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Published Audit Report of Annual Financial Statement of the Public Enterprise „Regional Water Supply for Montenegrin Coast“– Budva for 2016

Podgorica, 27th July 2017 – The State audit institution has carried out and published the Audit Report of Annual Financial Statement of the Public Enterprise „Regional Water Supply for Montenegrin Coast“– Budva for 2016.

Based on conducted audit, established factual state and consideration of the audited entity’s opinion on the Preliminary Report of the SAI, the competent Auditing Board comprised of Mr. Zoran Jelić (member of Senate – head of Auditing Board) and PhD Branislav Radulović (member of Senate – member of Auditing Board) has expressed adverse opinion on the Annual Financial Statement and qualified opinion on compliance of the operations of the Public Enterprise „Regional Water Supply for Montenegrin Coast“ – Budva with the regulations.

Financial audit of the Annual Financial Statement of the Public Enterprise „Regional Water Supply for Montenegrin Coast“– Budva for 2016 has found that its Annual financial statement does not provide a fair and objective view of the loan balance on 31st December 2016. In the Balance sheet for 2016, the budget position long-term loans totaling at 1.512.909,90€  was incorrectly presented, as well as the budget position Property, facilities and equipment in amount of 233.479,77€. In the Balance sheet for 2016, the long-term loans were stated in the amount of 19.527.904,65€, while the auditing has determined that the amount of the long-term loans is 21.040.814,35€ at the end of 2016. In the Profit and Loss Statement for 2016, the position of financial expenditures was incorrectly stated in the amount of 249.100,65€. In the Profit and Loss Statement, the financial expenses were stated in the amount of 953.063,05€, while the auditing has determined that the Public enterprise on 31st December 2016 stated interests on loan of the International Development Association (IDA) in the amount of 249.100,65€, even though it did not make any payments of compensation (interests) for this loan, but it was carried out by the Ministry of finance.

Regularity audit of the Annual Financial Statement of the Public Enterprise „Regional Water Supply for Montenegrin Coast“– Budva for 2016 has found that the Public enterprise did not fully comply the business activities with the legal and other regulations. The audit has determined a certain deviations and non-compliances of the operation of the Public enterprise with the following regulations: Law on Accounting and Auditing; Law on Prevention of Illegal Business; Law on value added tax; Labour law; Public procurement law; Regulations on the Chart of Accounts and Content of Accounts for Corporate and Other Legal Entities; Instruction for calculation of gross salaries; Regulations on petty cash operations and Regulations on business travel, which have material, but not pervasive character.

Taking into account the scope and character of irregularities and deviations within the audited entity, the competent Auditing Board requires that the Government and Ministry of sustainable development and tourism as a supervision body over the work of the audited entity should be notified of the content of this Report in order to take measures to establish legal framework and accountability in public finance management, as well as the Committee on economy, budget and finance and Committee on tourism, agriculture, ecology and  spatial planning of the Parliament of Montenegro.

The final Audit Report of Annual Financial Statement of the Public Enterprise „Regional Water Supply for Montenegrin Coast“– Budva for 2016 has been published at the official website of the State audit institution of Montenegro.

Audit Report of Annual Financial Statement of Public Enterprise „Regional Water Supply for Montenegrin Coast“ – Budva for 2016 (mne)