emergency restoration works carried out to eliminate the consequences of the large-scale flood of 2020. Based on the results of the audit, the State Audit Service concluded that the contractors hired by the Infrastructure Administration allegedly performed the work poorly and not fully. The State Audit Service demanded compensation to the state budget for losses in the total amount of more than 1.1 million dollars.
The difficulty of this case was that the administrative courts take the position that such disputes should be considered by the commercial courts after the Infrastructure Administration, in compliance with the requirements of the State Audit Service, addresses its contractors with claims for compensation of damages.
We managed to justify the jurisdiction of this dispute to administrative courts, focusing on those violations that the State Audit Service, as a subject of authority, allowed in the audit process. The court satisfied the lawsuit of the Infrastructure Administration, recognized it as illegal and canceled the State Audit Service's demand for an obligation to compensate for the damage caused.
