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Published Audit report of the Final Statement of Budget Accounts of Municipality of Danilovgrad for 2019

Podgorica, 16th November 2020 – The State audit institution has performed financial audit and regularity audit of the Final Statement of Budget Accounts of Municipality of Danilovgrad for 2019.

Based on the conducted audit, determined facts and statement of the Municipality Danilovgrad on the Preliminary report of the SAI, the competent Auditing Board composed of a member of Senate, Zoran Jelić, head of Auditing Board and a member of Senate Radule Žurić – member of Auditing Board has expressed unqualified opinion on the financial audit of the Final Statement of Budget Accounts of Municipality of Danilovgrad for 2019 and qualified opinion on regularity audit. The regularity audit has determined certain discrepancies and non-compliance with the following legislative regulations: Law on public internal financial control system, Law on tax administration, Law on earnings of the employees in the public sector, Law on local self-government, Law on financing local self-government, Law on state property, Decree on methods of keeping records of movable and immovable property and inventory of the state owned property, Rulebook on unique classification of the accounts of the Budget of Montenegro and budgets of the municipalities and Instruction on work operations of the local self-government treasury.

Short overview of the identified irregularities:

-       Municipality did not adopt the Register of risks, Strategy of risk management and Plan for improvement management and controls of establishing financial management and control and methodology for implementation of the plan.

-       Payment of the funds from the treasury accounts were made according to the Request for payment but without previous allocation of the funds or without submitting the Request for allocation of the funds.

-       Measures for collecting property tax have almost not taken by the municipality and not all legal possibilities for enforced collection are used based on the debts of the property taxpayers.

-       Administration for the local public revenues does not keep tax accounting for the utility taxes. The state auditor could not gain assurance of the total amount of the debt arising from the decisions made for 2019, as well as the state of debt as of 31st December 2019.

-       Calculation with the included past service is stated in every segment of the calculation of other allowances, which caused an increased price of the work per hour for night work, overtime, readiness at home and incorrect calculation of the allowances for performing special work.

-       In some cases, it has been determined that the employees did not meet certain requirements prescribed by the law and internal act on systematization of the job posts during the employment procedure (for example not passed the professional exam for the work at the state authorities etc).

-       Service contracts were concluded with several individuals for the job posts prescribed by the internal act on systematization of the job posts.

-       Based on the insight into the General Ledger, the total amount of the expenditures recorded irregularly on the account 4149 is 85.926,16 €, as well as on the account 4412 – Expenditures for local infrastructure amounted to 456.036,60€.

-       Funds recorded on the account 4412 – expenditures for local infrastructure, mostly refer to the payments to the: Utility company, Danilovgrad according to the signed Contract for performed services of keeping the municipality clean and  arranging public areas and Water supply company, Danilovgrad for its work on water supply network. Qualitative and quantitative acceptance of the performed works and services was not performed in the Utility company, while the Water supply company, Danilovgrad did not submit to the Municipality the invoices and reports as an evidence that the stated works were performed.

-       Municipality paid the amount of 483.948,47,00€, or 148,54% of the planned amount for the other capital expenditures during 2019. For stated overrun of 158.137,47€, or 48,54%, the municipality did not make decision on reallocation of the funds.

-       Municipality does not keep records of the immovable and movable property on the modified basis or of the class 0, in line with the Rulebook on on unique classification of the accounts of the Budget of Montenegro and budgets of the municipalities.

-       Inventory of the movables was carried out in the Form PL, but all recorded property is only stated in the natural form (without purchased, write-off and current value).

-       Public services and companies founded by the municipality did not submit data on the movable and immovable property in line with deadline prescribed by the Law on state property (till the end of February of the current year for the previous year).

-       Municipality did not submit the data on immovable property to the Property administration according to Article 51 of the Law on state property till the end of March of the current year for the previous year on the prescribed templates.

The SAI gives a recommendation to the Ministry of finance to transfer public revenues to the municipality at least once a day after which a report on structure of public revenues is to be sent in accordance with Article 4 of the Decree on manner of payment of public revenues.

The Final Audit report of the Final Statement of Budget Accounts of Municipality of Danilovgrad for 2019 has been published at the official web site of the State audit institution.