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Published audit report on “Funds allocation system of Equalization Fund”

Podgorica, 18. 04. 2018.– State audit institution conducted audit of Funds allocation system of Equalization Fund.

The subject of audit included comprehensive insight in accuracy of the system of submission, calculation and disclosure of data in decisions on the advance and final distribution of the funds of the Equalization Fund in 2016. The audit also controlled the compliance of the system of allocation of funds of the Equalization Fund with the Law on Financing of Local government, the Rulebook on distribution and use of the funds of the Equalization Fund and the Rulebook on determining the development degree list of development of local government unit.

Audit of Funds allocation system of Equalization Fund, meant the control of data processing submitted by the municipalities to the Ministry of Finance necessary for determining rights on allocating funds from the Equalization Fund, the advance payment and final allocation of the funds of the Equalization Fund for 2016, the loan from the funds of the Fund and the work of the Commission for monitoring development fiscal equalization of municipalities.  Also, the subject of the audit is the accuracy of the data that the municipalities submit to the Ministry of Finance. The accuracy of the data submitted to the Ministry of Finance included the following municipalities: Berane, Bijelo Polje, Danilovgrad, Kolašin, Pljevlja, Rožaje and Cetinje.

Audit of Funds allocation system of Equalization Fund concluded that misinterpretations, either individually or collectively, were materially significant but did not affect the final allocation of funds from the Equalization Fund. Misstatements refer to data provided by the Ministry of Finance for the needs of the advance payment and final allocation of the funds of the Equalization Fund for 2016, and the processing of records on loans from the Equalization Fund, which were analyzed in detail in the findings of the State Audit Institution. The audit found that the Ministry of Finance and the Municipality did not harmonize all business activities with legal and other regulations in all aspects. The audit determined individual deviations and inconsistencies with the Law on Financing of Local Government, the Law on Budget and Fiscal Responsibility and the Rulebook on the Allocation and Use of the Funds of the Equalization Fund.

Based on the conducted audit, determined facts and the statement of the audited entity the competent Auditing Board comprised of Zoran Jelić (Senator - Head of the Auditing Board) and Milan Dabović, PhD, (President of the Senate - a member of the Auditing Board), determined that expresses qualified opinion. The competent audit board concluded that the scope and character of the identified irregularities and shortcomings in the audit subject requires that the Government, the Ministry of Finance and the Ministry of Public Administration know about the contents of the Report in order to undertake measures to establish a sustainable framework and responsibilities in the management of public finances, as well as the Committee on Economy, budget and finance of the Parliament of Montenegro. The Ministry of Finance is obliged to submit to the State Audit Institution within 2 (two) months a plan of activities for the implementation of the recommendations that should contain the measures, activities carriers and deadlines, as well as a report on the conducted actions on the prepared and submitted recommendations within 6 six) months.

The Final audit report on the “Funds allocation system of the Equalization Fund” has been published at the official web site of the State audit institution of Montenegro.