Month: November 2012

From this year’s audit report on the financial account of the Budget, it is clear that the work of the SAI is not taken seriously into account neither by the Government and Ministry of Finance, nor by the individual audit entities and the Parliament.

Institute Alternative has been dealing with the problem of the impact of the SAI for a long time. IA has bee warning for years about the conditions in which the SAI works: it works with half -systematized capacity; Ministry of Finance has consistently refused to approve the major budget for the SAI treatening its financial independence; the Parliament hasn’t appointed the fifth member of the SAI’s Senate and is not willing to meet the SAI recommendations; misdemeanor responsibility hasn’t been defined in the Law on Budget nor reports on auditing entities which has been made compliant with the SAI recommendations. The role of the SAI is thus almost meaningless.

As an emergency measure, we demand that the Prime Minister at the next meeting of the Ministers requires information on the allegations in the report and the SAI to take a position of responsibility for irregularities in the work of its officials. We demand that the Government inform the public about the reasons why it does not consistently follow the recommendations of the SAI as well as whether the Government was behind the illegal activities of its officers and civil servants.

We believe that the Minister of Finance should participate in the work of the competent parliamentary committee when the audit report on the annual financial account of the budget is on the Agenda, which was not the case last year. Minister in this occasion must explain the reasons for non-compliance of SAI recommendations and Parliament’s conclusions.

If we want to prevent that situation in the next year and prevent complaints about the failure of the SAI recommendations, in addition to these activities, we need to work to achieve the following five principles:

A Government that listens the SAI – The Ministry of Finance shall establish a system for monitoring the compliance with the SAI recommendations, check what is being done to meet the recommendations.

The Parliament, which keeps to itself – Parliament must examine what the Government is doing to comply with its conclusions on the review of the budget and final accounts and to hold accountable those entities which show disrespect to those conclusions. We should not forget that by disrespecting the SAI recommendations, the Government actually expresses contempt for the Parliament of Montenegro, since the recommendations were adopted last year as Parliament’s conclusions.

Penalties for offenders – Introduce misdemeanor responsibility in a Law on Budget in order to sanction offenders and punish responsible persons in the institutions where budgetary irregularities could occur. Supreme State Prosecutor must use the SAI reports, check a hint of the existence of the criminal act.

Strong SAI – Amend the Law on SAI – which will determine its financial independence and edit transparent reporting of audit entities about what they have done to comply with the recommendations and remove irregularities.

Awake public – public is the strongest weapon in the state audit – NGOs and media should work intensively on monitoring of SAI’s work, read audit reports and claim accountability of audited entities.

Marko Sošić
Public Policy Researcher

Questions from “Dan”:

Can you comment the final report of the SAI on the Government accounts for 2011 year and the fact that the Ministers were shared 775 thousand euros, hired 697 civil servants and diverted funds from one budget item to another and between the consumer unit?

How do you comment the fact that the Government failed to meet 13 of 18 recommendations made by the SAI last year?

Marko Sošić, Public Policy Researcher in the Institute Alternative replies:

Institute Alternative has been warning for a long time about the unacceptable attitude of the Ministry of Finance, which has repeatedly refused to approve the significantly major budget for the SAI, endangering its financial independence. Now we see the logical consequence of such position, and that is the fact that the Ministry of Finance does not care much for the work or the SAI and is not paying attention to the recommendations and rectifying of irregularities.

This is a practice that has worried the people in the SAI, but especially in the Parliament: We should not forget that by ignoring the SAI recommendations, the Government actually expresses contempt for the Parliament of Montenegro, which has adopted SAI recommendations last year as its conclusions.

The European Commission, in the last Progress Report noted that progress has been made in accepting the recommendations of the audited entities. The question is, on what basis is deserved this positive score if the SAI data show a very different trend and set a variety of cases in which the recommendations are not followed.

SAI itself has, in the final audit report of the Budget, clearly pointed out the problem of the lack of attention paid to the verification of implementation of recommendations of the audited entities.
It seems that, after seven years of work, it is about time for the SAI recommendations to go beyond ordering to respect laws in force. Here we mean that persistent “offenders” must be punished. For this to occur, however, it is necessary to regulate the levels of accountability in public finances, especially when it comes to the misdemeanor and criminal liability.

The problem that prevents the determination of responsibility for the irregularities and wrongdoing is that systemic Budget Law contains no penalties for budget users and executives in the event of improper conduct in planning, execution and reporting of the budget process. Montenegro is the only country in the region where sanctions in the area of public financial management is not adequately regulated by the law nor applied in practice. This issue we have highlighted in 2010 in our study on the impact of state audit.

If we want the SAI’s work to be meaningful, it is not enough to produce based, comprehensive reports and good references. All the other actors, especially the Ministry of Finance and the Government must evaluate its work and work to implement the recommendations of the SAI. From the last SAI report we can see that this is not the case and that other actors do not care much for the work of the SAI when it is necessary to implement the SAI’s recommendations. To make things worse, a legal framework for ensuring that those responsible for the irregularities and law breaches will be sanctioned has not even been established.