The first successes of party soldiers in the Senate of the State Audit Institution

The story of financial management at the Pension and Disability Insurance Fund regarding the transfer of money to the Union of Pensioners’ Associations, which Vijesti recently initiated, inter alia, pointed to the major mistakes of the State Audit Institution during the oversight of the Fund.

The institution, whose primary task is to take care that our money is spent effectively, expressed an unqualified opinion to the Pension and Disability Insurance Fund twice in 2016, despite the fact that Fund provided no evidence to substantiate expenditure for over 1,5 million euro, which was directly or indirectly managed by the Union of Pensioners’ Associations.

Namely, regarding the expenditure of this amount, the Pension and Disability Insurance Fund stated “that the documentation on the funds expenditure is in the possession of Pensioners’ Association”, which the auditors would have taken as sufficient evidence indicating that everything was all right. For this reason, they have expressed an unqualified opinion on both financial and regularity audit. Therefore, state auditors have not noticed anything problematic in transfers to the Union of Pensioners’ Associations.

In the case of expenditures of 500 000 euro for the construction of housing units that were transferred to the Pensioners’ Associations, SAI, while conducting audit, accepted explanation “that the financial documentation on expenditure of transferred funds is in the possession of association”.

Apart from half a million for housing needs, Pension and Disability Insurance Fund transferred additional 465 173 euro to the Union in 2016: transfers to individuals (135 173€) and NGO (30 000€), as well as one-off assistance (300 000€). Additional 454 600 € subsidies should be counted as well, which the Fund gives to its own company, DOO PIO Ulcinj. The company is also indirectly managed by the Union of Pensioners’ Associations, which decides on the distribution and users of company’s services. Taken into account this information, only in 2016, the Union of Pensioners’ Associations had the opportunity to manage approximately 1,5 million euro.

The audit report reveals that state auditors did not have insight into any kind of evidence on how Union of Pensioners’ Association managed these funds and whether they had been used for the intended purpose.
SAI’s recommendations focused on issues such as IT strategy and the effectiveness of information security measures for the physical protection of buildings and premises – but not on the method, criteria and oversight of expenditure of more than 1,5 million euro by a non-governmental organization.

The SAI had not reviewed the model of money transfer to the Pension and Disability Insurance Fund, nor it highlighted the lack of control and of possession of documents justifying payments made by the Union of Pensioners’ Associations by the Health Insurance Fund. It has not even questioned the justification of delegating this scope of authority to a non-governmental organization whose work is out any kind of oversight.

This is the evidence of our claim that the appointment of party soldiers to the Senate of SAI will lead to a quality decline of SAI’s work, but also inevitably, to the fall of public trust in the work of this institution.

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