REPUBLIC OF LITHUANIA                                      
                                                                                
                               LAW                                              
                                                                                
               ON THE DEPARTMENT OF STATE CONTROL                               
                                                                                
                                                                                
                            Chapter 1                                           
                                                                                
                       General Provisions                                       
                                                                                
                                                                                
     Article 1.  The Department  of State Control of the Republic               
of Lithuania  is an  agency of control accountable to the Supreme               
Council of  the Republic  of Lithuania,  carrying out inspections               
regarding the  lawful, expedient,  and efficient  utilization  of               
state material and financial resources, as well as the protection               
of state property.                                                              
                                                                                
     Article  2.   The  Department   of  State  Control,  at  the               
recommendation of the State Controller, shall submit its estimate               
of expenditures   to  the Supreme  Council  of  the  Republic  of               
Lithuania for  its approval, and then submit it to the Government               
for inclusion in the Draft Budget of the Republic of Lithuania.                 
                                                                                
     Article 3.  The Department  of State  Control shall  act  in               
accordance with this law, other laws of the Republic of Lithuania               
and when  exercising control functions shall be governed by other               
legislative acts of the Republic of Lithuania.                                  
                                                                                
     Article 4.  Each year  the Department of State Control shall               
submit a  report to  the  Supreme  Council  of  the  Republic  of               
Lithuania on how state financial and material resources were used               
and how state property was protected in the preceding year.                     
     The activity  of the  Department of  State Control  and  its               
estimate of  expenditures are  under the  control of  the Supreme               
Council of Republic of Lithuania.                                               
     Article 5.  The Department of State Control shall inform the               
Supreme  Council   of  the  results  of  inspections  and  audits               
performed at  the behest  of the  Supreme  Council.  The  Supreme               
Council, and  the Government,  as necessary,  must be informed of               
the results  of inspections  that are  of general significance or               
when urgent actions must be taken in furtherance thereof.                       
     Article 6.  The Department  of State  Control shall make the               
results of  inspections available  to the  public, except  to the               
extent certain  data  are  deemed  to  be  state,  technological,               
commercial, professional or personal secrets.                                   
                                                                                
     Article 7.  The Department  of State  Control, as necessary,               
shall act  in coordination  with the  office of  the  Procurator,               
bodies of  internal affairs,  with other  law enforcement bodies,               
and with  public organizations,  but without interfering in their               
internal affairs, provided the latter do not violate the law.                   
                                                                                
                            Chapter 2                                           
                                                                                
   Objectives and Functions of the Department of State Control                  
                                                                                
        Article 9. The Department of State Control shall:                       
                                                                                
     (1) monitor  how  indices  of  budget  expenditures  of  the               
Republic of  Lithuania are  being followed; inspect and audit the               
fulfillment of the estimate of expenditures of the Managing Board               
of the  Supreme Council, the Managing Board under the auspices of               
the Executive Branch, of the ministries, of government bodies, of               
inspectorates and  other  state  institutions,  as  well  as  the               
financial  and  economic  activities  of  state  enterprises  and               
organizations regarding  the legitimacy,  expedience, efficiency,               
and accuracy of their accounting and accountability;                            
     (2) monitor  the activities of state enterprises under lease               
within  the   limits  and   in  accordance  with  the  procedures               
established  by   their  lease   agreements,  as  well  as  their               
compliance with laws governing leases;                                          
     (3) monitor  the utilization  of  state  capital  at  state,               
state-joint stock and mixed stock companies;                                    
     (4) monitor  local  governments,  public  organizations  and               
movements to  determine whether allocations from the State Budget               
are used efficiently and for the purposes indicated;                            
     (5) monitor  loans from the State Budget and other subsidies               
to determine  whether they  are used  expediently; check  on  the               
economic health of institutions and organizations whose loans and               
other contractual obligations are guaranteed by the government;                 
     (6) monitor  how property  owned by the state, or managed or               
used by the state, is being protected;                                          
     (7) monitor the expediency and legitimacy of the utilization               
of resources appropriated for state social insurance; and                       
     (8) at  the behest of the Supreme Council of the Republic of               
Lithuania shall  monitor financial  and  economic  activities  of               
other bodies formed by the Supreme Council.                                     
                                                                                
     The Department  of  State  Control  shall  not  monitor  the               
activity of  the Supreme Council of the Republic of Lithuania, of               
the Executive Branch, or of the Bank of Lithuania.                              
                                                                                
     Article 10.  The Department of State Control shall supervise               
the functioning  of the government apparatus, whether it violates               
state and  financial discipline in carrying on its activities and               
whether principles  of social  justice  and  legality  are  being               
observed, shall  disclose cases  of procrastination,  bureaucracy               
and fraud,  and shall  submit proposals to improve the government               
apparatus and its functioning.                                                  
                                                                                
     Article 11.  The Department  of State Control, as necessary,               
shall provide   methodological  assistance to  local governments,               
state institutions, enterprises, and organizations, as well as to               
other agencies  of control,  by organizing  local inspections and               
audits.                                                                         
                                                                                
                                                                                
                            Chapter 3                                           
                                                                                
   Structure and Competence of the Department of State Control                  
                                                                                
     Article 12.  The Department of State Control of the Republic               
of Lithuania  shall consist  of a  central apparatus and district               
divisions.                                                                      
                                                                                
     The Department  of State Control shall enjoy the rights of a               
legal person.                                                                   
                                                                                
     Article 13.  The Department of State Control of the Republic               
of  Lithuania   is  established   and  its   internal  rules  and               
regulations are  approved by  the Supreme Council of the Republic               
of Lithuania.                                                                   
     Head of  the Department  of State Control shall be the State               
Controller.                                                                     
                                                                                
     Article 14.  The State  Controller shall be appointed by the               
Supreme  Council   of  the   Republic   of   Lithuania   on   the               
recommendation of  the President  of the  Supreme Council,  for a               
term of 7 years.                                                                
                                                                                
     The State Controller shall:                                                
                                                                                
     (1) supervise and direct the Department of State Control and               
shall be  responsible to  the Supreme  Council  for  the  overall               
functioning of  state control  and for the observance of legality               
in the activities of agencies of state control;                                 
     (2) approve  the structure  and number  of employees  of the               
Department of  State Control,  as well as the location, structure               
and number  of employees  of district  divisions of state control               
within the limits of funds appropriated for Department salaries;                
     (3) approve  the rules  and regulations  of  the  structural               
subdivisions of  agencies of  state control,  as  well  as  their               
internal rules and regulations;                                                 
     (4)  monitor   the  legality   of  the  decisions  of  chief               
controllers,  review   complaints  concerning   the  actions  and               
decisions of chief controllers;                                                 
     (5) organize  the work  of the  Council of State Control and               
preside over its sittings;                                                      
     (6) represent  the Department  of State  Control and  ensure               
that the  Supreme  Council  is  provided,  in  due  course,  with               
information and  accounting pertaining  to the  activities of the               
Department of State Control.                                                    
                                                                                
     Article 15.  The State  Controller shall  have the  right to               
take part  in meetings  held  by  the  Executive  Branch  of  the               
Republic of Lithuania, but shall not have the right to vote.                    
     If the State Controller disagrees with a decision adopted by               
the Executive Branch, he may voice his own opinion, which must be               
recorded in  the minutes  of the meeting of the Executive Branch;               
however, such  a record  shall not  have the effect of suspending               
the execution of the decision of the Executive Branch.  The State               
Controller shall inform the Supreme Council of the opinion he has               
thus voiced.                                                                    
                                                                                
     Article 16.  The State  Controller shall adopt decisions and               
issue  instructions concerning the functioning of the Department.               
                                                                                
     Article 17.  Vice Controllers  shall be appointed or removed               
from office  by the  Supreme Council of the Republic of Lithuania               
on the recommendation of the State Controller.                                  
                                                                                
     Article 18.  The Department  of State  Control includes  the               
Council of  State Control,  which also  includes ex  officio  the               
State Controller, his vice controllers and chief controllers.                   
     As necessary, members of the Executive Branch may be invited               
to take part in the sittings of the Council.                                    
                                                                                
         Article 19. The Council of State Control shall:                        
                                                                                
     (1) consider  drafts  of  the  organizational  structure  of               
agencies of  state control  and the  number of employees thereof,               
drafts of estimates of expenditures, and plans for their work and               
their accounts;                                                                 
     (2)  consider   and  approve   regulations  and  methods  of               
conducting inspections and audits;                                              
     (3)  periodically   consider  and  discuss  the  results  of               
inspections  and   audits  and   on  the   basis  thereof  submit               
appropriate  proposals   and  recommendations   to  the  relevant               
government bodies;                                                              
     (4) as  necessary, analyze  the need  for  and  efficacy  of               
measures adopted  by  officials  of  agencies  of  state  control               
against violators,  and  prepare  recommendations  on  perfecting               
their implementation;                                                           
     (5) approve the qualifications for departmental officers;                  
     (6) consider other issues proposed by the State Controller.                
                                                                                
     Article  20.  The  Department  of  State  Control  shall  be               
comprised of  divisions  and  subdivisions,  depending  on  their               
spheres of  activity and  objects under  their control. Divisions               
performing  control   functions  shall   be   headed   by   chief               
controllers, which  shall be  appointed and  removed  from  their               
posts by  the Supreme Council of the Republic of Lithuania on the               
recommendation of the State Controller.                                         
                                                                                
     Chief controllers  shall organize  inspections  and  audits,               
which  shall   be  conducted  by  departmental  officers  of  the               
appropriate divisions.                                                          
                                                                                
     Article 21.  The district  department of state control shall               
be headed  by a  chief controller  who  shall  be  appointed  and               
removed  from   his  post   by  the   Supreme  Council   on   the               
recommendation of the State Controller.                                         
                                                                                
     Article 22.   Citizens  of the  Republic of Lithuania having               
higher education,  supervisory experience  in  the  work  of  the               
government apparatus and who have passed qualifying examinations,               
can be appointed to the posts of heads of the Department of State               
Control and  its structural  subdivisions.   They may  hold  such               
posts up to the age of 65.                                                      
                                                                                
     Citizens  of   the  Republic   of  Lithuania  having  higher               
education corresponding  to the  profile of  a given  division or               
subdivision of  State Control, as well as experience in practical               
work, can  be appointed  as departmental  officers.    Heads  and               
officers may  not engage  in any  other paid activity, except for               
scientific-educational activity.                                                
                                                                                
                                                                                
                            Chapter 4                                           
                                                                                
              The Exercise of State Control and the                             
            Powers of the Department of State Control                           
                                                                                
     Article 23.  The Department of State Control shall establish               
on its  own discretion  the terms  of inspections and audits, and               
their form and scope.                                                           
                                                                                
     Institutions, enterprises  and  organizations  must  provide               
officers of  state control  and specialists who assist them  with               
all that is required to perform their duties.                                   
                                                                                
     Article 24.  Ministries, other  state bodies,  and  agencies               
shall, in  due course,  inform the Department of State Control of               
all current  and  new  legislative  acts  regulating  accounting,               
distribution and utilization of financial and material resources.               
                                                                                
     Article 25.  Inspections and  audits must be conducted so as               
not  to   interfere  with   the  normal   functioning  of   those               
[enterprises] under inspection.                                                 
                                                                                
     The officers  of state  control must  not interfere with the               
functioning of  enterprises, institutions  or organizations,  and               
must not  make preliminary assessments or hasty conclusions prior               
to the completion of the inspection or audit.                                   
                                                                                
     Article 26.  For  performing  inspections  and  audits,  the               
Department of  State Control  has the right to employ specialists               
of other  institutions,  enterprises  or  organizations,  and  in               
accordance with proper procedures to pay them for their work.                   
                                                                                
     Article 27. While exercising their functions the officers of               
state control shall have the right to:                                          
     (1) compel  submission of  initial documents,  balances  and               
accounts, estimates,  contracts,  orders,  directives  and  other               
documents revealing economic and financial activity;                            
     (2) freely enter warehouses, storage areas, industrial units               
and other entities, to locate all material valuables and cash and               
securities;                                                                     
     (3) obtain  from heads of institutions and organizations and               
from other  employees verbal  or written  explanations, bills  of               
lading and other documents of entitlement, copies of documents on               
issues concerning inspections and audits;                                       
     (4) remove  documents and  to attach  them to  the  official               
audit papers,  to seal documents, and to seal places for securing               
money and other material valuables;                                             
     (5) compel  special measurements  and special tests for work               
done; and                                                                       
     (6) in  cases  provided  by  law,  and  in  accordance  with               
procedures established by law, obtain from the Bank of Lithuania,               
from credit  and commercial  banks,  and  from  institutions  and               
organizations relevant  data, bills of lading and other documents               
of  entitlement,   as  well  as  copies  of  documents  regarding               
financial and  other operations  pertaining to  the object  under               
inspection.                                                                     
                                                                                
     Article 28. Employees whose activity is being inspected must               
be present when material valuables and money in their custody are               
being checked,  and they have the right to familiarize themselves               
with the  documents asserting  shortcomings in their work, and to               
provide explanations  and additional  documents, which  shall  be               
appended to the inspection material.                                            
                                                                                
                                                                                
     Article 29.  The Department of State Control, upon agreement               
with government bodies or local governments, may delegate to them               
the right to inspect the objects under its control.                             
                                                                                
                                                                                
     Article 30.  The Department of State Control, upon agreement               
with  government   bodies  of   other  countries,   as  well   as               
international monitoring  organizations, may  arrange to transfer               
or assume  on their  own account  the duty to conduct inspections               
and audits.                                                                     
                                                                                
                                                                                
     Article 31.  Upon performance  of an  inspection  or  audit,               
official audit  papers shall  be drawn up, and the controller who               
signs it shall be fully responsible for its contents.    Heads of               
enterprises,  institutions   and  organizations  that  are  being               
inspected must  be informed  of the  results of the inspection or               
audit, and  when there  is a  determination that the law has been               
violated, the  relevant agencies or financial bodies must also be               
informed.                                                                       
     If during  an inspection signs of a crime are uncovered, the               
Department  of   State   Control   must   submit   the   relevant               
incriminating material to the agencies of law enforcement.                      
     The Department  of State  Control must  be informed within a               
month of  the measures  adopted to compensate for material losses               
or to  eliminate the  violations of  law  uncovered  during  such               
inspection.                                                                     
                                                                                
                                                                                
     Article 32.  The State Controller, his vice controllers, and               
chief:                                                                          
                                                                                
      (1)  point out to departmental officers their shortcomings,               
to warn  them and  to require  that they  eliminate any uncovered               
violations;                                                                     
     (2) put  questions to the heads of enterprises, institutions               
and organizations  concerning the removal of directives issued by               
the executives  violating legitimate  interests  of  enterprises,               
institutions and  organizations as  well as  the  rights  of  its               
employees, to  suspend the illegitimate directives and actions of               
executives if  they impair  the interests  of the  State  or  the               
rights of its citizens;                                                         
     (3) impose  fines upon  the executives  equal to  the damage               
caused to  the State  but not  exceeding the  sum total  of three               
average monthly salaries;                                                       
     (4) remove from posts employees of governmental institutions               
and enterprises  who have  severely  violated  the  laws  of  the               
Republic of  Lithuania, incurred  damage to  the  State  and  its               
citizens.                                                                       
                                                                                
     Administrative  measures   shall  be   adopted  against  the               
executives who  do not  permit the  state controllers  to inspect               
enterprises,  institutions   and  organizations,  do  not  submit               
relevant documents  or conceal  them as  well  as  present  false               
information.                                                                    
                                                                                
                                                                                
     Article 33.  The officers of the state control agencies  are               
accountable for the performance  of their duties according to the               
procedure as  is established  for the  employees of  governmental               
bodies.                                                                         
     An appeal  against the decisions of chief controllers may be               
filed with  the State  Controller whereas  an appeal  against the               
decisions of the State Controller and his vice controllers may be               
addressed to the court.                                                         
                                                                                
                                                                                
Bronius Kuzmickas                                                               
                                                                                
Vice President                                                                  
Supreme Council                                                                 
Republic of Lithuania                                                           
                                                                                
Vilnius                                                                         
31 May 1990                                                                     
No.1-258