The State Audit Institution (SAI) has continued its positive practice for the second consecutive year, inviting civil society, the academic community, and professional associations to submit proposals for the annual audit plan for the coming year.
We would like to remind that last year, the SAI accepted one of the three proposals we submitted, and conducted an audit on the compliance of simplified procurement procedures across multiple public sector entities for the year 2023. This audit confirmed previous findings from the IA on a smaller sample, pointing to abuses of the direct procurement mechanism.
For the 2025 Annual Audit Plan, we have prepared three new proposals:
- Performance Audit – System for Planning and Preparing Infrastructure Projects for EU Funding (WBIF)
Considering that in 2023, the government submitted investment projects in energy, environmental protection, and transport sectors to the European Commission, which were deemed premature or unsuitable for funding by the Western Balkans Investment Framework, we have suggested this as a starting point for this audit. In our analysis of the Unified List of Priority Infrastructure Projects, we highlighted numerous irregularities in how projects were presented, evaluated for maturity, and valued. A comparative regional review shows that other countries in the region have more developed project preparation mechanisms, where both the domestic capital budget system and the projects submitted to the EU are centralised and linked with the national budget planning system. Additionally, there have been changes to the body overseeing and planning these types of projects, negatively affecting its work and the adoption of a new list of priority projects.
Therefore, we believe it is essential for the SAI to monitor the functioning of this system, particularly because of the announced Growth Plan, an EU financial support instrument for regional countries, providing Montenegro access to a €3 billion fund of loans and grants over the next four years through this type of infrastructure project financing.
- Performance Audit – Efficiency of Inspection Oversight in Terms of Resolving Appeals in Second-Instance Procedures
The goal of this audit would be to determine whether the current actions of institutions have been effective in addressing appeals in second-instance inspection procedures. According to the Inspection Oversight Act, an appeal against an inspector’s decision can be filed within 8 days of receiving the written decision. The appeal in the second-instance procedure is decided by the ministry responsible for the relevant administrative area. Although the law states that an appeal does not suspend the execution of the decision, it also allows for the execution to be postponed until a decision on the appeal is made in certain situations. Institute Alternative’s experience shows that the response to an appeal can take several months; in one case, we waited more than two months, while in another, there was no response even after three months.
Given the recent changes to the legislative framework on inspection oversight, whereby inspections are now part of ministries, we consider it important for the SAI to provide an objective insight into the functioning of this system to identify legal and other obstacles to efficient proceedings in second-instance inspection oversight.
- Corporate Governance in State-Owned and Public Enterprises
We proposed that the SAI conduct a thematic audit on a sample of several state-owned and municipally-owned enterprises at the central and local levels, focusing on the core elements of good corporate governance to draw conclusions on shortcomings and challenges.
Public enterprise reform was highlighted as one of the priority areas in the European Commission’s 2023 report. Structural reforms in this area are also planned in the Economic Reform Programme for the 2023-2025 period. The work of companies that are majority-owned by the state requires further regulation—either through a special act or an amendment to the current Companies Act—to introduce mechanisms allowing the state to manage companies more effectively, making them more transparent and accountable for the responsibilities assigned to them and the assets they manage. The fact that government conclusions on salary reductions and similar matters are being ignored speaks to a systemic issue in the communication between the owner and the enterprises.
We believe this type of audit is the best way for the SAI to enter multiple enterprises of this type simultaneously and provide the public with a comprehensive view of the quality of corporate governance. At the same time, as the Ministry of Finance is currently contemplating reform directions for public enterprises, it would be valuable to have objective recommendations from the SAI in that process.
IA Team
