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Published Audit Report on Annual Financial Statement of the Movement for Changes for 2014

Podgorica, 6th October 2015 - The State Audit Institution conducted a financial audit of the Annual Financial Statements and a regularity audit of the Movement for Changes, which implies compliance with legal and other relevant regulations.

Based on the conducted audit, determined facts and the statement of the audited entity, the competent Auditing Board comprised of a member of the Senate Nikola Kovačević, Head of the Auditing Board and a member of the Senate Branislav Radulović, PhD, a member of the Auditing Board, has given unqualified audit opinion on the Annual financial statement for 2014 with emphasis of matter and qualified audit opinion on regularity audit.

Financial Audit has found that the Annual Financial Statement of the Movement for Changes in 2014 in all important material respects had been made and presented fairly and objectively in accordance with the applicable financial reporting framework. Apart from given unqualified audit opinion, the competent Auditing Board has emphasized a matter to the items related to the Balance Sheet, Claims (made advances), Rent revenues and rent expenditures.

Regularity audit has found that the audited entity did not comply all the financial and other actions with laws and other regulations that had been identified as the criteria for the respective audit, being that shortcomings had been found in the implementation of the Labour Law, the Law on Obligation Relations of the Law on Employment and Right to Exercise Unemployment Insurance, the Law on Personal Income Tax and Regulation on reimbursement of expenses to officials and civil servants.

With regards to identified shortcomings, the competent Auditing Board has given following audit recommendations:

- The audited entity should conclude contracts in accordance to the Labour Law with the employees hired to perform tasks of systematized positions (the Secretary of MP club, the Secretaries of Municipal Boards) and only conclude service contracts in accordance with the provisions of the Law on Obligations.

- The audited entity is obliged to announce to the Employment Agency all the vacancies in order to track the supply and demand on the labour market, as is stipulated by the Law on Employment and the Right to Exercise Unemployment Insurance.

- The audited entity is obliged to consistently apply the Regulation when calculating and paying per diem allowances, and the payment of all the expenses should be done based on the adequate and complete documentation.

- The audited entity should record all the petty cash transactions chronologically in the petty cash journal.

- The audited entity should establish through an internal act which persons within the Party have the right for reimbursement of mobile phone expenses, as well as the amount of the reimbursement.

- The write‐off of liabilities should be done with the approval of the supplier that they had abjured the right to payment or based on a court ruling.

- The audited entity, pursuant to the Article 47 of the Law on Personal Income Tax is obliged to submit statements on calculated and paid taxes (IOPPD form) to the competent tax authority and to show the data on paid salaries and other taxable incomes in accordance with the Rulebook.

The audit of the Annual Financial Statements for 2013 had found certain irregularities and shortcomings in the part of establishing the internal control, in the documentation of costs, calculation and payment of per diem and travel expenses for official trips and creation of service contracts and payout of benefits in accordance with the same contracts. In order to eliminate noted irregularities four (4) recommendations had been given.

The audit of the Annual Financial Statement for 2014 has found that the audited entity implemented recommendation related to the establishment of internal control by creating the Financial Plan for 2014, the Supervisory Board had submitted the report on conducted internal control of financial operations to the General Board, and the Rulebook on internal organization and systematization of jobs had been created as well. The audited entity had taken certain actions in order to implement the recommendations relating to the documentation of costs and the calculation and payment of per diem and travel expenses for official trips, but the same had not been fully implemented.

The audited entity did not implement the recommendation concerning the conclusion of service contracts with persons who were employed under employment contracts, given that it had made payments based on these contracts in 2014 as well, in the amount of € 15,150.00. It was also found that the recommendation related to reporting of earned revenues realized in the Party on the basis of service contracts had not been implemented. For four public officials the data on the amount of received earnings determined by the audit and the amount reported in the applications submitted had not been harmonized.

The final Audit Report on Annual Financial Statement of the Movement for Changes 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 Movement for Changes for 2014

Audit Report on Annual Financial Statement of the Movement for Changes for 2014 (mne)