Published Performance Audit Report “Efficiency of internal audit in the public sector”

Podgorica, 19th January 2017 – The State audit institution of Montenegro has published the final report on performance audit “Efficiency of internal audit in the public sector”.

This audit encompassed 11 entities at the central and local government level as follows: Ministry of finance; Ministry of education; Ministry of culture; Ministry of economy; Ministry of agriculture and rural development; Ministry for Information Society and telecommunication; Pension and Disability Insurance Fund of Montenegro; University of Montenegro; Capital Podgorica; Municipality Nikšić;  Municipality Berane.

The procedures for performing internal audit are assessed in relation to sufficiency and personnel training of the internal auditors. The criteria for this evaluation were the requirements legally prescribed about a minimum number of the internal auditors and requirements for performance of their work. The reporting procedure is assessed in terms of completeness, accuracy and timeliness of the reports of internal audit units submitted to the head of the entity and Ministry of finance. The criteria for evaluation of the implementation of recommendations given in the internal audit reports were: number of recommendations not agreed with the head of the entity; number of implemented recommendations, number of non-implemented recommendations and percentage of implementation of the recommendations given in the internal audit reports per each entity and their mutual comparison.

After completed performance audit procedure, it has been determined that there are a number of segments that should be improved so that the internal audit system in the public sector functions in a more efficient manner:

  1. provide (employ) a sufficient number of the internal auditors according to the Law;
  2. understand the role of internal audit in the public sector by the heads of the entities and their support for development of the internal audit units;
  3. achieve better communication of the internal audit units and entities and achieve a higher degree of mutual cooperation between the internal audit units within the public sector;
  4. improve the internal audit work methodology by the Ministry of Finance (CHU) and encourage the internal auditors to carry out new types of audits;
  5. provide long-term and structural-oriented training programs for the internal auditors.

Based on the conducted audit and established facts and audited entities responses, the competent Auditing Board of the SAI, consisting of Mr. Branislav Radulović, PhD (member of the Senate – Head of Auditing Board) and Mr. Nikola Kovačević (member of the Senate – member of the Auditing Board), has stated that:

  • there is a legal framework that enables functioning and development of internal audit, which should be further upgraded, especially with regard to the internal audit methodology;
  • heads of the public sector entities (ministers, mayors, directors and others.) still do not recognize importance of internal audit to the extent necessary and they should, in accordance with their responsibilities, undertake the activities with regard to establishing, strengthening and developing of internal audit so that the whole system functions in a more efficient manner;
  • existing internal audit system is not sufficiently efficient and additional actions should be taken in the coming period to eliminate the shortcomings that make performance of the internal audit difficult, and with aim to improving the overall business process. 

The final Performance audit report “Efficiency of public sector internal audit” has been published at the official web site of the State audit institution of Montenegro.

Performance audit report „Efficiency of internal audit in the public sector“