The process of selecting commercial auditors in local self-governaments in Montenegro is not transparent and adequately controlled. This is one of the findings from the research “Strengthening the Budget Control in Local Self-Government”, which Institute Alternative conducted with the support of the Canada Fund.
The level of transparency is limited by the selection procedure. Given that these are usually low – value services, procedure that is usually used is the shopping method. It involves the submission of requests for proposals to be sent to at least three potential bidders. Decisions on awarding of the contracts is given applying the lowest available price criterion. On the other hand, alderman in the local assemblies have no influence in the selection of commercial auditors which limits their supervisory and control function when it comes to budget execution.
International standards require that after three years a new commercial auditor should be selected. This is also the recommendation of the Montenegrin State Audit Institution. However, in some municipalities, audit is done by the same commercial auditor for years. Sometimes it happens that the selection takes place without a public procurement procedure. This brings into question the objectivity of the auditor’s findings.
We belive that quality and experience should be the main criterion for selection of commercial auditors, not the lowest available price as it is currently the case.
Careful selection of a commercial auditor is necessary to increase oversight and control in spending public money on local level. Objective and transparent selection of commercial auditors is particularly important because State Audit Institution does not have the sufficient capacity to perform control of a significant number of local budgets per year. It is also evident that a regular revision of all local budgets will not be established in due time. We believe that the State Audit Institution as the supreme control organ of public money spending should be included in the selection process of commercial audit at the local level, as well as the alderman in municipal assemblies.