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Published Audit Report on Proposed Law on the Final Statement of Accounts of the State Budget of Montenegro for 2014

Podgorica, 15th October 2015 - On the basis of Article 4 and 9 of the Law on State Audit Institution and Article 68 of the Law on Budget and Fiscal Responsibility, the State audit institution conducted the audit of the Proposal Law on the Final Statement of Accounts of the State Budget of Montenegro for 2014.

Based on conducted audit, established facts and deliberations of the audited entities' Opinions regarding the SAI Preliminary Report, the Auditing Board responsible for the audit, composed of Mr Milan Dabović PhD, Head of the Auditing Board and Mr Dragiša Pešić, member of the Auditing Board, expressed unqualified audit opinion on financial audit and qualified audit opinion on regularity audit of the Proposed Law on the Final Statement of Accounts of the State Budget of Montenegro for 2014.

Financial audit of the Proposed Law on the 2014 Final Statement of Accounts of the State Budget of Montenegro, established that the Proposed Law on the Final Statement of Accounts of the State Budget of Montenegro for 2014 was in all material aspects prepared in compliance with the Law on Budget and Fiscal Responsibility and the Rulebook on the Manner of Drafting, Compiling and Filing Financial Statements of the Budget, State Funds and Local Self‐Government Units. Revenues and expenditures are presented in a true and fair way in all material respects and they do not contain any materially significant errors in the presentation of the results (deficit).

Regularity audit of the Proposed Law on the Final Statement of Accounts of the State Budget of Montenegro for  2014 established that the spending units, users of the budget funds have not put their business activities in all their aspects in compliance with the legislation that governs budget operations in Montenegro.

In auditing the Proposed Law on the Final Statement of Accounts of the State Budget of Montenegro for 2014, the competent Auditing Board gave the following audit recommendations:

- It is recommended to the Ministry of finance to fully align the general and the special part of the budget when planning the annual budget in the forthcoming period;

- It is recommended that the Ministry of Finance consistently implement established rules prescribed by the annual The Budget Laws;

- It is recommended that in the process of budget planning through the annual budget laws, the Government of Montenegro anticipate the revenues generated by the spending units in the course of their own business activities, and ensure that such revenues be used in line with the budget constraints defined in the annual The Budget Law;

- It is recommended that The Ministry of finance should ensure full records of of the balance and turnover of monetary transactions on the deposit accounts in the system of Consolidated account of the State Treasury in class 1 of the General Ledger of the State Treasury, in accordance with Article 6 of the Regulation on Uniform Classification of Accounts for the Budget, Extra‐budgetary Funds and Budgets of Municipalities.

- Tax Administration should harmonize its accountancy records, in the part on reported balances in the accounts of the class “1“ ‐ monetary funds accounts, class “3“ ‐ accounts of the public revenue payers, (including the deposit accounts) and class “7“ – public revenues, with the Rulebook on Tax Accounting;

- It is recommended that the Ministry of finance comply with Regulation on conditions for deferred collecting of tax and non‐tax claims;

- It is recommended to record the expenditures for repayment of arrears which have not been budgeted by the spending units within the group of accounts 463 – Repayment of Arrears from Previous Years, as well as not to charge this account with the expenditures due for payment in the current fiscal year;

- Despite the evident improvements of the internal financial control system, the activities on establishing financial control function and internal audit in the spending units should be continued, in line with the Law on Public Internal Financial Control and internal audit standards.

The Final Audit Report on Proposed Law on the Final Statement of Accounts of the State Budget of Montenegro for 2014 has been officially published at the web site of the State audit institution of Montenegro.

Audit Report of the Proposed Law on the Final Statement of Accounts of the State Budget of Montenegro for 2014