Preliminary 'Total Audit' of Boric Administration Reveals $9.2 Billion Fiscal Risk in Chile

Chilean Audit Uncovers Significant Fiscal Risks and Irregularities

A comprehensive preliminary audit of the Gabriel Boric administration in Chile has revealed a staggering fiscal risk of over $9.2 billion. This "total audit," commissioned by the incoming President José Antonio Kast, scrutinized more than 500 public services and state organizations, analyzing over 913 million data points from 2022 to 2026. The findings highlight a range of issues, including errors, inconsistencies, poor management, structural control weaknesses, inefficiencies, and potential irregularities that could lead to criminal charges.

Key Areas of Concern for Internal Auditors

The audit identified several critical areas of concern for internal audit and assurance professionals:

• Delayed Payments: Approximately $3.2 billion in deferred payments, including $268 million owed to nearly 10,000 small and medium-sized enterprises (SMEs), as well as funds for university gratuity and educational support programs.
• Direct Procurement Issues: Over $3.17 billion spent through direct deals and agile purchasing mechanisms, even when public tenders were feasible. This practice is estimated to have resulted in overpayments of around $760 million.
• Weaknesses in Control and Compliance: Structural weaknesses such as low accountability for disbursed funds, public fund recipients not registered in official records, multiple purchases from the same vendor on the same day, budget under-execution exceeding 30%, and unrecovered medical leave subsidies.
• Uncollected Revenue: Approximately $150 million in uncollected medical leave reimbursements.

Implications and Next Steps for Public Sector Assurance

The Chilean government has already initiated investigations into four key entities: the National Board of School Aid and Scholarships (Junaeb), the Ministry of Women, the Ministry of Transport and Telecommunications, and the National Agency for Research and Development (ANID). These actions underscore the critical role of robust internal audit functions in identifying and mitigating financial risks, ensuring compliance, and promoting efficient resource allocation within public administration. For assurance professionals, this case serves as a stark reminder of the importance of continuous monitoring, thorough data analysis, and the proactive identification of systemic weaknesses to safeguard public funds and maintain public trust.