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Published Audit Report on Annual Financial Statement of the Socialist People’s Party for 2014

Podgorica, 14th September 2015 – The State audit institution has conducted a financial audit of the Annual financial statement and audit of regularity of the Socialist People’s Party operations with legal and other relevant regulations.

Based on the performed audit, established facts and consideration of the audited entity's response to the SAI’s Preliminary Report, the Auditing Board, composed of Mr. Nikola Kovačević, Head of the Auditing Board – member of Senate and Mr. Branislav Radulović, PhD, member of the Auditing Board ‐ member of the Senate, has given qualified audit opinion on Annual financial statement and qualified opinion on regularity audit.

The financial audit has established that Annual Financial Statement of the Socialist People's Party for 2014 is not, in all material aspects prepared and presented on a fair and objective manner in line with accepted financial reporting framework, but identified irregularities do not have a pervasive impact on understanding the financial statement. With regards to identified irregularities, the Auditing Board gave following recommendations to the audited entity: balance the state of deposits stated in the business books with the balance stated in the bank statements and make corrections of bookkeeping in the business books in line with balanced state; keep record of all payments supported by adequate and complete documents and balance receivables with local self-government units and make corrections of bookkeeping in the business books.

The regularity audit has established that the financial and other activities of the audited entity are not, in all material aspects complied with legal and other regulations identified as criteria for a given audit.

With regards to identified irregularities, the Auditing Board gave following recommendations to the audited entity:

- engage and hire the employees by Employment contracts, but not by service agreements and decisions on conducting administrative and technical jobs as well as jobs for systematized work positions;

- calculate and pay tax liabilities on compensations paid to the physical persons in line with article 46 of the Law on Personal Income Tax;

- report vacant job posts to the Employment Agency in line with Article 26 of the Law on employment and exercising rights with respect to unemployment insurance;

- make separations of financial transactions related to the regular operations and election campaign with aim to improve reporting and ensure precise data;

- keep record of all expenditures on appropriate accounts and make their classification by type in line with the Rulebook on the Chart of Accounts;

- keep annual records of inventories and liabilities as it is prescribed in line with the Rulebook on the Method and Deadlines for Inventories and Alignment of the Bookkeeping with the Actual Status;

- determine by an internal act who is entitled to fees based on the fuel and mobile phone costs as well as the limit of these fees;

- political entities must not borrow from physical persons pursuant to Article 24 paragraph 4 of the Law on financing political entities and election campaigns;

- in the business books, the financial transactions of all credit cards incurred by the holder should be recorded and based on valid accounting documents; an internal act should define that the funds transferred through the giro account of the Party are only used for the activities of the party.

The final Audit Report on Annual Financial Statement of the Socialist People's Party for 2014 has been officially published at the web site of the State audit institution.

Excerpt from the Audit Report on Annual Financial Statement of the Socialist People’s Party for 2014

Audit Report on Annual Financial Statement of the Socialist People’s Party for 2014 (mne)