Estonia’s defence forces move to fix inventory and accounting failures

Estonia’s Defence Forces are working to correct serious weaknesses in inventory management and accounting after an audit by the National Audit Office, ERR’s programme AK.Nädal reported. Officials say the problems emerged as the country rapidly strengthened its defence capabilities and supported Ukraine after Russia’s invasion began in 2022.

The Defence Forces say they have maintained an overview of what equipment they possess and where it is located. However, attention shifted away from recording the value at which the equipment was entered into the accounts, said Major General Vahur Karus, chief of the Defence Forces General Staff.

“The main activity was preparing units and ensuring that they had the necessary equipment. The focus of training was on getting the force ready as quickly as possible,” Karus said. “As a result, the focus of the Defence Forces certainly shifted away from support functions and how they operate.”

ERR wanted to ask former Defence Ministry Secretary General Kusti Salm how the ministry handled matters at the time. Salm initially indicated that he was willing to speak to the programme but ultimately declined an interview.

Reports have described a ministry atmosphere in which the priority was to acquire ammunition and complete transactions, with paperwork to be put in order later. The issue came under renewed scrutiny after it emerged that, in addition to inadequate accounting, tens of millions of euros may have been written off.

New Secretary General Kaimo Kuusk has begun reforming the accounting system, drawing lessons from the Ukrainian armed forces. He said the reform would include a comprehensive overhaul of asset and stock accounting and the creation of a modern logistics system.

“We are also putting the accounting of assets and stocks in order. We have changed the principles of inventories. We will not simply count everything mechanically in the future; we must also assess the condition of the assets,” Kuusk said.

A full inventory is currently under way at the Viru Battalion and is due to be completed in September. It is expected to show how many resources would be needed to inventory the Defence Forces’ entire stock.

Karus said some core activities might have to be suspended temporarily while items were counted again, entered into the balance sheet and the opening balance established. After that, the Defence Forces would be able to balance core activities with support functions, he said.

Kuusk said the Defence Forces did not have to choose between training, defence readiness and accurate asset accounting. “They must be done together and at the same time,” he said.

Karus cautioned that the National Audit Office could still identify shortcomings in its 2026 audit, because the current measures address problems highlighted by the audit only in the short term.