Audit reports with qualified opinion and emphasis of matter for seven financial institutions of BiH in 2013 were discussed at the 38th session of the Committee for Budget and Finance of the Parliamentary Assembly’s House of Peoples, immediately after being discussed by the members of the Committee on Budget and Finance of the BiH Parliamentary Assembly’s House of Representatives.
The session had a quorum and was attended by representatives of the Audit Office for the Institutions of BiH and the seven institutions which received audit reports with qualified opinion and emphasis of matter. The topic of the session was understandably interesting to the media, whose representatives were also in attendance. Partners on the project Strengthening Governing Processes and Institutions (SGIP) were guests, including a representative of the Institute for Youth Development KULT.
Discussions were held according to the following agenda of the 38th session of the Committee:
- Adopting the Minutes from the 37th session of the Committee for Finance and Budget of DNPSBiH;
- Discussing audit reports for 2013, including: 2.a. Ministry of Foreign Affairs of BiH– raporteur: Dragan ?ovi?; 2.b Ministry of Defense of BiH – raporteur: Mladen Ivani?; 2.c Ministry of Human Rights and Refugees BiH – raporteur: Seudin Hodži?; 2.d Ministry of Communication and Transport of BiH – raporteur: Dragutin Rodi?; 2.e Centra za uklanjanje mina u BiH – raporteur: Krunoslav Vrdoljak; 2.f Indirect Taxation Authority of BiH – raporteur: Mehmed Bradari?; 2.g Agency for identification documents, registers and data exchange – raporteur: Krunoslav Vrdoljak;
- Discussing information on the state of public debt on December 31, 2013, No: 01,02-16-1-904/14, on July 22, 2014;
- Discussing the Budget draft of the Audit Office for the Institutions of BiH for 2015;
- Discussing the financial report of the Audit Office for the Institutions of BiH for the period between January 1 and June 30, 2014.
Observations and the most frequent questions the delegates asked the representatives of audited institutions concerned public procurements which were not performed in accordance with the Law on Public Procurements, as well as questions regarding signing temporary service contracts with external experts for jobs whose description is similar or identical to already classified work positions.
The Audit Office stated that none of the institutions showed indolence towards auditing and the majority of the recommendations in the audit reports.
A short review of grounds for qualified opinions and emphasis of matter is presented in the table below:
|
Grounds for qualified opinion |
Emphasis of matter |
|
|
Ministry of Foreign Affairs of BiH |
. signing temporary service agreements in continuity and the amount spent for this purpose, . mismatch of the real state of funds financial claims and obligations, with the state recorded in financial books on December 31, 2013, . procurement of specific goods by sidestepping procurement procedures or on the basis of previously signed contracts. |
# adopting the Law on Foreign Affairs, # further improvements in spending funds intended for services relating to representation and more extensive documentation of special purpose expenses and building comprehensive records for the use of official vehicles. |
|
Ministry of Defense of BiH |
. listing all property, obligations and financial claims which are not in line with current regulations, . not displaying the value of the army’s movable property, which, according to an Agreement on final disposal of all rights and obligations pertaining to movable property, will be used by the Ministry, which led to an underestimation of funds by at least 72,894,127 BAM, . overestimating obligations towards suppliers amounting to at least 312,251 BAM which the Ministry paid as an obligation towards suppliers from previous years, and recorded as short-term current obligations in 2013, . failure to establish an efficient and reliable public procurements system. |
# rationalization of the expenses incurred by using official vehicles, # potential obligations with respect to judicial disputes. |
|
Ministry of Human Righs and Refugees of BiH |
. high expenditures incurred through a significant number of temporary service contracts and their duration in continuity, . inefficiency of the public procurement process and lack of harmonization with legal regulations and monitoring of the fulfillment of contractual obligations. |
# the need to further advance the process of using funds for covering mobile phone expenses, # continuous implementation of activities on financial processing of constant income, financial claims and obligations with the goal of providing the conditions for determining the situation during inventory. |
|
Ministry of Communications and Transport of BiH |
. signing temporary service contracts with external experts for jobs whose description is similar or identical to work positions listed in the Regulations on the classification of work positions, and . constant deficiencies in the public procurement process relating to the efficiency of the process and implementation of the procurement contracts. |
# list of funds, obligations and financial claims, # weaknesses in the debt recovery process, and # inefficiency in project implementation. |
|
Mine Action Center in BiH |
. defects and weaknesses in public procurement procedures. |
# the BHMAC Director’s term in office which has not ended, # expenditures related to temporary service contracts. |
|
Indirect Taxation Authority of BiH |
. flaws and weaknesses in implementing contracts signed after public procurement processes. |
# current expenditures; expenses for electricity and refuse disposal and maintenance (fuel oil) with a description of the cost changing process: gross salaries and compensations, with respect to the manner of employing and implementing Regulations on the internal organization and classification of work positions: incurring representation expenses and temporary service contracts, and # special purpose programme – Administrative Board, whereby the Board neglected to implement the previously made recommendations. |
|
Agency for identification documents, registers and data exchange |
. breach of Law on Public Procurements when selecting a bidder for purchasing electronic ID cards and driver’s license, and the possibility of its detrimental effect on the budget of BiH, . with regards to the apportionment of expenses, the Agency apportioned them in the amount of 307,244 BAM, which had previously been shown as the Agency’s expenditures for the aforementioned amount and the financial claims for a given advance payment. Furthermore, the supplier’s invoice from 2014 was processed as a 2013 expense which led to an overestimation and expenses for the aforementioned amount. |
# unresolved issue of construction land for the Agency’s building. |
During the following session, scheduled for Wednesday, September 10, members of the Committee will discuss the Cumulative opinion on Audit Reports on the financial functioning of the institutions of BiH for 2013, which they will send to the House of Peoples of the Parliamentary Assembly of BiH, and will contain proposals of conclusions with the goal of increasing the work efficiency and eliminating the inadequacies noted in audit reports of those institutions of BiH which received audit reports with qualified opinion and emphasis of matter from the Audit Office for 2013.
According to the data of the Ministry of Finance and Treasury of BiH, the percentage of the debt in the GNP is 40%, which does not indicate overly serious indebtedness, and in comparison with other countries in the region can be considered a good position (By the end of the year in Slovenia, debt is projected to represent 80% of the GNP). However, when talking about the indebtedness of BiH, it is important to consider the fact that projections of an increase in GNP do not show significant improvement.
Recommendations of the Ministry of Finance and Treasury for taking new loans with the goal of preventing potential causes for the deterioration of public debt indicators of BiH are:
- rational allocation of approved loans and their use in sectors,
- taking special precautions when deciding on issuing guarantees,
- be mindful of the term structure of new loans, the interest rate and total indebtedness, noting that the issue of restitution has not yet been regulated by law.
The Committee adopted the Budget draft of the Audit Office for the Institutions of BiH for 2015, and taken cognizance of the financial report of the Audit Office for the first half of 2014.
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