godisnji izvjestaj, dri- prevod report of the audits and...resolutions in seven basic points...
TRANSCRIPT
Republic of Montenegro
STATE AUDITORS INSTITUTION
SAI No.: 401-01-64/07
ANNUAL REPORT
on performed audits and activities of the State Auditors Institution of Montenegro for period October 2006- October 2007
Podgorica, October 2007
TABLE OF CONTENTS PAGE
I INTRODUCTION….........................................................................................................................................................3
1. General remarks…….…………………………………………………………………………………..……..………….……3 2. Annual audit plan……...…………………………………………………………………………………………………..…...4
3. Realisation of Resolutions of the Parliament of the Republic of Montenegro adopted on the account of the audit of the Annual Financial Statement of the Budget of the Republic of Montenegro for 2005..……………..… 5
4. Report on expenditures of State Auditors Institution for 2006……….…………………………………..….……….. 7
II REALISED AUDITS IN 2007 …………………………………….…………………………………………………9
1. General remarks on realised audits in 2007…………………………………………..…………………………………….. 10
2. Report on Audit of the Annual Financial Statement of the Budget of the Republic of Montenegro for 2006…..…..… 11
1. Lawful cause, objective and subject of audit of the Annual Financial Statement of the Budget of the Republic of
Montenegro for 2006 …............................................................................................................................................... 11
2. Scope and procedure of audit...................................................................................................................................12
2.1. Scope of audit.................................................................................................................................................. 12
2.2.Procedure of audit………………....................................................................................................................... 12
3. System of records and realisation of the Budget.. .................................................................................................. 13
3.1. Accounting system……………. .........................................................................................................................13
3.2. Realisation of the Budget of the Republic of Montenegro for 2006.................................................................. 13
3.2.1. Report on cash flows…………….............................................................................................................. 14
3.3. Collection of tax revenues.. ................................................................................................................................. 20
3.3.1. Budgetary receipts…………. .................................................................................................................... 21
3.3.1.1. Taxes, excises and customs......................................................................................................... 24
3.3.1.1.1. Personal income tax…………. ..................................................................................... 24
3.3.1.1.2. Corporate tax ............................................................................................................... 24
3.3.1.1.3. Capital income tax………………................................................................................... 25
3.3.1.1.4. Value added tax…………….......................................................................................... 25
3.3.1.1.5. Excises…. .................................................................................................................... 25
3.3.1.1.6. Tax on international trade and transactions. ................................................................ 26
3.3.1.1.7. Other taxes…... ............................................................................................................ 27
3.3.1.2. Duties…………….......................................................................................................................... 27
3.3.1.3. Other revenues of the Republic..................................................................................................... 27
3.3.1.4. Receipts from credit repayments, donations, loans and credits.................................................... 28
3.3.2. Expenditures of the Budget of the Republic.............................................................................................. 29
3.3.2.1. Gross salaries of employees…..................................................................................................... 33
3.3.2.2. Current maintenance………........................ ................................................................................. 34
3.3.2.3. Transfers to institutions, individuals, non-government sector and public sector........................... 40
3.3.2.4. Capital expenditures…….............................................................................................................. 41
3.3.2.5. Permanent and current budgetary reserve................................................................................... 43
3.3.2.6. Cash payment……………............................................................................................................. 45
3.3.2.7. State property…………….. ........................................................................................................... 46
4. Findings and recommendations............................................................................................................................... 46
5. Opinion………………….. ........................................................................................................................................ 49
3. Statements from individual audits…………………………….................................................................................. 50
1. Statement from the Report on audit of financial reports of Health Insurance Fund of the Republic for 2006….…. 50
2. Statement from the report on audit of the Annual fiscal statement of the budget of the municipality Kolašin for
2006 ………………………………………………………………………………………………………................................ 70
3. Statement from the report on audit of the Annual fiscal statement of the budget of municipality Ulcinj for 2005.... 74
III OTHER ACTIVITIES OF THE STATE AUDITORS INSTITUTION.......................................................................... 78
1. Cooperation with the Parliament of the Republic of Montenegro- participation in the public debate on Draft of the
Constitution of the Republic of Montenegro…………………………………………………………………………......….. 78
2. Harmonisation of the Law on State Auditors Institution with international audit standards……..……….… 79
3. Relation of the Institution with the Government of the Republic of Montenegro and other governmental bodies ………………………………………………………………………………………………………….……………… 79
4. International co-operation……………………………………………………………………………………………….. 80
5. Human resources management………………………………………………………………………………………… 81
6. Information system………………………………………………………………………………………………………....83
IV PLANNED ACTIVITIES OF THE INSTITUTION AND FINAL REMARKS ……………..................................................
84
The Senate of the State Auditors Institution, pursuant the Article 38 and in
relation with the Articles 18 and 19 of the Law on State Auditors Institution („Official
gazette of the Republic of Montenegro“ No. 28/04, 27/06 and 78/06), has adopted at
the session held on 18th October 2007:
ANNUAL REPORT on Performed Audits and Activities of the State Auditors Institution
for Period October 2006- October 2007
I INTRODUCTION
1. GENERAL REMARKS
State Auditors Institution (hereinafter: the Institution) performs its activity based
on the Law on State Auditors Institution (hereinafter: the Law), as the substantive and
independent governmental body.
Pursuant the Law, the Institution has the assignment to examine the regularity (lawfulness), functionality and efficiency of the operations in bodies and organizations which are managing the budget and property of the state and units of the local self-government, funds, Central Bank of Montenegro and other legal entities in which the state is a shareholder. Institution performs audit in order to provide important information on management of budget, property and economic affairs, legal acting of audited entities, promotion of their capability for successful completion of assignments and prevention of mistakes. Institution provides professional assistance to the Parliament and the Government of the Republic of Montenegro and other governmental institutions in the decision making process within its competence.
Institution, in accordance with the Article 18 and 19 of the Law, reports to the
Parliament and the Government until the end of October by submitting the Annual report,
which specially contains:
• Evaluation of whether the amounts presented in the Annual financial statement of
the Budget of the Republic correspond to the amounts stated in records;
• Evaluation of whether the controlled revenues, expenditures and property were
properly documented in accordance with regulation and general standards;
• Important cases in which regulations and rules on budget and economic affairs of the country were not obeyed, and
• Remarks to noticed deficiencies with audited entities and recommended measures.
Furthermore, in the procedure of drafting of the Annual Financial Statement of the Budget
of the Republic, the Institution reports to the Parliament on the audit of the Annual
Financial Statement, which enables the Parliament, to make decisions on suggested
measures and term for their implementation, based on the important facts from the
Annual report.
2. ANNUAL AUDIT PLAN
Institution independently makes decisions on audited entities, subject, scope and
type of audit, time and manner of performing of audit, by adoption of the Annual Audit
Plan until 10th January for current year.
During 2006, problems in functioning of the Senate- the fact that all members of
the Senate were not elected, have limited the work of Institution in full its capacity. On
the initiative of other members of Senate, the Parliament has adopted necessary law
amendments and supplements, at the end of last year, which caused not only the
increase of the number of Senate members and therefore its completion, but also the
improvement of the selection of special professional and other conditions necessary for
election of the member of the Senate of the Institution.
At the first Session of the Senate held in 2007, Annual Audit Plan and the plan of
future activities aiming strengthening of the role and importance of the Institution were
adopted in the statutory term.
Audit Plan for 2007, stipulates not only the Annual Financial Statement of the
Budget of the Republic of Montenegro for 2006, but also the audits of the following
entities: Health Insurance Fund of the Republic of Montenegro; Municipality Kolašin; Municipality Ulcinj; Ministry of Culture, Sports and Media.
The plan was realised in total, while for next year a significant growth of number
the audits and the realisation of new types of audits with audited entities is expected.
Institution has realised on the day of the adoption of the Annual report – Annual
Audit Plan for 2007, in the manner that all audits planned for first three quarters were
realised and Final reports of the Board of Directors competent for performance of audits
were drafted, while the audit of the Ministry of Culture, Sports and Media, planned for the
IV quarter, is ongoing and will be performed in the planned period until the 25th of
December.
With regards to above mentioned, Annual report of the Institution encompasses
realised audits and activities in the period from October 2006 until October 2007:
• Annual Financial Statement of the Budget of the Republic of Montenegro for 2006;
• Financial reports of the Health Insurance Fund of the Republic for 2006;
• Annual Financial Statement of the Budget of the Municipality Ulcinj for 2005;
• Annual Financial Statement of the Budget of the Municipality Kolašin for 2006,
Reports and statements on performed audits are integral part of the Annual report.
Also, activities planned in the section II of the mentioned Activity Plan of the Senate in
2007 have been realised, such as:
• Realisation of lawfully determined competences of the State Auditors Institution in the sphere of expressing views on realisation of the Budget and the rational usage of funds which are given to audited entities for usage, in accordance with the Article 4 of the Law, condition of the state property, borrowing and guarantees given during the year and giving of recommendations for amendments and supplements of the Law in case the conclusion is reached that the existing laws are producing or can produce negative consequences and are not leading to planned results.
• Training programmes and further professional strengthening and completion of the Institution.
• Constitutional and normative organisation of the State Auditors Institution, making of the auditing standards and enactments of the Institution.
• Accession of the State Auditors Institution of Montenegro into the full membership of the world association of supreme state auditing courts- institutions at the XIX Congress of the INTOSAI-a.
3. REALISATION OF RESOLUTIONS OF THE PARLIAMENT OF THE REPUBLIC OF MONTENEGRO, ADOPTED ON THE OCCASION OF THE AUDIT OF THE ANNUAL FINANCIAL STATEMENT OF THE BUDGET OF THE REPUBLIC OF MONTENEGRO FOR 2005
Parliament of the Republic of Montenegro, at the Session held on 22nd of November
2006, on the suggestion of the Board for Economy, Finance and Budget has adopted
based on Recommendations of the Institution contained in the Annual report for 2006,
Resolutions in seven basic points regarding promotion of public finances and public
sector, and in relation with the performed audit of the Annual Financial Statement of the
Budget of the Republic of Montenegro for 2005. Institution has performed subsequent
control of the realisation of Resolutions of the Parliament and has requested opinion from
the Ministry of Finance. Institution found that the Resolutions of the Parliament were
mostly obeyed and recommendations were applied.
Review of realised Resolutions of the Parliament of the Republic of Montenegro and
undertaken measures regarding these Resolutions:
1. In accordance with Resolutions of the Parliament of the Republic of Montenegro,
Ministry of Finance has enacted the Rule Book on Tax Book-Keeping ("Official
gazette of the Republic of Montenegro", No. 81/06) which regulates the way of
book-keeping records on taxes, contributions, compensations and other public
revenues, way and deadlines for drafting of the annual financial tax statement,
deadlines for booking of book changes and way of keeping of book-keeping
records and documentation.
2. Report was made on analysis of contracts on rent of the business premises by
Republic bodies and regarding that the Government was submitted the Draft
Decision on criterions and conditions for demarcation of costs between the
Republic and units of local self-government based on use of business premises by
Republic bodies, which was used for legal and linguistic harmonisation of existing
Decision with valid regulations adopted by the Government at the Session held on
26th April 2007 ( „Official gazette of the Republic of Montenegro“ No. 27/07).
The Administration for Joint Services of the Republic Bodies is the body which,
after the adoption of the mentioned Decision, reconsiders individual contracts on
rent of business premises and is continuously working on providing business
premises which should be owned by the Republic, and it would contribute to the
unburdening of the Budget, on this ground.
The Administration for Joint Services of the Republic Bodies is also the body
which, in cooperation with the Real-Estate Administration, identifies the property of
former social-political organisations and suggests to the Government the bylaw
which would determine the way and procedure of giving of the state property for
use to the parliamentary parties.
3. Sector for Internal Audit of the Ministry of Finance, during 2006, performed audit on earmarked usage of budgetary funds in 2005, and in spending units which have implemented the programme budget and given recommendations for consistent application of legal provisions and earmarked usage of funds. Also, for drafting of the Annual Financial Statement of the Budget of the Republic for 2006, Ministry of Finance has requested from all beneficiaries of the Budget of the Republic to submit the reports on realised activities during 2006, and for beneficiaries of the programme budget the report on realisation of the programme objectives and assignments.
4. Ministry of Finance- State Treasury has submitted to all beneficiaries of the
Budget of the Republic the Directions which refers to deadlines of reception of final transactions, closing of the ledger of the Treasury and making of annual financial statements of spending units, thus warning them that the main officer for finance is obliged to compare accounting data of its spending unit with data from the Ledger of the Treasury and to notify State Treasury on eventual corrections, and that the deadline for adjustment of data is 31st January of the current year for previous year. Great number of beneficiaries of the Budget of the Republic is directly involved in the SAP system and has every day insight into the realised transactions in the ledger of the Treasury, and reports are sent to other beneficiaries upon their requests.
5. Records of call in arrears in the ledger of the Treasury is being realised at the level
of yearly budget of planned funds, and in spending units to the level of undertakings which, according to the Article 31 of the Budget Law, are realised in next fiscal year. For consideration of the total account of call in arrears at the end of the fiscal year, data shown in the annual financial statement are based on data submitted by spending units which have made lists of call in arrears.
6. Ministry of Finance has requested from spending units to obey the obligation of
inventory and obligation of listing and submitting of the inventory listing with the situation on 31st December 2005. Inventory with situation on 31st December 2005 was submitted by almost all spending units.
7. Records on payments by economic classification in the ledger of the Treasury are
made according to planned funds in the Annual budget so that the recommendation which refers to the records of payments by execution of court warrants from the current budgetary reserve was not realised, because it is from the point of view of the Ministry of Finance, contrary to the Article 33 of the Budget Law, based on which the funds from the reserve are used only for emergencies and unforeseen expenditures during the fiscal year.
4. REPORT ON EXPENDITURES OF THE STATE AUDITORS INSTITUTION
Senate of the Institution, in accordance with the Article 38 of the Law and Rule Book on
way of preparation, drafting and submitting of annual financial reports and statements of
the budget, of budgetary beneficiaries and extra-budgetary funds, has determined the
Annual Financial Statement (annual financial report) of the State Auditors Institution for
2006.
With the Budget Law for 2006, funds earmarked for the Institution amounted 279.502,98
EUR, while the Institution has realised 205.349,54 EUR, or 73,47 %, of planned funds.
Furthermore, the Institution has realised also the funds from current budgetary reserve
for payment of the meal allowance and cash-grants to the amount of 4.686,24 EUR and
through donation of the GTZ has provided the equipment valuable to the amount of
25.260,97 EUR, so that the total spending for 2006 amounted 235.296,75 EUR.
TOTAL SPENDING 235.296,75 EUR
SOURCES OF FINANCING:
Budget of the Republic of Montenegro for 2006- position 520 SAI 205.349,54 €
Current budgetary reserve 4.686,24 €
Donations 25.260,97 €
Structure of the spending of the SAI for 2006: -Salaries of employees 149.310,14 €
-Other personal income 8.885,00 €
-Expenses for material and services 51.840,64 €
-Capital expenditures 25.260,97 €
Capital expenditures- donations
In 2006, there was no procurement of non-financial property from the funds of the Budget
of the Republic of Montenegro for 2006. However, in 2006, based on donations of the
GTZ, equipment was acquired to the value of 25.260,97 €, which was noticed also in the
Report on the Inventory for 2006, such as:
• office furniture 6.700,50 €, •printing equipment 1.439,47 €, •equipment computers 15.288,00 €, •other equipment 1.833,00 €.
Call in arrears in 2006
Total call in arrears of the Institution for 2006, amounted 1.743,51 €, and 82% pf
it referred to the bills for telephone phone services and spent electricity for December
2006.
Inventory in 2006
Commission for inventory submitted the Report on performed inventory listing of
the State Auditors Institution on 31st December 2006. Total listed value of the property of
the State Auditors Institution is 149.511,98 €.
II REALISED AUDITS FOR PERIOD OCTOBER 2006- OCTOBER 2007
1. GENERAL REMARKS
Annual Financial Statement of the Budget of the Republic of Montenegro for 2006
Audit of the Annual Financial Statement of the Budget of the Republic of Montenegro for
2006 represents the most important audit, respecting the fact that the Budget represents
the framework of the public spending of the Republic and that the audit of the Annual
Financial Statement of the Budget is lawfully determined obligation, which is performed
by the State Auditors Institution in every fiscal year.
By its circumference, which in 2006 amounted 587,38 mil.€, Budget of the Republic of
Montenegro represents the most significant institution in the public spending system. In
accordance with the lawfully constituted obligation and importance of this system, State
Auditors Institution has performed the audit of the Annual Financial Statement of the
Budget of the Republic of Montenegro for 2006. Performed audit mostly refers to the
audit of regularities, and it was performed in accordance with the international audit
standards and procedures stipulated by the Law.
State Auditors Institution has provided the overall report which publishes the most
important audit results, confirms the accuracy of data presented in the annual financial
statement and sublimes the most important findings and proposal of recommendations
and measures is given, aiming the improvement of records and more efficient
organisation of the public spending system.
During the audit procedure of the Annual Financial Statement of the Budget of the
Republic of Montenegro for 2006, Ministry of Finance has submitted report on realisation
of measures and recommendations adopted anent the audit of the annual financial
statement of the Budget of the Republic of Montenegro for 2005.
Financial reports of the Health Insurance Fund of the Republic for 2006
Financing of the health protection in the Republic of Montenegro represents very
important part of the public spending, taking into account the fact that the turnover shown
in the Fund for 2006, amounted 131.706.231,04 € and that this system represents one of
the most important pillars of the health protection of citizens. In accordance with the
scope of public spending which is related to the financing system of the health protection
provided by the Fund, State Auditors Institution has expanded the objectives and scope
of audit. Namely, by audit of the financial reports of the Health Insurance Fund of the
Republic for 2006, an overall systematic overview was given, which shows not only flaws
in the part of regularity, but also the flaws in efficiency of the functioning of the health
protection financing.
Audit of the Fund for 2006, has given the expected results. Suggested measures in
the part of synchronisation of functioning of the health system and more efficient records,
create conditions in the Fund that through more efficient cash management savings are
provided to the level of 3,5 to 4 mil.€. Usefulness of this audit is, beside the acceptance
of suggested measures, the Fund has already taken specific steps on removal of noticed
mistakes. It is important to emphasise that the audit performed in this way was enabled
by the quality and accurate records of the Fund, and a high level of responsibility and
cooperativeness of professional services in the Fund.
Audit of financial reports of the Health Insurance Fund of the Republic by the State
Auditors Institution was done by the method based on the sample, so it is not possible to
encompass all the possible flaws which can occur in the part of efficiency of functioning
of the system.
However, observed possibilities of savings through more efficient cash management
and standing of the Fund regarding findings of the audit, leads to the conclusion that the
Institution will improve the efficiency and quality of the functioning of the system in the
following period.
Annual Financial Statements of Municipalities Kolašin for 2006 and Ulcinj for 2005
With audits of Annual Financial Statements of Budgets of Municipalities the Institution
has performed the control of consistent application of the Budget Law, Law on Local
Self-Government Financing, Directions on Treasury Operations and other laws and
bylaws and international standards, which refer to regulation of the local self-government
financing. With the audit of the annual financial statement of municipalities we are
controlling whether the revenues, expenditures, property and liabilities shown in the
annual financial statement, are supported by the correct documentation, if the payments
during the fiscal year are realised outside the expenditures approved by the budget, way
of presenting of deficit and are the internal controls established which are to provide
legal operations of the local self-government bodies.
Based on the realised audits of the annual financial statement of the budget of
municipality, SAI has identified some omissions which refer to:
- system of the financial reporting;
-organisational structure and
- functioning of the internal controls.
Aiming the improvement of work in local self-government bodies regarding obeying
of operations legality and improvement of efficiency of the functioning of the system of
municipality budget, SAI has given some recommendations which are the integral part of
this report, in reports on audit of the annual financial statement of controlled
municipalities.
REPORT ON AUDIT OF THE ANNUAL FINANCIAL STATEMENT OF THE BUDGET OF THE REPUBLIC OF MONTENEGRO FOR 2006
1. LAWFUL CAUSE, OBJECTIVE AND SUBJECT OF THE AUDIT OF THE ANNUAL FINANCIAL STATEMENT OF THE BUDGET OF THE REPUBLIC OF
MONTENEGRO FOR 2006
Lawful cause
Based on the Article 4 and 9 of the Law on State Auditors Institution (»Official
gazette of the Republic of Montenegro« No. 28/04, 27/06 and 78/06 hereinafter: the Law
on State Auditors Institution) and Article 51 of the Budget Law, (»Official gazette of the
Republic of Montenegro« No. 40/01,44/01, and 71/05, and in accordance with the
International Audit Standards (INTOSAI) and Annual Audit Plan for 2007, the audit of the
annual financial statement of the Budget of the Republic of Montenegro for 2006 was
performed.
Reasons for performing of the audit
Audit is being performed for providing of important information related to the
checking of the regularities of obeying of rules in revenues collection, completion of
tasks, booking and documenting of realised transactions, reporting and management of
financial and non-financial property and liabilities.
Objective
Basic objective of audit is collection of sufficient and adequate evidence for
reporting on significant facts which refer to regularity (lawfulness) of work of competent
persons in beneficiaries of the budgetary funds and objectivity of shown public revenues
and public expenditures in the Draft Annual Financial Statement of the Budget of the
Republic of Montenegro for 2006 (hereinafter: Annual Financial Statement).
Subject
Subject of the audit is the Annual financial statement made in accordance with the
Article 51 of the Budget Law and Articles 1, 2, 3 and 4 of the Rule book on unique
classification of the statements for Budget of the Republic, budgets of extra-budgetary
funds and budgets of municipalities («Official gazette of the Republic of Montenegro» No.
35/05, 37/05 and 81/05) and Article 6 of the Rule book on way of preparation, drafting
and submitting of financial reports of the budget, extra budgetary funds and units of local
self-government («Official gazette of the Republic of Montenegro« No. 03/06) and in
accordance with that, data and reports were controlled on:
• Initial and final account of the Consolidated account of the Treasury;
• Realised deviations when compared to the planned amounts;
• Loans taken;
• Expenditures of budgetary reserve (permanent and current reserve);
• Guarantees given during the fiscal year;
• National debt.
AUDIT PLANNING
In accordance with the international auditing standards (INTOSAI), audit was
planned to be performed well, efficiently and economically in the given period of time.
Aiming that, the concept and detailed audit plan was made, in which the main
objectives and main questions of the audit of the annual financial statement were
determined. Audit plan determines the dynamics of performing of audit, and the range of
already collected information, or of those which are to be collected based on
documentation and other data in the State Treasury and in other beneficiaries of the
budgetary funds.
2. SCOPE AND PROCEDURE OF AUDIT
2.1. Scope of the audit
Audit of the Annual financial statement encompasses not only documentation and
reports which are controlled in the Ministry of Finance- State Treasury as competent
body for preparation and drafting of the Draft Annual financial statement of the budget of
the Republic in accordance with the Budget Law- but also the individual financial reports,
records and documentation per spending units aiming checking of supporting of realised
transactions with adequate documents. Audit of individual annual financial statements is
based on the control of obeying of regulations which refer to procedures of issuance and
forming of documentation, book keeping and harmonisation with the main book which is
being kept in the State Treasury. Audit was performed based on samples in following
spending units:
1 Republic of Montenegro, Ministry of Finance 2 Republic of Montenegro Ministry of Interior Affairs 3 Republic of Montenegro, Ministry of Culture 4 Republic of Montenegro, Ministry Labour and Social Welfare 5 Republic of Montenegro, Ministry of Maritime Affairs, Transportation and Telecommunication 6 Republic of Montenegro, Ministry of Education and Science 7 Republic of Montenegro, Ministry of Defence 8 Republic of Montenegro, Administration of Justice 9 Republic of Montenegro, Pension and Disability Insurance Fund (Transfers) 10 The Administration for Joint Services of the Republic Bodies
2.2. Audit Procedure
Audit of the annual financial statement was performed in accordance with the
International Audit Standards (INTOSAI), and it includes analysis of evidences based on
samples which are used for confirmation of shown data and information from the annual
financial statement. The audit also includes evaluation of the applied book keeping
principles, and disclosure of data in accordance with the international audit standards for
public sector. In the procedure of audit performing, special attention is given to the
process of collection of data which enable expressing of opinion on reality and objectivity
of total receipts and expenditures shown in annual financial statement. 3. SYSTEM OF RECORDS AND REALISATION OF THE BUDGET 3.1. ACCOUNTING SYSTEM
Accounting system of the Budget of the Republic of Montenegro is organised on the
cash base in accordance with the provision of the Budget Law, Rule book on way of
preparation, drafting and submitting of the annual financial statements of the budget,
extra budgetary funds and units of local self-government („Official gazette of the Republic
of Montenegro“ No. 03/06), Directions on State Treasury Operations („Official gazette of
the Republic of Montenegro“ No. 64/01) and International Accounting Standards for
Public Sector.
Accounting system is based on records in the ledger of the Treasury, which is being
kept in the Ministry of Finance and book-keepings which are made per spending units.
Spending units based on their records on expenditures (payments) and receipts at the
end of the year make annual financial report which is submitted to the Ministry of
Finance- State Treasury by 31st March of the current year for previous year. Ledger of
the State Treasury and financial reports of spending units represent documental
foundation for drafting of the annual financial statement.
The following facts were determined with the audit:
-57 spending units were obliged to submit annual financial reports to the Ministry of
Finance- State Treasury.
All spending units have submitted financial reports for 2006.on time to the Ministry of
Finance- State Treasury
By comparing of data shown in annual financial reports and data shown in the ledger
of the Treasury, it was determined that accordance was realised between total
expenditures and realised in spending units and expenditures kept in the ledger of the
Ministry of Finance- State Treasury. However, it was determined with the control that the
structure of expenditures shown in some of spending units does not amount to the
planned budgetary spending. Spending units have made payments which do not
correspond to the allocations shown in the budget, and it is necessary to increase the
budgetary discipline and to demand from spending units to do authorised spending, with
increase of the efficiency by preventive intern control by the Ministry of Finance.
3.2. Realisation of the Budget of the Republic of Montenegro for 2006
In the Draft Law on Annual Financial Statement of the Budget of the Republic of
Montenegro in the Article 1 the following account was shown:
I Funds transferred from 2005 year 50,976,784.57€
II Receipts 587,388,871.18€
-direct revenues 562,698,380.82€
non-refundable aids from abroad 44,155.27€
Loans taken(borrowings and credits) 9,045,040.85€
Revenues from sold property 6,287,921.72€
Receipts from credit repayments 9,313,372.52€
III Expenditures 580,054,519.93€
Expenses 451,980,514.64€
Loans given (lending and credits) 6,692,832.28€
Repayment of given guarantees 1,050,939.44€
Credit repayment 38,346,806.16€
Expenditures of budgetary reserve 27,204,434.31€
Payment of liabilities from previous years 54,778,993.10€
IV Deposits 58,311,135.82€
REVIEW OF TRENDS OF DEPOSISTS, RECEIPTS AND EXPENDITURES
Fiscal years Description
2003 2004 2005 2006
Deposits at the beginning of year 28,311,520.00 15,705,572.00 13,374,050.00 50,976,784.57
Total receipts during the year 414,556,675.00 436,907,833.00 581,023,344.00 587,388,871.18
Total expenditures during the year -427,162,623.00 -439,239,355.00 -543,420,609.00 -580,054,519.93
Deposits at the end of the year 15,705,572.00 13,374,050.00 50,976,785.00 58,311,135.82
Account shown in the Article 1 of the Annual financial statement was compared to
the cash flow trends in 2006, aiming analytic interpretation of the shown cash, and
verification of the account accuracy of realised cash transactions.
Cash flows with shown state of the deposit are harmonised with the report of the
Central Bank of Montenegro and commercial banks, so that data shown in the Article 1 of
the Annual financial statement confirms derived cash flows made on stipulated forms.
3.2.1. Report on cash flows
Pursuant the Rule Book on way of preparation, drafting and submitting of financial
reports of the budget, extra budgetary funds and units of local self-government («Official
gazette of the Republic of Montenegro» No. 03/06) hereinafter Rule book, way of
preparation, drafting and submitting of annual financial reports of the Budget of the
Republic of Montenegro is stipulated. Pursuant the Article 6 of the Rule book, obligation
of the Budget of Republic is stipulated to prepare the annual financial report based on
International Accounting Standards for Public Sector, and in accordance with the forms
stipulated by the Rule book. Financial reports of the Budget of the Republic, in
accordance with the Rule book, are being made on stipulated forms:
1 Report on cash flows I –economic classification, 2 Report on cash flow II –functional classification, 3 Report on consolidated public spending, 4 Report on call in arrears.
Report on cash flow shows the difference between the receipts and expenditures
per earmarked structure for fiscal period of one year. Report on cash flows which is given
on the page 108 of the Commentary of the Draft Law on Annual Financial Statement of
the Budget of the Republic of Montenegro for 2006, methodologically does not
correspond to stipulated reports in the Rule book.
Aiming regular presentation of trend of cash flows in the Budget of the Republic, and
in accordance with the stated Rule book, and for the verification of the account accuracy
of realised transactions (receipts and expenditures) by the Ministry of Finance- State
Treasury, State Auditors Institution has made reports on cash flows on stipulated forms
based on data from the Draft of Annual Financial Statement of the Republic of
Montenegro, such as:
1 Report on cash flows I- economic classification 2 Report on cash flows II- functional classification 3 Report on consolidated public spending (1) REPORT ON CASH FLOWS I- ECONOMIC CLASSIFICATION
Ordinal Cash flow-economic classification Plan Realisation in the comparable period of previous year
Realisation in the stated period current year
1 2 3 4 5
RECEIPTS
1 Current revenues (1.1+1.2+1.3+1.4+1.5) 492.654.880.44 428.109.365.73 562.698.380.82
1.1 Taxes 437.147.690,87 394.767.975,87 499.381.748,51
1.2 Contributions
1.3 Duties 10.548.639,97 6.846.891,72 13.900.279,19
1.4 Compensations 10.832.463,53 6.882.369,14 17.868.340,15
1.5. Other revenues 34.126.086,07 19.612.129,00 31.548.012,97
2 Receipts from credit repayment 0,00 1.941.237,62 9.313.372,52
3 Donations and transfers 5.503.625,00 2.499.990,00 44.155,27
3.1 Donations 5.503.625,00 2.499.990,00 44.155,27
3.2 Transfers
I Total receipts (1+2+3) 498.158.505,44 432.550.593,35 572.055.908,61
EXPENDITURES
4 Current expenditures 262.897.821,06 254.891.544,48 262.159.460,93
4.1 Gross salaries and contributions payable by employer
161.425.471,22 155.931.223,00 158.589.560,21
4.2 Other personal income 8.360.639,37 11.263.975,00 8.164.967,57
4.3. Material and service expenses 48.666.647,40 42.741.406,48 43.271.514,90
4.4 Current maintenance 19.151.486,92 14.646.102,00 18.844.737,58
4.5 Interests 14.177.852,64 20.615.480,00 22.367.124,43
4.6 Rent 2580461,51 1.810.925,00 2.429.650,17
4.7 Subsidies 6.076.000,00 6.333.356,00 6.072.666,83
4.8 Other expenditures 2.459.262,00 1.549.077,00 2.419.239,24
5 Transfers for social security 38.673.511,06 120.969.292,00 38.425.621,38
5.1 Rights from the sphere of social security 34.323.511,06 34.683.383,00 34.076.058,17
5.2 Funds for redundancies 4.350.000,00 4.280.934,00 4.349.563,21
5.3 Rights from the sphere of Pension and disability insurance
0,00 0,00
5.4 Other rights from the sphere of health security
0,00 82.004.975,00 0,00
5.5 Other rights from the sphere of health insurance
0,00 0,00
6 Transfers to institutions, individuals, non-governmental and public sector
120.503.226,62 119.770.351,13
7 Loans and credits 6.713.200,00 7.455.247,00 6.692.832,28
8 Payment of guarantees 2.000.000,00 5.531.312,00 1.050.939,44
9 Repayment of liabilities from previous period
24.024.985,68 26.645.789,00 54.778.993,10
10 Reserve 29.232.262,52 17.099.758,00 27.204.434,31
II TOTAL EXPENDITURES (4+5+6+7+8+9+10)
484.045.006,94 432.592.942,48 510.082.632,57
III NET CASH FLOW (I-II) 14.113.498,50 -42.349,13 61.973.276,04
Cash flow based on investments
11 Receipts from sale on non-financial property
0,00 5.200.075,08
12 Receipts from sale of financial property 7.000.000,00 136.309.965,00 1.087.846,64
13 Capital expenditures 35.634.078,31 26.802.558,00 31.625.081,20
IV Net cash flow based on investments (11+12-13)
-28.634.078,31 109.507.407,00 -25.337.159,48
Cash flow based on financing
14 Loans and credits 5.108.234,00 12.162.783,37 9.045.040,85
15 Credit repayments 11.783.100,00 84.025.107,00 38.346.806,16
V Net cash flow based on financing (14-15) -6.674.886,00 -71.862.323,63 -29.301.765,31
VI Increase/reduction of cash (III+IV+V) -21.195.445,81 37.602.734,24 7.334.351,25
VII Cash at the beginning of the period 13.374.050,33 50.976.784,57
VIII Cash at the end of the period (VI+VII) 50.976.784,57 58.311.135,82
Total realised direct revenues, receipts from credit repayments and donations in
2006 amount 572.055.908,61€, while total expenditures amount 510.082.632,57 €, so
that total realised revenues based on taxes, duties, compensations and other direct
revenues are 61.973.276,04 € higher than expenditures (current expenditures, transfers
for social protection, transfers to institutions, individuals, non-government and public
sector, loans and credits, payment of guarantees, repayment of liabilities from previous
years and reserves- current and permanent).
With the control of expenditures it was determined that the receipts from the sale of
non financial and financial property amounted 6.287.921,72 €, while for capital
expenditures 31.625.081,20 € was spent, so that on the grounds of cash transactions in
the part of investing the missing amount of 25.337.159,48 € was realised.
During 2006, loans and credits which were paid to the budget amounted
9.045.040,85 € and at the same time credit repayment was realised to the amount of
38.346.806,16 €, so the negative cash flow was realised on the base of financing to the
amount of 29.301.765,31 €.
Missing financing sources based on capital expenditures to the amount of
25.337.159,48 € and based on financing to the amount of 29.301.765,31 € were covered
from the credit balance realised in current budgetary transactions, after which there were
remaining funds to the amount of 7.334.859,87 €. This amount, enlarged for initial
account of the state deposits, which belong to the Budget of the Republic of Montenegro
to the amount of 50.976.784,57 € on 31.12.2005. resulted in cash assets to the amount
of 58.311.648,03 € on 31.12.2006.
Cash to the amount of 58.311.648,03 € was confirmed by the State Auditors
Institution and the following amounts were confirmed:
Bank 2005 2006
Central Bank of Montenegro 47,901,512.56 55,755,297.06
Crnogorska Komercijalna banka 297,463.69 155,658.91
Podgoricka banka 1,756,614.56 1,413,740.98
Montenegro banka 20,797.11 0
Atlasmont banka 982,255.29 971,176.50
Hipotekarna banka 18,141.36 15,774.58
TOTAL: 50,976,784.57 58,311,648.03
Discrepancy 512.21
Change in the account of deposits by years was also reconciliated and shown in the
following table: ACCOUNT AND CHANGES OF DEPOSITS
Fiscal years (EUR) Description
2003 2004 2005
Deposits at the beginning of the year 28.311.520,00 15.705.572,00 13.374.050,00
Total receipts during the year 414.556.675,00 436.907.833,00 581.023.344,00
Total expenditures during the year -427.162.623,00 -439.239.355,00 -543.420.609,00
Deposits at the end of the year 15.705.572,00 13.374.050,00 50.976.785,00
Aiming consideration of the realisation of the budgetary policy for last 4 years we give the
overview of spent budgetary funds with financing sources for period from 2002 to 2006.
Sources of financing- realisation Year Total realised expenditures
Growth index of expenditures with base 2002
Direct revenues Growth index of revenues with base 2002
credits Donations
2002 335,195,078.00 100.00 267,532,753.00 100.00 40,680,883.00 26.957.582.00
2003 451,452,187.00 135.00 353,323,358.00 132.00 48,649,543.00 12.583,773.00
2004 439.239.355.00 131.00 381,182,690.00 142.00 51.109.984,00 6.946.681.00
2005 543.420.610.00 162.00 528.757.857.00 197.00 12.162.763.00 2.499.990.00
2006 587.399,871.00 175.00 578.699.675.00 216.00 9.045.041.00 44.155,00
Presented data indicate faster growth of direct revenues when compared to
expenditures- direct revenues have grown for 116% in 2006 when compared to 2002 and
expenditures for 75%. Also, in observed period there is a tendency of fall of credit
borrowings and donations.
PRESENTED RECEIPTS AND EXPENDITURES BY FUNCTIONAL CLASSIFICATION
REPORT ON CASH FLOWS II – functional classification Ordinal CASH FLOW-FUNCTIONAL
CLASIFICATION Plan Realisation in
comparable period previous year
Realisation in stated period current year
1 2 3 4 5
RECEIPTS
1 Current revenues (1.1+1.2+1.3+1.4+1.5) 492.654.880,44 428.109.365,73 562.698.380,82
1.1 Taxes 437.147.690,87 394.767.975,87 499.381.748,51
1.2 Contributions
1.3 Duties 10.548.639,97 6.846.891,72 13.900.279,19
1.4 Compensations 10.832.463,53 6.882.369,14 17.868.340,15
1.5 Other revenues 34.126.086,07 19.612.129,00 31.548.012,97
2 Receipts from credit repayment 0,00 1.941.237,62 9.313.372,52
3 Donations and transfers 5.503.625,00 2.499.990,00 44.155,27
3.1 Donations 5.503.625,00 2.499.990,00 44.155,27
3.2 Transfers
I Total receipts (1+2+3) 498.158.505,44 432.550.593,55 572.055.908,61
EXPENDITURES
4 General public services 94.746.638,36 122.941.492,59 129.503.149,34
5 Defence 38.821.196,00 40.611.008,03 36.442.076,67
6 Public safety 79.018.635,60 65.709.240,50 78.190.775,57
7 Economic affairs 45.852.145,57 53.934.650,63 44.763.337,36
8 Environment protection 3.622.631,23 3.002.521,36
9 Community affairs and residence 3.508.688,69 2.813.332,75 3.062.548,64
10 Health 13.064.279,30 7.673.983,21 11.786.028,70
11 Sports, culture and religion 10.826.824,33 10.161.822,72 10.631.632,14
12 Education 88.211.271,52 84.274.878,32 86.998.980,16
13 Social protection 106.372.698,04 44.473.535,73 105.701.582,63
II Total expenditures (4+5+6+7+8+9+10+11+12+13) 484.045.008,64 432.593.944,48 510.082.632,57
III Net cash flow (I-II) 14.113.496,80 (43.351,13) 61.973.276,04 Cash flow based on investing
14 Receipts from sale of non-financial property 0,00 5.200.075,08
15 Receipts from sale of financial property 7.000.000,00 136.309.965,00 1.087.846,64
16 Capital expenditures 35.634.078,31 26.802.556,00 31.625.081,20
IV NET CASH FLOW BASED ON INVESTING (14+15-16)
-28.634.078,31 109.507.409,00 -25.337.159,48
Cash flow based on investing
17 Loans and credits 5.108.234,00 12.162.783,37 9.045.040,85
18 Credit repayment
V NET CASH FLOW BASED ON FINANCING (17-18)
-6.674.866,00 -71.861.323,63 -29.301.765,31
VI Increase/reduction of cash (III+IV+V) -21.195.447,51 37.602.734,24 7.334.351,25
VII Cash at the beginning of period 21.195.445,82 13.374.050,33 50.976.784,57
VIII Cash at the end of period (VI+VII) -1,69 50.976.784,57 58.311.135,82
Based on data presented in the Report on Cash Flows II by functional classification,
we can reach the conclusion that the share of taxes in the total realise receipts in 2006
amounted 499.381.748,51 € or 87,30% of realised receipts.
When compared to the previous year tax revenues have increased for about
104.713.663,00 € or 26,50%. Budgetary revenues were mostly formed from basic
sources of financing, which proves the fact that stability of financing of public spending
from the budget of the Republic was reached and that need for public borrowing was
reduced, and that importing activity is being increased, considering the significant growth
of revenues based on VAT collected from import.
Realised public revenues were spent for financing of following areas of public
spending: general public services, defence, public safety, economic affairs, environment
protection, affairs community and residence, health, sports, culture and religion,
education and social protection.
Largest expenditures were spent on financing of general public services, defence
and public safety.
Financing of general public services refers to financing of expenditures of legislative
and executive bodies, financial and fiscal operations, foreign affairs, public debt, transfers
in general between different levels of government and similar public services. Financing
of general public services has a share of 129.503.149,34 € or 25,38% in total realised
expenditures of the Republic in 2006. When compared to the previous year, expenditures
for general public services were increased for 6.561.656,75 € or 5,3%.
Expenditures for social protection in the total realised expenditures from the Budget
of the Republic have a share of 20,72% or in the absolute amount it was paid
105.701.582.63 €. Expenditures for social insurance, social welfare etc. belong here. The
largest sphere of these expenditures refers to expenditures based on transfers to the
Pension and Disability Insurance Fund, expenditures for needs from competences of the
Ministry of Labour and Social Welfare and transfers to the Employment Agency. When
compared to the previous year, expenditures for social welfare have increased for about
61.228.046,90 € or 137,67%, due to reclassification by functional classification.
For defence was spent 36,442,076.67 € or 7,14% of total realised expenditures. For
these purposes, 10,26% or 4.168.931,36 € was spent less than last year.
Expenses for public safety refer to police authorities, courts and prison services. For
this area 78.190.775,57 € or 15,32% was spent from total realised revenues. When
compared to the previous year, expenditures for these services increased for
12.481.535,07 € or 19%.
Report on consolidated public spending for 2006, is shown in the following table:
(5) REPORT ON CONSOLIDATED PUBLIC SPENDING
account Description Plan Realisation in comparable period last year
Realisation of the stated period current year by annual financial statement
7 Receipts 513,850,326.26 430,050,605.41 572,011,753.36 71 Current revenues 492,654,880.44 428,109,367.79 562,698,380.84 711 Taxes 437,147,690.87 394,767,975.81 499,381,748.53 7111 Personal income tax 70,376,155.20 67,085,461.63 72,493,703.82
7112 Corporate tax 16,043,415.68 21,292,026.81 12,681,282.08
7113 Property tax 2,458,847.06 2,567,438.91 7,371,892.86
7114 Value added tax 225,866,796.27 193,382,539.63 273,156,637.10
7115 Excises 77,544,673.67 65,600,422.79 72,376,242.18
7116 Tax on international trade and transactions 41,518,056.18 41,095,834.12 56,766,223.62
7118 Other revenues of the Republic 3,339,746.81 3,744,251.92 4,535,766.87
713 Duties 10,548,639.97 6,846,891.72 13,900,279.19 7131 Administrative duties 8,643,589.88 5,218,882.91 7,506,509.48
7132 Court fees 1,680,730.51 1,589,109.42 6,027,790.69
7133 Residence taxes 200,000.00 1,838.81 365,979.02
7136 Other duties 24,319.58 37,060.58 0,00
714 Compensations 10,832,463.53 6,882,369.14 17,868,340.15
7141 Fees for usage of goods of common interest 1,179,654.47 911,767.23 1,274,186.23
7142 Fees for usage of natural resources 2,951,607.04 3,104,935.80 3,521,417.44
7143 Ecological fees 1,800,835.73 1,300,354.99 1,902,110.17
7144 Games of chance fees 1,745,256.59 1,565,311.12 3,406,245.76
7148 Road fees 1,756,758.31 0,00 5,372,953.17
7149 Other compensations 1,398,351.39 0,00 2,391,427.38
715 Other revenues 34,126,086.07 19,612,131.12 31,548,012.97
7151 Yields on capital 3,276,845.87 4,967,035.69 6,551,762.67
7152 Penalties and divested property benefits 7,968,819.51 7,605,061.13
7153 Revenues made by authorities and their activities 1,421,030.64 9,978,968.53 3,888,328.17
7154 Self-contribution
7155 Other revenues (collection of tax claims from previous periods)
21,459,390.05 4,666,126.90 13,502,861.00
73 Receipts from credit repayment and funds transferred from previous year
21,195,445.82 1,941,237.62 9,313,372.52
731 Receipts from credit repayments 0,00 1,941,237.62 9,313,372.52 732 Funds transferred from previous year 21,195,445.82 0,00 0,00 4 EXPENDITURES 519,679,085.25 459,395,499.96 541,707,713.77 41 Current expenditures 262,897,821.06 254,891,544.48 262,159,460.93 411 Gross salaries and contributions payable by
employer 161,425,471.22 155,931,223.00 158,589,560.21
4111 Net salaries 92,524,399.83 91,370,298.00 91,942,290.18
4112 Income tax 20,070,048.61 17,815,288.00 19,100,934.95
4113 Contributions payable by employee 23,377,681.13 24,501,658.00 22,785,858.09
4114 Contributions payable by employer 22,399,216.72 19,645,437.00 21,833,407.81
4115 Municipal surtax 3,054,124.93 2,598,542.00 2,927,069.18
412 Other personal income 8,360,639.37 11,263,975.00 8,164,967.57
413 Material and service expenses 48,666,647.40 42,741,406.48 43,271,514.90
414 Current maintenance 19,151,486.92 14,646,102.00 18,844,737.58
415 Interests 14,177,852.64 20,615,480.00 22,367,124.43
416 Rent 2,580,461.51 1,810,925.00 2,429,650.17
417 Subsidies 6,076,000.00 6,333,356.00 6,072,666.83
418 Other expenditures 2,459,262.00 1,549,077.00 2,419,239.24
42 Transfers for social security 38,673,511.06 38,964,317.00 38,425,621.38
421 Rights from the field of social security 34,323,511.06 34,683,383.00 34,076,058.17
422 Funds for redundancies 4,350,000.00 4,280,934.00 4,349,563.21
43 Transfers to institutions, individuals and non-government sector
120,503,226.62 82,004,974.48 119,770,351.13
431 4311 Transfers to public institutions 24,667,274.01 12,319,236.48 24,580,394.89
4312 Transfers to non-government institutions 3,125,600.00 3,090,350.24
4313 Transfers to individuals 11,926,490.00 7,854,861.00 11,849,494.54
4314 Transfers to the Pension and Disability Insurance Fund
66,205,862.61 45,881,936.00 66,018,170.80
4315 Transfers to Health Insurance Fund of the Republic 6,935,000.00 5,891,769.00 6,935,000.00
4316 Transfers to the Employment Agency 5,570,000.00 7,622,587.00 5,570,000.00
4317 Transfers to municipalities 1,833,000,00 2,434,585.00 1,726,940.66
4139 Transfers to public enterprises 240,000.00 0,00 0,00
44 Capital expenditures 35,634,078.31 26,802,558.00 31,625,081.20 441 Capital expenditures 35,634,078.31 26,802,558.00 31,625,081.20
45 Loans and credits 6,713,200.00 7,455,247.00 6,692,832.28 46 462 repayment of guarantees 2,000,000.00 5,531,312.00 1,050,939.44
463 Repayment of liabilities from previous period 24,024,985.68 26,645,789.00 54,778,993.10
47 Reserve 29,232,262.52 17,099,758.00 27,204,434.31 DEFICIT / SURPLUS -5,828,758.99 -29,344,894.55 30,304,039.59
Financing 5,828,759.00 29,344,897.37 -30,304,548.19
Domestic financing -4,750,000.00 -68,979,505.09 -24,086,770.22
75 751 7511 Loans and credits from domestic sources 0,00 8,858,883.91 0,00
46 461 4611 Debt repayment 4,750,000.00 77,838,389.00 24,086,770.22
Foreign financing 3,578,759.00 -382,828.54 -5,170,839.82
Credits and securities -1,924,866.00 -2,882,818.54 -5,214,995.09
75 751 7512 Loans and credits from foreign sources 5,108,234.00 3,303,899.46 9,045,040.85
46 461 4612 Debt repayment 7,033,100.00 6,186,718.00 14,260,035.94
74 741 Donations 5,503,625.00 2,499,990.00 44,155.27
72 Income from sale of property 7,000,000.00 136,309,965.24 6,287,921.72
74 742 Transfers 0.00
Increase (-)/reduction of deposit (+) 0.00 -37,602,734.24 -7,334,859.87
Remark: Report on consolidated public spending refers only to the Budget of the
Republic of Montenegro for 2006.
Report on consolidated public spending indicates realised deficit or surplus for 2006.
Pursuant the Article 16 of the Budget Law, cash surplus or deficit represents the
difference of receipts and expenditures, whereas the receipts are reduced for loans,
received transfers, donations and receipts from sale of the property, and expenditures for
repayment of the capital amount in country and abroad based on debt caused by taking
of credits or securities issue. Starting from this legal solution State Auditors Institution
has determined budgetary surplus for 2006, based on data shown in the Draft Law on
Annual Financial Statement of the Budget of the Republic for 2006, by using of
methodology which is stipulated by the Rule book on preparation, drafting and submitting
of financial reports of the budget, extra budgetary funds and units of local self-
government:
1. Receipts- account 7…………………………………………….………..……587.388.871,18 EUR 2. Loans and credits from foreign sources- account 7512.……………..……9.045.040,85 EUR 3. Revenues from sale of property- account 72…………………………………6.287.921,72 EUR Reduced receipts (1-2-3-4)……………………………………………………………..572.011.753,34 EUR
1. Expenditures- account 4……………………………………………………..580.054.519,93 EUR 2. Debt repayment from domestic sources- account 4611………………..24.086.770,22 EUR 3. Debt repayment from foreign sources- account 4612…………………..14.260.035,94 EUR Reduced expenditures (1-2-3)………………………………………………………..541.707.713,77 EUR
Presented surplus in 2006 amounts 30.304.039,57 EUR (572.011.753,34 EUR- 541.707.713,77 EUR).
Ministry of Finance has shown surplus for 2006, in the Commentary of the Annual Financial Statement to the amount of 85.083.032,67 €. Presented surplus, according to the commentary of the Ministry of Finance, derived in accordance with recommendations and suggestions of the International Monetary fund’s representative.
3.3. Collection of tax revenues
Central Bank of Montenegro submits individual statements on daily changes per
payers: to Tax Administration from the group of accounts 820, to Customs
Administration from the group of accounts 805, Ministry of Interior Affairs from the
group of accounts 825, State Treasury from the group of accounts 832.
Tax Administration, Customs Administration and Ministry of Internal Affairs after th
identification of the type perform transfer of funds from clearing accounts to the Central
account of the State Treasury with simultaneous submitting of the „Declaration of the
Receiver“ on the structure of public revenues by eco codes and by municipalities.
The audit of the Budget encompassed also comparison of data, on realised income
recorded in the State Treasury with data on data on person giving the “Declaration of the
Receiver” i.e. Tax Administration, Customs Administration and Ministry of Internal Affairs.
With all receivers of income clearing of the account is being performed every day by
wiring except in case when the income can not be identified. It was determined by
checking that unidentified revenues which were not cleared every day do not represent
materially significant amount.
Tax Administration did not make the tax annual financial statement in accordance
with the Article 6 paragraph 1 item 13 of the Law on Tax administration (»Official gazette
of the Republic of Montenegro« No. 65/01, 80/04 and 29/05) and the Rule book on Tax
Book-Keeping published by the Ministry of Finance (»Official gazette of the Republic of
Montenegro«, No 81/06). However, Tax Administration has performed confirmation of
collected revenues by the document No. 0371-9645/107 from 5.06.2007, shown in the
Draft Law on Annual Financial Statement of the Budget of the Republic fro 2006 by the
Ministry of Finance. This confirmed accuracy of presented data by the Tax
Administration, but as for 2005 the Institution still insists on drafting of tax annual financial
statement whose form and contents are stipulated by the mentioned Rule book.
3.3.1. Budgetary receipts
Pursuant the Article 9 of the Budget Law («Official gazette of the Republic of
Montenegro« No. 40/01, 44/01 and 71/05) receipts of the Budget of the Republic of
Montenegro encompass:
1) Current revenues (taxes, contributions, duties, compensations and other revenues); 2) Receipts from the property sale;
3) Receipts from credit repayments;
4) Donations and transfers;
5) Loans and credits (domestic and foreign);
6) Other revenues, in accordance with the Law.
Receipts of the Budget of the Republic of Montenegro for 2006 were realised to the
amount of 587.388.871,18 € and are 10,52% higher than planned by the Budget of the
Republic of Montenegro for 2006, and are 1% higher than realised in 2005.
Structure of realised receipts is given in the following table and graph: Table and graph
show that in the structure of receipts on 2006, taxes have the largest share of 85,02%
while in 2005 this revenue amounted 67,94%.
Description Realised Planned
Taxes 499.381.748,51 437.147.690,87
Duties 13.900.279,19 10.548.639,97
Other revenues of the Republic 42.864.590,45 41.681.703,73
Yields on capital 6.551.762,67 3.276.845,87
Receipts from repayment of given credits 9.313.372,52 21.195.445,82
Revenues from sold property 6.287.921,72 7.000.000,00
Donations 44.155,27 5.503.625,00
Loans and credits 9.045.040,85 5.108.234,00
TOTAL: 587.388.871,18 531.462.185,26
Porezi- taxes; Takse- duties; Ostali republicki prihodi-other revenues of the Republic; prihodi od kapitala- yields on capital; primici od povracaja datih kredita- receipts from repayment of given credits; prihodi od prodate imovine- revenues from sold property; donacije- donations; pozajmice i krediti- loans and credits
Competent bodies in the system of collection of direct public revenues (taxes, duties and compensations) in Montenegro are Tax Administration, Customs Administration, Ministry of Internal Affairs and Administration of Justice. In the Budget of the Republic of Montenegro, Customs Administration has collected direct revenues to the amount of 313.725.578,00 €, Tax Administration 206.419.146,20 €, Ministry of Internal Affairs 8.523.650,33 € and Administration of Justice 6.027.790,69 €.
Difference between realised and planned receipts for 2006, is presented in the following
table:
account Receipts by economic classification Planned in 2006 Realised in 2006
Less realised
More realised
1 2 3 4 5(3-4) 6 (4-3) 7111 Personal income tax 70.376.155,20 72.493.703,82 2.117.548,62
7112 Corporate tax 16.043.415,68 12.681.282,08 3.362.133,60
7113 Property tax 2.458.847,06 7.371.892,86 4.913.045,80
7114 Value added tax 225.866.796,27 273.156.637,08 47.289.840,81
7115 Excises 77.544.673,67 72.376.242,18 5.168.431,49
7116 Tax on international trade and transactions 41.510.050,10 50.700.220,02 15.240.107,44
7118 Other taxes of the Republic 3.330.746,81 4.535.766,87 1.106.020,06
7131 Administrative duties 8.613.589,88 7.506.509,18 1.137.080,40
7132 Court fees 1.680.730,51 6.027.790,69 4.347.060,18
7133 Residence taxes 200.000,00 365.979,02 165.979,02
7136 Other duties 24.319,58 0,00 24.319,58
7141 Fees for usage of goods of common interest
1.179.654,47 1.274.186,23 94.531,76
7142 Fees for usage of natural resources 2.951.607,04 3.521.417,44 569.810,40
7143 Ecological fees 1.800.835,73 1.902.110,17 101.274,44
7144 Games of chance fees 1.745.250,59 3.400.245,70 1.000.909,17
7148 Road fees 1.756.758,31 5.372.053,17 3.616.104,86
7149 Other compensations 1.398.351,39 2.391.127,38 993.075,99
7151 Yields on capital 3.276.845,87 6.551.762,67 3.274.916,80
7152 Penalties and divested property benefits 7.968.819,51 7.605.061,13 363.758,38
7153 Revenues made by authorities and their activities
1.421.030,64 3.888.328,17 2.467.297,53
7155 Other revenues 21.459.390,05 13.502.861,00 7.956.529,05
7200 Revenues from sale of property 5.143.152,77 5.143.152,77
7211 Sale of real-estates 53.788,70 53.788,70
7212 Sale of capital assets 1.400,00 1.400,00
7213 Sale of stocks 1.675,61 1.675,61
7221 Sale of shares 7.000.000,00 991.187,58 6.008.512,12
7222 Sale of other securities 96.359,06 96.359,06
7311 Receipts from credit repayments given to other levels of government
392.337,34 392.337,34
7312 Receipts from credits to public enterprises 7.390.770,57 7.390.770,57
7313 Receipts from credits to government institutions
1.465.486,39 1.465.486,39
7314 Receipts from credits to natural persons 64.778,22 64.778,22
7321 Funds transferred from previous year 21.195.445,02 0,00 21.195.445,02
7411 Current donations 5.503.625,00 44.155,27 5.450.460,73
7511 Loans and credits from domestic sources 0,00
7512 Loans and credits from foreign sources 5.108.234,00 9.045.040,85 3.936.806,85
TOTAL: 531.462.185,26 587.388.871,18 50.675.680,47 106.602.366,39
Table showing realised differences between planned and realised receipts shows
less realised receipts than planned in corporate tax to the amount of 3.362.133,60 €,
excises to the amount of 5.168.431,49 €, administrative duties 1.137.080,40 €, other
revenues to the amount of 7.956.020,43 €, funds transferred from previous years to the
amount of 21.195.445,82 € and current donations 5.459.469,73€.
Revenue item which refers to transferred funds from previous year was not
realistically planned, because the realisation of direct revenues over planned amounts
provided that the total amount of budgetary spending was financed from direct revenues.
Donations were not realised according to the planned structure and when compared to
plan they were realised 0,8%. Most positive deviation in 2006 in realisation of revenues
was achieved in value added tax to the amount of 47.289.848,81 € or 20,94% higher, tax
on international trade and transactions to the amount of 15.248.167,44 € or 36,73%
higher and property tax to the amount of 4.913.045,80 € or 199,81%.
Comparative overview of realised receipts for 2006 and 2005 by economic
classification is shown in the following table:
account Receipts by economic classification Realised in 2006 Realised in 2005 Index realised 2006/2005
1 2 3 4 5 7111 Personal income tax 72.193.703,82 67.085.161,33 108,06
7112 Corporate tax 12.681.282,08 21.292.026,31 59,56
7113 Property tax 7.371.892,86 2.567.438,91 287,13
7114 Value added tax 273.156.637,08 193.382.539,33 141,25
7115 Excises 72.376.242,18 65.600.422,35 110,33
7116 Tax on international trade and transactions 56.766.223,62 41.095.834,00 138,13
7118 Other taxes of the Republic 4.535.766,87 3.744.251,00 121,14
7131 Administrative duties 7.506.509,48 5.218.882,91 143,83
7132 Court fees 6.027.790,69 1.589.109,42 379,32
7133 Residence taxes 365.979,02 1.838,31 19903,04
7141 Fees for usage of goods of common interest
1.274.186,23 37.060,58 3438,12
7142 Fees for usage of natural resources 3.521.417,44 911.767,38 386,22
7143 Ecological fees 1.902.110,17 3.104.935,20 61,26
7144 Games of chance fees 3.406.245,76 1.300.354,99 261,95
7148 Road fees 5.372.953,17 1.565.311,12 343,25
7149 Other compensations 2.391.427,38 0,00
7151 Yields on capital 6.551.762,67 0,00
7152 Penalties and divested property benefits 7.605.061,13 4.967.035,59 153,11
7153 Revenues made by authorities and their activities
3.888.328,17 0,00
7155 Other revenues 13.502.861,00 9.978.968,53 135,31
7200 Revenues from sale of property 5.143.152,77 4.666.126,90 110,22
7211 Sale of real-estates 50.700,70 0,00
7212 Sale of capital assets 1.400,00 0,00
7213 Sale of stocks 1.075,01 0,00
7221 Sale of shares 001.487,58 136.300.065,00 0,73
7222 Sale of other securities 06.350,06 0,00
7311 Receipts from credit repayments given to other levels of government
302.337,34 1.041.237,32 20,21
7312 Receipts from credits to public enterprises 7.300.770,57 0,00
7313 Receipts from credits to government institutions
1.165.186,39 0,00
7314 Receipts from credits to natural persons 61.778,22 0,00
7321 Funds transferred from previous year 0,00 0,00
7411 Current donations 44.155,27 2.499.990,00 1,77
7511 Loans and credits from domestic sources 0,00 8.858.883,00 0,00
7512 Loans and credits from foreign sources 9.045.040,85 3.303.899,00 273,77
TOTAL: 587.388.871,18 581.023.341,48 101,10
Table of realised receipts in 2006 and 2005 shows the change of structure of realised
receipts in 2006 when compared to 2005. Direct revenues increased in 2006: value
added tax for 41%, tax on international trade for 38%, while other receipts (sale of
shares, donations, loans and credits) were reduced to minimum when compared to 2005
and previous years.
3.3.1.1. Taxes, excises and customs
Tax revenues (taxes, excises and customs) represent the most important part of
receipts of the Budget of the Republic of Montenegro for 2006 and were realised to the
amount of 499.381.748,51 € and are higher than plan for 14,23%, or absolutely shown
they are higher than the planned amount for 62.234.057,64 €. Revenues from taxes,
excises and customs in the total realised receipts of the Budget of the Republic of
Montenegro fro 2006 have a share of 85,02%.
3.3.1.1.1. Personal income tax
Revenues from the personal income tax in 2006 were realised to the amount of
72.493.703,82 € and are higher than the planned amount for 4,91%.
Overview of realised revenues is given in the following table by type of personal
income tax with the structure shown in percents and share in total receipts:
Personal income tax Amount Structure% Share in other receipts%
Individual income tax for employees with legal persons 61,303,840.37 84.56% 10.44%
Personal income tax (part belonging to the budget) 2,352,095.58 3.24% 0.40%
Tax from individual income of employees with natural persons 136,344.96 0.19% 0.02%
Tax on other personal income 4,850,991.82 6,69% 0.83%
Tax on revenue from independent activity on real income 184,871.12 0.26% 0.03%
Tax on revenue from independent activity in lump amount 1.125.095,16 1.55% 0.19%
Tax on revenue from property and property rights 1.376.279,11 1.90% 0.23%
Tax on yields on capital 779.760,01 1.08% 0.13%
Tax on capital gain 27.579,68 0.04% 0.00%
Tax on income by annual application 356.846,01 0.49% 0.06%
TOTAL: 72.493.703,82 100.00% 12.34%
3.3.1.1.2. Corporate tax
Revenues based on corporative tax for 2006 were realised to the amount of
12.681.282,08 €, which is 3.362.133,60 € or 24,65% less than the planned amount. In
the structure of total receipts corporate tax has the share in 2006 of 2,16%, (in 2005 the
share of this tax in total receipts amounted 3,66%) and their structure is shown in the
following table:
Corporate tax amount Structure% share in total receipts%
Corporate tax of the resident legal person 11.685.375,71 92.15% 1.99%
Corporate tax of the non-resident legal person 16.423,09 0.13% 0.00%
Tax by rebate on dividend and share in profit 513.259,54 4.05% 0.09%
Tax by rebate on authors compensations, interests and other
466,223.74 3.68% 0.08%
Total: 12.681.282,08 100.00% 2.16%
Non-realisation of the plan of the corporate tax in 2006, and the reduction of share
of this tax in total receipts when compared to 2005, indicates that there is a need for
making the analysis of causes which led to this state.
3.3.1.1.3. Capital turnover tax
Revenues based on capital turnover tax for 2006 were realised to the amount of
7.371.892,86 € which is 199,81% higher than the planned amount, or 4.913.045,80 €. In
the structure of total receipts capital turnover tax has a share of 1,26%.
Capital turnover tax Amount Structure % Share in total receipts %
Property tax (indebtedness until 31.12.2002) 15.240.51 1.56% 0.02%
Capital turnover tax 7.256.652,35 98.22% 1.24%
Total: 7.371.892,86 100.00% 1.26%
3.3.1.1.4. Value added tax
Revenues based on value added tax were realised in 2006 to the amount of
273.156.637,05 € and are 21% higher than planned amount, i.e. 41,25 % higher than in
2005. In the structure of total receipts VAT has a share of 46,50%.
Value added tax Amount Structure% Share in receipts%
Value added tax in the country 22.024.509,67 8.06% 3.75%
Tax on turnover of products 96.342,46 0.04% 0.02%
Tax on turnover of services 139.157,56 0.05% 0.02%
Value added tax on import 245.861.683.70 90.01% 41.86%
Value added tax on services of foreign persons 5.227.628,58 1.91% 0.89%
Total: 273.156.637,05 100.00% 46.50%
3.3.1.1.5. Excises
Excises were in 2006 collected in the total amount of 72.376.242,18€ out of which
7.473.688,46 € goes to the excises in production and to excises on import goes
64.902.553,72 €. When compared to plan, excises were realised less for 6,67% or for the
amount of 5.168.431,49 €.
Excises in production
Revenues based on excises in production in 2006 were realised to the amount of
7.473.688,46 € which is 24,82% less than in 2005. The structure of excises in production
is presented in the following overview. Excises in production Amount Structure% Share in total
receipts%
Excises on other mineral oil, their derivates and substitutes 1.118.150,39 14.96% 0.19%
Excises on alcohol and alcoholic beverages 6.168.138,04 82.53% 1.05%
Excise duties on tobacco products 187.400,03 2.51% 0.03%
Total: 7.473.688,46 100.00% 1.27%
Import duties
Revenues based on import duties in 2006, were realised to the amount of
64.902.553,72 € which is 16,61% higher than in 2005. Structure of excises upon import is
given in the following table:
Excises upon import Amount Structure% Share in total receipts%
Duties on leaded petrol super 98- duties storehouse 11.054.267,61 17.03% 1.88%
Duties on unleaded petrol 95- duties storehouse 13.267.172,43 20.44% 2.26%
Duties on diesel fuel D2 and eco diesel- duties storehouse 27.821.728,72 42.87% 4.74%
Excise duties on other mineral oils, their derivates and substitutes-duties storehouse
2.630.195,21 4.05% 0.45%
Excise duties on tobacco products- duties storehouse 352.635,26 0.54% 0.06%
Duties on unleaded petrol 95 356.430,65 0.55% 0.06%
Duties on diesel fuel D2 and eco fuel 668.860,01 1,03% 0.11%
Excises duties on other mineral oils, their derivates and substitutes
3.577.586,50 5.51% 0.61%
Excises on alcohol and alcoholic beverages 1.560.421,23 2.42% 0.27%
Excise duties on tobacco products 38.886,87 0.06% 0.01%
Excise duties on imported cigarettes 3.565.360,20 5.40% 0.61%
TOTAL: 64.902.550,72 100.00% 11.05%
3.3.1.1.6. Tax on international trade and transaction
In 2006, revenues based on taxes on international trade and transactions were
realised to the amount of 56.766.223,62 € which is 15.248.167,44 € higher than the
planned amount and in the structure of total realised receipts this revenue has a share of
9,66% (in 2005, share of this revenue amounted 7,07%).
Tax on international trade and transactions Amount Structure% Share in total receipts%
Customs 41.350.228,43 72.84% 7.04%
Customs duties 2.823.333,72 4.97% 0.48%
Customs for services of customs office 10.304.179,53 18.15% 1.75%
Special fee upon import of agricultural and alimentary products
2.288.481,94 4.03% 0.39%
Total: 56.766.223,62 100.00% 9.66%
3.3.3.1.7. Other taxes
Revenues from other taxes for 2006 were realised to the amount of 4.535.766,87 €
and are 21% higher than planned, or absolutely shown for 791.515,87 €. Structure of
other taxes is given in the following table:
Other taxes of the Republic Amount Structure% Share in total
receipts%
Special tax on turnover of used motor vehicles,
vessels, aeroplanes and aircrafts
745.684,82 16.44% 0.13%
Tax on usage of motor vehicles and other goods 2.934.265,41 64.69% 0.05%
Tax on insurance premiums 855.816,64 18.87% 0.15%
Total: 4.535.766,87 100.00% 0.77%
3.3.1.2. Duties
Revenues based on duties in 2006, were realised to the amount of 13.900.279,19 €
which is 3.375958.80 € higher than planned amount of in percents for 32,07%. The
highest increase of revenues based on duties of 258,64% was realised based on court
fees, while on the base of administrative duties it was collected less when compared than
the planned amount for 13,16%. Revenues based on duties, by sorts and structure of
share, are presented in the following table:
Duties Amount Structure% Share in total receipts%
Administrative duties of the Republic 7.506.509,48 54.00% 1.28%
Court fees 6.027.790,69 43.36% 1.03%
Residence duties 365.979,02 2.63% 0.06%
Total: 13.900.279,19 100.00% 2.37%
3.3.1.3. Other revenues of the Republic
Income from other revenues of the Republic for 2006, was realised to the amount of
49.416.353,12 € which is 9,91% higher than the planned amount, or absolutely shown it
was realised for 4.458.312,14 € more than planned.
Other revenues of the Republic Amount Structure% Share in total receipts%
Compensations 17.868.340,15 36.16% 3.04%
Yields on capital 6.551.762,67 13.26% 1.12%
Revenues from activities of governmental bodies 3.888.328,17 7.87% 0.66%
Cash penalties and property divested benefits 7.605.061,13 15.39% 1.29%
Other revenues of the Republic 13.502.861,00 27.32% 2.30%
Total: 49.416.353,12 100.00% 0.41%
Revenues from compensations were realised from compensations for usage of
goods of common interests to the amount of 1.274.186.,23 € , compensations for usage
of natural goods to the amount of 3.521.417,44 €, ecologic compensation 1.902.110,47€,
compensation for organisation of games of chance 3.406.245,76 €, roads compensations
5.372.953,17 € and other compensations to the amount of 2.391.472,38 €. In other
revenues of the Republic, the biggest share goes to collected taxes which matured in
previous years to the amount of 4.876.310,00 € other revenues of the Ministry of Interior
Affairs to the amount of 2.336.616,60 € and revenues from successions – Ministry of
Finance to the amount of 4.792.917,00 €.
3.3.1.4. Receipts from credit repayments, donations, loans and credits
Receipts from credit repayments, donations, loan and credits in 2006 had been
planned to the amount of 10.611.859,00 €, and were realised to the amount of
18.402.568,64 €. In the following table, by economic classification, an overview is given
of planned and realised receipts on 2006 and 2005.
Economic classification
Receipts by economic classification
Planned in 2006
Realised in 2005
Realised in 2006
Index realised/ planned
Index realised 2006/2005
Difference
1 2 3 4 5 6=(5/3)’100 7=(5/4)’100
8=(5-3)
7311 Receipts from credit repayment given to other levels of government
1.941.237,62 392.337,34 20,21 392.337,34
7312 Receipts from credit repayment given to public enterprises
7.390.770,57 7.390.770,57
7313 Receipts from credit repayment given to other institutions
1.465.486,39 1.465.486,39
7314 Receipts from credit repayment given to natural persons
64.778,22 64.778,22
7411 Current donations 5.530.625,00 2.499.990,00 44.155,27 0,80 1,77 -5.459.469,73
7511 Loans and credits from domestic sources
8.858.883,00
7512 Loans and credits from foreign sources
5.108.234,00 3.303.899,00 9.045.040,85 177,07 273,77 3.936.806,85
TOTAL 10.611.859,00 16.604.009,62 18.402.568,64 173,42 110,83 7.790.709,64
Receipts from payment repayment
given to public enterprises in 2006 amount 7.390.770,57 €. They were mostly realised
from repayments of credits given to HTP „Ulcinjska rivijera“ to the amount of
5.252.770,83 €.
given to natural persons– in 2006 amount 64.778,22 €. Credits given to natural
persons in previous years were provided by means of commercial banks, based on
self-employment credits from Employment Agency. Government of the Republic of
Montenegro has assumed claims of commercial banks, made contract on debt
rescheduling with natural persons, credit beneficiaries, and overview of annuities with
maturity periods.
Donations – Receipts from non-refundable aid (donations) in 2006 were planned to
the amount of 5.503.625,00 €, and were realised to the amount of 44.155,27 €.
Donation was approved by World Bank for preparation of the project “Integral
management of eco-system Skadar lake” to the amount of 175.000,00 €. Realisation
of donations to the amount of 44.155,27 € indicates the need for re-examining
reasons for non-fulfilment of the plan of donations and the structure and relations with
donors.
Loans and credits from foreign sources- inflows of funds based on credits and loans taken from foreign sources in 2006 amount 9.045.040,85 € and are 77,07%
higher than planned, or 3.936.806,85 €, or when compared to realisation in 2005 for
173,77% i.e. 5.741.141,85 €.
In the following table an overview of taken loans and credits from foreign sources is
given:
Creditor Structure of the
World bank credit
Amount
Foreign credit from European Community (SAC-II tranche 7.150.584,92
IDA- World Bank
Foreign credit (WB-Pension Disability Insurance) 228.805,48
Foreign credit (World Bank- Health Insurance) 713.645,37
Foreign credit (World Bank- Education) 925.235,74
Credit from Treasury bills 26.769,34
TOTAL 9.045.040,85
Credit approved by International Development Association IDA- World Bank, has
approved credit for the programme on structural adjustment of Montenegrin economy
to the amount of 12.300.000,00 SDR (special drawing rights). In 2006, through
Central Bank of Montenegro, where the depositary account in EUR was open, funds
were paid to the amount of 7.150.584,92 €. Credit approved by IDA- World Bank, amount 1.867.686,59 € refers to indebtedness in World Bank (World Bank Affiliation).
Stated funds are programme credits which refer to investments with permanent
assignment such as: promotion of health protection, promotion of pension
administration and reforms of the education system.
Credits from Treasury bills – Inflow of funds from the liquidity account, as net surplus
of issuance of Treasury bills in 2006 amounts 26.769,34 €.
In accordance with the Article 10 of the Budget Law, expenditures encompass:
1) current expenditures;
2) transfers for social protection;
3) transfers to individuals, non-government and public sector;
4) capital expenditures for procurement and investment maintenance of financial and
non-financial property;
5) given loans and credits;
6) repayment of debts, guarantees and liabilities from previous years;
7) other payments in accordance with the Law.
By audit of shown expenditures of the Budget of the Republic of Montenegro, it was
confirmed that the expenditures for 2006 were shown to the amount of 580.054.519,93 €.
Realised expenditures for 9,30% are higher than planned, and 6.74% higher than those
realised in 2005.
Plan of expenditures of the Budget was determined by the Law on Budget of the
Republic of Montenegro for 2006 (“Official gazette of the Republic of
Montenegro”,No.77/05). At the beginning of November 2006, Parliament of the Republic
of Montenegro has adopted the Law Amending and Supplementing the Law on Budget of
the Republic for 2006, (“Official gazette of the Republic of Montenegro”, No.70/06), which
increased the budgetary spending for 12.550.000 € or 2,41%.
Structure of planned and realised expenditures with relative and absolute deviations
by economic and organizational classification is shown in the following graph and table:
Planirani izdaci- planned expenditures Ostvareni izdaci- realised expenditures
account Receipts by economic classification Planned in 2006 Realised in 2006 Non-realisation of
the budget (less) Overrun of plan (higher)
1 2 3 4 5(for 4<3) 6(for 4>3)
4111 Net salaries 92,524,399.83 91,942,290.18 582,109.65
4112 Personal income tax 20,070,048.61 19,100,934.95 969,113.66
4113 Contributions payable by employee 23,377,681.13 22,785,858.09 591,823.04
4114 Contributions payable by employer 22,399,216.72 21,833,407.81 565,808.91
4115 Municipal surtax 3,054,124.93 2,927,069.18 127,055.75
4121 Meal allowance 3,932,069.34 3,908,798.23 23,271.11
4122 Recourse 1,777,578.03 1,774,679.66 2,898.37
4124 Compensation for housing and separate living
213,818.00 193,667.10 20,150.90
4125 Compensation for transport 2,400.00 2,399.60 0.4
4127 Severance pays 4,080.00 1,300.00 2,780.00
4128 Compensation for members of the parliament
450,000.00 450,000.00 0
4129 Other compensations 1,980,694.00 1,834,122.98 146,571.02
4131 Costs for material 8,019,884.69 7,081,642.91 938,241.78
4132 Costs for business trip 3,994,737.83 3,682,988.50 311,749.33
4133 Costs for representation 307,863.12 288,774.61 19,088.51
4134 Costs for energy 7,610,750.98 7,028,082.90 582,668.08
4135 Costs for phone services 2,735,780.83 2,097,814.11 637,966.72
4136 Costs for post services 507,058.76 434,081.37 72,977.39
4137 Bank services and course deficit 130,504.00 105,811.53 24,692.47
4138 Transfer services 17,200.00 16,486.49 713.51
4139 Contracted services 25,342,867.19 22,535,832.48 2,807,034.71
4141 Current maintenance of public infrastructure 16,216,720.00 16,213,093.70 3,626.30
4142 Current maintenance of buildings 1,743,404.40 1,601,724.45 141,679.95
4143 Current maintenance of equipment 1,191,362.52 1,029,919.43 161,443.09
4151 Interests to residents 100,000.00 3,052,726.47 2,952,726.47
4152 Interests to non-residents 14,077,852.64 19,314,397.96 5,236,545.35
4161 Rent of object 2,204,,705.51 2,063,020.62 141,684.89
4162 Rent of equipment 367,576.00 360,452.36 7,123.64
4163 Rent of land 8,180.00 6,177.19 2,002.81
4171 Subsidies for production and services 6,076,000.00 6,072,666.83 3,333.17
4181 Communal compensations 625,562.00 589,982.97 35,579.03
4183 Duties 2,700.00 2,699.96 0.04
4184 Other 1,831,000.00 1,826,556.31 4,443.69
4211 Child allowances 3,310,538,50 3,307,036.88 3,501.62
4212 Disabled veterans’ care 7,525,006.50 7,506,599.23 18,407.27
4213 Financial securing of family 10,304,834.50 10,303,362.81 2,471.69
4214 Maternity leave 6,689,146.00 6,562,447.62 126,698.38
4215 Social care 3,166,163.00 3,160,113.00 6,050.00
4216 Food for children in preschool institutions 505,447.00 505,143.77 303.23
4217 Allowance to proteges in institutions 2,500,000.00 2,442,213.86 57,768.14
4218 Other rights from sphere of social protection 322,375.56 290,141.00 32,234.56
4222 Severance pay for redundancies 4,350,000.00 4,349,563,21 436.79
4311 Transfer to public institutions 24,667,274.01 24,580,394.89 86,879.12
4312 Transfer to NGOs, political parties and associations
3,125,600.00 3,090,350.24 35,4249.76
4313 Transfers to individuals 11,926,490.00 11,849,494.54 76,995.46
4314 Transfer to the Pension and Disability Insurance Fund of the Republic
66,205,862.61 66,018,170.80 187,691.81
4315 Transfer to the Health Insurance fund of the Republic
6,935,000.00 6,935,000.00 0
4316 Transfer to the Employment Agency 5,570,000.00 5,570,000.00 0
4317 Transfers to municipalities 1,833,000.00 1,726,940.66 106,05934
4319 Transfers to public enterprises 240,000.00 0 240,000.00
4411 Expenditures for infrastructure of common interest
7,218,000.00 7,094,330.46 123,669.54
4412 Expenditures for local infrastructure 4,319,222.00 4,319,222.00 0
4413 Expenditures for buildings 10,415,938.82 8,998,202.17 1,417,736.65
4415 Expenditures for equipment 6,982,835.49 4,780,835.14 2,202,000.35
4416 Expenditures for investment maintenance 6,075,442.00 5,942,489.98 132,952.02
4417 Expenditures for stocks 622,640.00 5,942,489.98 132,952.02
4511 Loans and credits to non-financial institutions
3,500,000.00 3,491,000.00 9,000.00
4513 Loans and credits 1,466,000.00 1,454,632.28 11,367.72
4515 Other loans and credits 1,747,200.00 1,747,200.00 0
4611 Repayment of securities and credits to residents
4,750,000.00 38,284,503.58 33,534,503.58
4612 Repayment of securities and credits to non-residents
7,033,100.00 14,260,035.94 7,226,935.94
4621 Repayment of guarantees in the country 1,000,000.00 766,666.68 233,333.32
4622 Repayment of guarantees abroad 1,000,000.00 284,272.76 715,727.24
4630 Repayment of liabilities 24,024,985.68 40,581,259.74 16,556,274.06
4710 Current budgetary reserve 22,779,308.40 20,796,434.78 1,982,873.62
4720 Permanent budgetary reserve 6,452,954.12 6,407,999.53 44,954.59
TOTAL: 531,462,185.25 580,054,519.93 16,914,650.69 65,506,985.37
Net difference: 48,592,334.68
The following table shows the relation between realised expenditures in 2006 when compared to 2005
account Receipts by economic classification
Realised in 2006 Realised in 2005 Index realised 2006/2005
1 2 3 4 5
4111 Net salaries 91,942,290.18 91,370,298.00 100.63
4112 Personal income tax 19,100,934.95 17,815,288.00 107.22
4113 Contributions payable by employee 22,785,858.09 24,501,658.00 93
4114 Contributions payable by employer 21,833,407.81 19,645,437.00 111.14
4115 Municipal surtax 2,927,069.18 2,598,542.00 112.64
4121 Meal allowance 3,908,798.23 7,843,222.00 49.84
4122 Recourse 1,774,679.66 1,376,602.00 128.92
4124 Compensation for housing and separate living
193,667.10 1,048,818.00 18.47
4125 Compensation for transport 2,399.60 0
4127 Severance pays 1,300.00 0
4128 Compensation for members of the parliament
450,000.00 449,715.00 100.06
4129 Other compensations 1,834,122.98 545,618.00 336.16
4131 Costs for material 7,081,642.91 7,606,414.00 93.1
4132 Costs for business trip 3,682,988.50 3,200,628.00 115.07
4133 Costs for representation 288,774.61 0
4134 Costs for energy 7,028,082.90 6,711,662.00 104.71
4135 Costs for phone services 2,097,814.11 1,146,878.82 182.92
4136 Costs for post services 434,081.37 702,640.73 61.78
4137 Bank services and course deficit 105,811.53 0
4138 Transfer services 16,486.49 0
4139 Contracted services 22,535,832.48 23,373,182.48 96.42
4141 Current maintenance of public infrastructure
16,213,093.70 112,338.90 14432.31
4142 Current maintenance of buildings 1,601,724.45 4,297,700.90 37.27
4143 Current maintenance of equipment 1,029,919.43 10,236,061.87 10.06
4151 Interests to residents 3,052,726.47 3,534,265.00 86.38
4152 Interests to non-residents 19,314,397.96 17,081,225.00 113.07
4161 Rent of object 2,063,020.62 1,781,889.00 115.78
4162 Rent of equipment 360,452.36 0
4163 Rent of land 6,177.19 29,036.00 21.27
4171 Subsidies for production and services 6,072,666.83 6,333,356.00 95.88
4181 Communal compensations 589,982.97 0
4183 Duties 2,699.96 0
4184 Other 1,826,556.31 1,549,077.00 117.91
4211 Child allowances 3,307,036.88 2,696,250.00 122.65
4212 Disabled veterans’ care 7,506,599.23 7,518,119.00 99.85
4213 Financial securing of family 10,302,362.81 8,856,699.00 116.32
4214 Maternity leave 6,562,447.62 6,135,031.00 106.97
4215 Social care 3,160,113.00 2,557,226.00 123.58
4216 Food for children in preschool institutions 505,143.77 493,708.00 102.32
4217 Allowance to proteges in institutions 2,442,213.86 2,517,548.00 97.01
4218 Other rights from sphere of social protection
290,141.00 3,908,802.00 7.42
4222 Severance pay for redundancies 4,349,563.21 4,280,934.00 101.6
4311 Transfer to public institutions 24,580,394.89 0
4312 Transfer to NGOs, political parties and associations
3,090,350.24 12,319,236.00 25.09
4313 Transfers to individuals 11,849,494.54 7,854,861.00 150.86
4314 Transfer to the Pension and Disability Insurance Fund of the Republic
66,018,170.80 45,881,936.00 143.89
4315 Transfer to the Health Insurance fund of the Republic
6,935,000.00 5,891,769.00 117.71
4316 Transfer to the Employment Agency 5,570,000.00 7,622,587.00 73.07
4317 Transfers to municipalities 1,726,940.66 2,434,585.00 70.93
4319 Transfers to public enterprises 0 0
4411 Expenditures for infrastructure of common interest
7,094,330.46 787,399.11 900.98
4412 Expenditures for local infrastructure 4,319,222.00 0
4413 Expenditures for buildings 8,998,202.17 19,211,377.29 46.84
4415 Expenditures for equipment 4,780,835.14 3,104,884.07 153.98
4416 Expenditures for investment maintenance
5,942,489.98 3,698,898.00 160.66
4417 Expenditures for stocks 490,001.45 0
4511 Loans and credits to non-financial institutions
3,491,000.00 1,580,000.00 220.95
4513 Loans and credits 1,454,632.58 5,875,247.00 24.76
4515 Other loans and credits 1,747,200.00 0
4611 Repayment of securities and credits to residents
38,284,503.58 77,838,389.00 49.18
4612 Repayment of securities and credits to non-residents
14,260,035.94 6,186,718.00 230.49
4621 Repayment of guarantees in the country 766,666.68 0
4622 Repayment of guarantees abroad 284,272.76 5,531,312.00 5.14
4630 Repayment of liabilities 40,581,259.74 26,645,789.00 152.3
4710 Current budgetary reserve 20,796,434.78 16,252,855.00 127.96
4720 Permanent budgetary reserve 6,407,999.53 846,903.00 756.64
TOTAL: 580,054,519.93 543,420,616.17 106.74
1 EXPENDITURES SHOWN BY SPENDING UNITS
Expenditures by spending units
Organisational unit
Name Realised in 2006
Planned in 2006
Non-realisation of the budget
Overrun of the plan (more)
class 1 2 3 4 For2<3
5 For 2>3
01 President of the Republic of Montenegro 307.708,57 312.508,01 4.799,44
02 Parliament of the Republic of Montenegro 3.980.537,27 4.023.218,76 42.681,49
03 Government of the Republic of Montenegro 3.350.535,02 4.989.94,47 1.639.459,45
04 Constitutional Court of the Republic of Montenegro 237.142,91 238.488,65 1.345,74
05 Montenegrin Academy of Science and Arts 669.971,94 681.884,63 11.912,69
06 Protocol of the Republic 145.263,40 148.953,20 3.689,80
07 Ministry of Finance 134.818.699,51 72.300.923,22 62.517.776,29
08 Ministry of Education and Science 87.443.462,67 88.601.786,15 1.158.323,48
09 Ministry of Labour and Social Welfare 45.051.907,57 45.379.019,59 327.112,02
10 Ministry of Internal Affairs 57.412.770,84 57.469.064,83 56.293,99
11 Ministry of Maritime Affairs, Transport and Telecommunications
10.207.310,86 10.256.190,46 48.879,60
12 Ministry of Agriculture, Forestry and Water Management
9.617.631,76 9.622.924,17 5.292,41
13 Ministry of Justice 843.553,48 884.648,68 41.095,20
14 Misdemeanour bodies 2.088.134,40 2.091.888,92 3.754,52
15 Office of Prosecutor 1.751.687,90 1.762.362,20 10.674,30
16 Judiciary 8.415.262,20 8.426.193,40 10.931,20
17 Ministry of Economy 2.670.138,09 2.712.220,45 42.082,36
18 Ministry of Tourism 2.046.210,49 2.061.899,95 15.689,46
1 Amount on account 4141 –current maintenance of public infrastructure in 2005 is shown based on realised
reclassification.
19 Ministry of Culture and Media 8.802.400,11 8.955.355,15 152.955,04
20 Ministry of Health 9.324.740,47 11.748.705,87 2.423.965,40
21 Ministry of foreign affairs 1.353.868,59 1.355.144,30 1.275,71
22 Agency for Anti-Corruption Initiative 72.637,88 73.551,06 913,18
23 Ministry of Economy-Market Inspection of the Republic
652.856,01 691.127,97 38.271,96
24 Ministry for Environmental Protection 3.243.165,73 3.871.152,76 627.987,03
25 Directorate for Sports and Youth 2.018.341,26 2.024.633,87 6.292,61
27 Ministry for Human and Minority Protection 389.478,14 428.083,97 38.605,83
28 Administration for Joint Services of the Republic Bodies
10.723.891,49 11.391.125,43 667.233,94
29 Directorate for Public Works 8.989.602,34 8.995.560,69 5.958,35
30 Tax Administration 6.024.304,09 6.138.156.95 113.852,86
31 Customs Administration 4.981.790,28 5.434.098,79 452.308,51
34 Secretariat for Legislation 187.415,82 226.436,80 39.020,98
35 Secretariat for Development 2.090.429,02 2.350.289,04 259.860,02
36 Directorate for development of small and medium-size enterprises
2.816.505,19 2.819.634,34 3.129,15
37 Real-Estates Directorate 3.713.028,67 4.188.389,46 475.360,79
38 Hydrological and Meteorological Service 994.206,85 1.027.529,06 33.322,21
39 Statistical Office of the Republic of Montenegro 1.224.488,15 1.300.310,74 75.822,59
40 ZAMTES 370.953,55 397.800,28 26.846,73
41 Montenegro Seismological Observatory 191.166,86 196.625,04 5.458,18
42 Agency for restructuring of economy and foreign investments
547.922,13 562.531,99 14.609,86
43 Commissariat for Refugees 110.379,97 133.757,84 23.377,87
44 State Archives of Montenegro 1.001.568,30 1.064.013,20 62.444,90
45 Institution for effectuation of criminal sanctions and notaries
4.412.434,35 5.505.010,73 1.092.576,38
47 Ministry of Defence 39.575.793,79 42.167.196,00 2.591.402,21
48 Pension and Disability Insurance Fund 54.564.918,61 54.564.918,61 0,00
49 Other beneficiaries of the budget 1.758.192,26 1.776.000,00 17.807,74
50 Ministry for foreign international relations 552.621,66 572.003,94 19.382,28
51 Education and Teacher Training Agency 891.610,46 945.414,77 53.804,31
52 State Auditors Institution 205.349,54 279.502,98 74.153,44
53 Protector of Human Rights and Freedoms 241.340,86 252.235,97 10.895,11
54 Administration for Prevention of Money Laundering 282.787,16 331.363,31 48.576,15
56 Commission for Conflict of Interest 141.681,72 166.011,50 24.329,78
57 Compensation Fund 2.028.990,91 2.028.990,91 0,00
58 Maritime Safety Department 854.295,49 872.108,52 17.813,03
59 National Tourism Organisation of Montenegro 712.469,51 753.256,82 40.787,31
60 Directorate for Animal Health 1.309.972,46 1.313.961,83 3.989,37
61 Human Resources Management Authority 293.744,41 298.849,26 5.104,85
62 Court of Serbia and Montenegro 118.056,22 236.258,82 118.102,60
63 Directorate for Forestry 2.261.000,00 2.261.000,00 0,00
64 Directorate for Water Management 654.090,33 785.161,94 131.071,61
66 Directorate for Traffic 15.443.869,89 15.530.110,28 86.240,39
67 Agency for National Safety 7.225.185,54 7.836.727,94 611.542,40
68 Tobacco Agency 73.044,98 77.916,78 4.871,80
69 Employment Agency 5.570.000,00 5.570.000,00 0,00
Total: 580.054.519,93 531.462.185,25 13.925.441,61 62.517.776,29
Net difference: 48.592.334,68
In presented expenditures, overruns were noticed in the Ministry of Finance to the
amount of 62.517.776,29 €.
Overruns mostly refer to payments of interests and capital sums based on debt of
the country and guarantees given by the county. Overruns based on expenditures were
realised in accordance with the Article 43 of the Budget Law, which gives the authority to
the Government of the Republic of Montenegro to illimitably pays from consolidated
account of the Treasury for liabilities based on interests, capital sums and guarantees
given by the country, in accordance with conditions and periods contracted by the
Government.
3.3.2.1. Gross salaries of employees
Expenditures based on gross salaries of employees were realised to the amount of
158.589.560,21 € or 98,24% of the plan. Net salaries, taxes and contributions for social
insurance participate with 27,34% in total expenditures in 2006 and are individually the
largest expenditure of the budget.
Taxes are determined in accordance with the Law on Personal Income Tax (“Official
gazette of the Republic of Montenegro, No. 65/01 and 12/02) and with the Decree on
Determining of the Amount which is Exempted from the Personal Income Tax (“Official
gazette of the Republic of Montenegro”, 63/02, 69/02, 04/04.) and depending of the
amount of the gross salary and determined scales on which a tax is calculated by rates of
0%, 15%, 19% and 21%. We mention that the Parliament of the Republic of Montenegro
has adopted on 26.12.2006, Law Amending and Supplementing the Law on Personal
Income Tax which introduced the unique tax rate of 9%, except for 2007 and 2008m
where the stipulated tax rate is 15%, and for 2009 it is 12%. Contributions are determined
in accordance with the Law on Contributions for Social Insurance (»Official gazette of the
Republic of Montenegro« No. 32/93, 03/94, 17/94, 42/94, 01/95,13/96, 45/98, 65/01,
54/03, 39/04 and 29/05) according to the following rates: Contributions for Pension and
Disability Insurance payable by employee 12% and payable by employer 9.60%,
contributions for health insurance payable by employee 7.50% and payable by employer
6.00%, and contribution for unemployment insurance payable by employee 0.5% and
payable by employer 0.5%.
OVERVIEW OF GROSS SALARIES WHEN COMPARED TO PLAN AND THEIR
SHARE IN EXPENDITURES
Structure of gross salaries Planned in 2006 Realised in 2006 Share in gross salaries (%)
Share in total expenditures (%)
Net salaries 92.524.399,83 91.942.290,18 57,97% 15,85%
Personal income tax 20.070.048,61 19.100.934,95 12,04% 3,29%
Contributions for social insurance 45.776.897,85 44.619.265,90 28,14% 7,69%
Tax surtax 3.054.124,93 2.927.069,18 1.85% 0.50%
Gross salaries of employees 161.425.471,22 158.589.560,21 100,00% 27,34%
OVERVIEW OF THE STRUCTURE OF GROSS SALARY
Structure of gross salaries Realised in 2006 Realised in 2005 Index 2006/2005 Net salaries 91.942,290,18 91.370.297,59 1.01
Personal income tax 19.100.934,95 17.815.288,45 1.07
Contributions for social insurance 44.619.265,90 44.147.132,28 1.01
Tax surtax 2.927.069,18 2.598.542,33 1.13
Gross salaries of employees 158.589.560,21 155.931.260,65 1.02
3.3.2.2. Current maintenance
Table overview of realisation of current maintenance when compared to plan
Description Plan 2006 Realisation 2006 Index realisation/plan
1 2 3 4 5=4/3
1 Current maintenance of public infrastructure 16.216.720,00 16.213.043,70 99,97
2 Current maintenance of buildings 1.713.404,40 1.601.721,45 91,91
3 Current maintenance of equipment 191.362,52 1.029.919,43 86,48
TOTAL 19.151.486,92 18.844.737,58 98,40
In 2006, payments from the budget amounted 18.844.737,58 €, which is 1,60% less
than planned amount. Biggest beneficiaries of these budgetary funds are: Public Roads
Directorate to the amount of 8.999.987,90 € and Ministry for Maritime Affairs,
Transportation and Telecommunication to the amount of 8.175.255,00 €. By programme
for maintenance of the railway infrastructure 7.200.000,00 € was spent. Record on
harmonised liabilities and realised payments for 2006 was signed between the Ministry of
Finance and Ministry of Maritime, Transportation and Telecommunication on 30.12.
2006.
Expenditures for interests Expenditures based on interests to residents and non-residents for 2006, were planned to the amount of 14.177.852,64 €, and realised to the
amount of 22.367.124,43 €, which is 57,76% higher than planned or for 8.189.271,79 €.
Expenditures based on interests are shown in the following table:
Economic
classification
Position Planned in 2006 Realised in
2005
Realised in 2006 Index
realised/planned
Index realised
2006/2005
Difference
realised/planned
1 2 3 4 5 8=(5/3)’100 9=(5/4)’100 10=(5-3)
4151 Interests to residents 100.000,00 3.533.728,83 3.052.726,47 3.052,73 86.39 2.952.726,47
4152 Interests to non-residents 14.077.852,64 17.081.225,29 19.314.397,96 137,20 113,07 5.236.545,32
TOTAL: 14.077.852,64 20.614.954,12 22.367.124,43 157,76 108,50 8.189.271,79
Interests to residents Expenditures based on interests to residents (domestic creditors) including bank commissions amount 3.052.726,47 € and are higher than planned expenditures on this ground for 2.952.726,47 €, while when compared to realised expenditures in 2005, they are lower for 481.002,36 €.
Structure of expenditures based on interest to residents is shown in the following table:
Description Amount Repayment of interests on credits 1.959.540,46
Repayment of interests on Treasury Bills 102.908,92
Repayment of interests for credits of the Health Insurance Fund of the Republic 16.499,98
Repayment of interest on guarantees in the country 30.657,54
Commission on repayments of credits given to residents 871.443,68
Commission of the bank (for other services) 71.675,89
Total: 3.052.726,47
Repayment of interests on credits In 2006 based on repayment of interests on credits it was paid 1.959.540,46 €:
X On programme on water supply of coastal municipalities and Municipality Cetinje to the amount of 115.258,74 €. X Payment of interests on contracts on ensuring of credit lines for support of the Programme “Legalisation of existing and opening of new jobs“. In 2006, based on subsidies of interests on credits for stated period was paid 334.023,40 €, to commercial
banks:
Montenegro banka 50.069,80
Podgorička banka 82.751,91
Atlasmont banka 59.396,91
Crnogorska komercijalna banka 141.804,78
Total: 334.023,40
X Repayment of interest by Protocol No. 06-905/1 from 12.05. 2006, on way of payment of debt which Government of the Republic of Montenegro owes to the Central Bank of Montenegro to the amount of 13.475.682,13 €. In 2006, based on this debt 1.250.990,25 € was paid based on interests. X Repayment of interest on taken credits to the amount of 257.947,24 € was realised in the way that enterprises ( Lipa-Cetinje, Obnova, GP „Crna Gora“ Nikšić, „Fidija“ Podgorica etc.), in order to collect their claims from the Directorate for Public Works, with approval of the Ministry of Finance, taken credits in business banks, and the Ministry of Finance has assumed the obligation for repayment of credits.. Repayment of interests on Treasury Bills In 2006, based on interests on Treasury bills 102.908,92 € was paid.
Repayment of interests on credits of the Health Insurance Fund of the Republic The Government of the Republic of Montenegro, at the Session held on 12. October 2006, upon request of the Health Insurance fund of the Republic, has adopted a Resolution No. 03-8394 which testifies that the Ministry of Finance assumes credit indebtedness of the Health Insurance Fund of the Republic by concluded contracts on short-term credits in commercial banks to the amount of 2.965.719,20 €.
Repayment of interests based on guarantees in the country In 2006, for interests on guarantees in the country it was paid 30.657,54 €. Interest refers to the credit
indebtedness, for given guarantees of the Government of the Republic of Montenegro,
Radio Television of Montenegro in business banks for rent of the satellite station and
satellite capacities for covering of the whole territory of Europe.
Commission of banks for payment of interests to residents - Expenditures based on paid commissions of banks and compensations, for interests to residents amounted
871.443,68 €:
Description Amount
Central Bank of the Republic of Montenegro 57.968,52
National Bank of Serbia 40.625,67
Montenegro banka 83.019,85
Podgoricka banka 667.336,30
Niksicka banka 2.428,71
Compensation to the Privatisation Council 1% of the sale of state 12.302,50
Unidentified amount 7.068,16
TOTAL 871.443,89
Interests to non-residents (to foreign creditors)- expenditures based on credit repayments to non-residents for 2006 were planned to the amount of 14.077.852,64 €.
Realised expenditures based on interests repayments to non-residents in 2006 amount
19.314.397,96 € and are higher than planned for 37,20% or for 5.236.545,32 €. These
expenditures are higher in 2006 when compared to 2005 for 2.233.172,67 € or for
13,07%.
In the following table an overview is given of expenditures based on interests to non-
residents.
Creditor Amount
European Investment Bank 1.515.616,48
International Finance Corporation 363.890,00
European Community 250.200,71
International Bank for Reconstruction and Development 12.323.597,75
Paris Club-members 4.072.478,47
AY Bank LTD London 94.866,60
Vovlo Truck Corporation Sweden 62.931,00
CEB- Council of Europe Bank 99.027,80
EBRD-European Bank for Reconstruction and Development 20.124,40
KfW- Credit bank for Reconstruction Germany 129.916,87
KfW- Credit bank for Reconstruction Germany 71.877,38
Commission and other expenditures of indebtedness 309.870,50
TOTAL: 19.314.397,96
Overview of expenditures based on commission and other expenditures of indebtedness is given in the following table:
Name of the Bank Amount
Commission to Narodna Banka Srbije 4.386,66
Commission to the Central Bank of the Republic of Montenegro 7.249,21
Costs for servicing of loans by IDA conditions 268.688,97
Commission for Electric Power Industry (0.25%) 4.475,00
Commission for Monte broker 1.419,19
Commission for credit from KfW (0.25%) 13.636,34
Commission for credit from EBRD 4.515,13
Commission on resolution 5.500,00
TOTAL: 309.870,50
Expenditures for loans and credits, repayments of credits and repayments of guarantees
Expenditures for loans and credits, repayment of credits and repayments of guarantees
in 2006 amounted 57.086.478,96 € and are higher than the planned amount for 230%. When compared to 2005 they are lower for 44,81% or 46.357.679,44 €.
Economic classification
Position Planned for 2006
Realised in 2005
Realised in 2006
Index realised/ planned
Index realised 2006/2005
Difference realised/ planned
4511 Loans and credits to non finance institutions
3.500.000,00 3.379.999,26 3.491.000,00 99,74 103,28 (9.000,00)
4611 Repayment of securities and credits to residents
4.750.000,00 88.346.129,52 38.284.503,58 805,99 43,33
4612 Repayment of securities and credits to non-residents
7.033.100,00 5.531.311,62 14.260.035,94 202,76 257,81 33.534.503,58
4621 Repayment of guarantees in country
1.000.000,00 6.186.718,00 76.666,68 76,67 12.39 7.226.935,94
4622 Repayment of guarantees abroad
1.000.000,00 284.272,76 28,43 (233.333,32)
TOTAL: 17.283.100,00 103.444.158,40 57.086.478,96 330,30 55,19 39.803.378,96
In the following table an overview of credits and loans given to non-financial institutions in
2006 to the amount of 3.491.000,00 €.
Description Amount
Obod Cetinje 2.606.400,00
Coal Mine “Ivangrad” Berane 107.500,00
“Radoje Dakic” Podgorica 155.000,00
Corporation “Velimir Jakic” Pljevlja 150.000,00
Printing office “Obod” Cetinje 10.000,00
“Imako” Bijelo Polje 60.000,00
Regional water-supply “Crnogorsko Primorje” 33.303,15
AD”Staklenici” Podgorica 50.000,00
“Nova Beranka” Berane 200.000,00
“19. Decembar” Podgorica 48.796,85
“Montena Modern Shoes” 70.000,00
Total: 3.491.000,00
To the enterprise “Obod” Cetinje in 2006 credits were given to the amount of
2.606.400,00 € (based on several contracts). Credits were granted as short-term loans
for overcoming of business problems, with time of repayment of six months from the day
of transfer of funds and with calculation of interests by comfort method with rate of 4%
annually. Given loans and credits to other enterprises were granted based on programme
of restructuring of enterprises, with repayment period until the end of bankruptcy
procedure without calculated interest.
Repayment of securities and credits given to residents Expenditures for repayment of securities and credits and (call in arrears) in 2006, amounted
38.284.503,58 € and are higher than planned for 705,99% or for 33.534.503,50 €.
Structure of repayment of securities and credits to residents is given in the following
table:
DESCRIPTION Amount
Repayment of capital sum on credits 13.398.448,60
Repayment of capital sum on Treasury Bills 4.663.137,41
Payment of social aid and call in arrears 13.105.156,41
Decisions of the cabinet of the Government of the Republic of Montenegro 674.000,00
Repayments on assumed debts 2.716.787,07
Given credits 755.273,90
Repayment of capital sum for credits of the Health Insurance fund of the Republic 2.970.700,19
TOTAL 38.284.503,58
In the Draft Law on Annual Financial Statement of the Budget of the Republic of
Montenegro for 2006, on position 4611- Repayment of securities and credits to residents
the amount of 24.086.770,22 € is shown. Difference between the ledger of the Treasury
and Draft Law on Annual Financial Statement amounts 14.197.733,36 €. However,
liabilities from previous years, position 4630, in the ledger of the Treasury are shown to
the amount of 40.581.259,74 €, and in the Draft of Annual Financial Statement
54.778.993,10 €, which means that the difference to the amount of 14.197.733,36 €
corresponds the difference on the account 4611 –Repayment of securities and credits to
residents.
Repayment of securities on Treasury Bills on the base of repayment of capital
sum on Treasury Bills 4.663.137,41 € was paid.
DESCRIPTION AMOUNT
Repayment of capital sum on 182-day Treasury Bills 2.180.545,11
Repayment of capital sum on 91-day Treasury Bills 1.485.140,73
Repayment of capital sum on 56-day Treasury Bills 997.451,57
TOTAL 4.663.137,41
Account of debt on the base of Treasury Bills on 31.12.2006 amounted
3.300.000,00 €, with maturity period as shown in the following table:
Maturity period Issuance of Treasury Bills Amount
09.01.2007 182-day Treasury Bills 1.300.000,00
22.02.2007 182-day Treasury Bills 500.000,00
05.04.2007 182-day Treasury Bills 200.000,00
22.05.2007 182-day Treasury Bills 800.000,00
22.05.2007 91-day Treasury Bills 500.000,00
TTOTAL 3.300.000,00
Payment of social aid and outstanding allowances From the position of
repayment of securities and credits to residents, based on the Decision of the
Government from the Session held on 06.10. 2005, social compensations were paid to
the amount of 8.048.692,78 €. Payment of compensations refers to outstanding
compensations from 2005. In the following table an overview was given of paid social
allowances by types of compensations.
OPIS AMOUNT
Financial securing of family 1.529.938,20
Child allowance 749.525,00
Maternity leave 2.498.221,58
Social care 731.140,00
Personal disability allowance 127.285,50
Unemployed persons in the Employment Agency 1.403.681,98
Trainees in the Employment Agency 759.017,40
MOB-financial ensuring of soldiers 250.880,12
TOTAL 8.048.692,78
From the position of repayment of securities and credits to residents, based on the
Decision of the Government from the Session held on 06.10.2005, call in arrears were
paid to the Ministry of Internal Affairs to the amount of 5.056.463,63 €. Call in arrears
refer to calculated compensations based on additional night, overtime work and work in
days of state or religious holidays of employees in the Ministry of Internal Affairs from
2001 until 2005. Also, from this position the expenditures were paid for credits given to
non-financial institutions to the amount of 755.273,90 €.
Repayment of capital sum for credits of the Health insurance Fund of the Republic- The Government of the Republic of Montenegro, at the Session held on 12.
October 2006, upon request of the Health Insurance Fund of the Republic, has passed a
Resolution No. 03-8394 with which the Ministry of Finance assumes the credit
indebtedness of the Health Insurance Fund of the Republic based on signed contracts
on short-term credits in commercial banks to the amount of 2.965.719,20 €. On stated
Resolution of the Government the amount of 2.970.700,19 € was paid.
Repayment of securities and credits to non-residents- Expenditures based on repayment of securities and credits to non-residents (payments on foreign credits) in
2006 were planned to the amount of 7.033.100,00 €. Their share in total budgetary
expenditures is 2,46%. Realised expenditures based on repayment of foreign debt in
2006 amounted 14.260.035,94 € and are 102,76% higher than planned or 7.226.935,94
€ higher than planned. These expenditures are higher in 2006 than in 2005 for
8.728.724,32 € or for 157,81%.
Overview of credit repayment to non-residents is given in the following table:
CREDITOR AMOUNT
Volvo Truck Corporation 618.347,00
IFC- International Finance Corporation 423.523,43
Bank Handlowy Warszawie 743.452,55
IBRD- International Bank for Reconstruction and Development 6.101.526,86
AY Bank LTD London 392.383,92
CEB- Council of Europe Bank 484.042,34
Paris Club- Members 172.997,13
EBRD- European Bank for Reconstruction and Development 1.393.679,42
Fiesta Investments LTD 1.145.805,00
Export Bank Czech Republic 2.500.000,00
KfW- Credit Bank for Reconstruction Germany 284.278,29
TOTAL: 14.260.035,94
Repayment of guarantees in the country – In 2006, based on expenditures for repayment of guarantees in the country 766.666,68 € was paid. These expenditures refer
to granted guarantees of the Government for credit indebtedness of the Radio Television of Montenegro in business bank, for rent of satellite station and satellite capacities for covering of the whole area of Europe.
Repayment of guarantees abroad – Funds approved for Project on Improvement
of the Water supply of the Montenegrin Coast and Cetinje contract No.9259 from
23.02.2001, concluded between the Credit Bank for Reconstruction KfW and public
enterprise for water-supply “Crnogorsko primorje“ to the amount of 10.000.000,00 DEM,
or 5.112.918,81 € (with course 1,95583). Credit is being repaid from 30.06.2004. until
31.12.2012. In 2006, two instalments were paid to the amount of 284.272,76 €.
Given guarantees and counter-guarantees for foreign credits in 2006, published in Official gazette of the Republic of Montenegro and are shown in the following
overview:
Ordinal number
Creditor Loan amount in mill. EUR
Project Published in Official gazette of RoM
1 Government of the Republic of France
8,47 Reconstruction and expending of the electric power network in Montenegro
39/06
2 European Investment Bank 9,00 Project on rehabilitation of roads and bridges in Montenegro
10th June
3 German Bank for Reconstruction 10,00 Project on Water supply and liquid waste disposal in the Coastal area- phase II
22nd June
4 European Community 2,50 Given counter-guarantees to Serbia and Montenegro
39/06
5 European Investment Bank 5,00 Project A- water and sewerage in Montenegro
39/06
6 Austrian credit 4,10 Project on procurement of equipment for Clinical Centre and other health institutions
26th June
3.3.2.3. Transfers to institutions, individuals, non-government and public sector
Funds for these purposes in 2006, were paid to the amount of 119.770.351,13 € or
when compared to the plan- they are lower for 1% and in the absolute amount of
732.875,49 €.
In the following table an overview of paid transfers, and share in total expenditures
in the budget for 2006 is given
Transfers from the Budget Amount Share in expenditures
for transfers
Share in total
expenditures in the
Budget %
Transfers to public institutions 24.580.394,89 20,52% 4,24%
Transfers to NGO, political parties, parties and
associations
3.090.350,24 2,58% 0,53%
Transfers to individuals 11.849.494,54% 9,89% 2,04%
Transfer to the Pension and Disability
Insurance Fund
66.018.170,80 55,12% 11,38%
Transfer to the Health Insurance Fund of the
Republic
6.935.000,00 5,79% 1,20%
Transfer to the Employment Agency of
Montenegro
5.570.000,00 4,65% 0,96%
Transfers to municipalities 1.726.940,66 1,44% 0,30%
TOTAL 119.770.351,13 100,00% 20,65%
.
Beside the Pension and Disability Fund of the Republic, Health Insurance Fund of
the Republic and Employment Agency, beneficiaries of budgetary transfers are also
public institutions and bodies, and among them the largest beneficiaries are University of
Montenegro10.999.999,96 €, Ministry of Education and Science- Centre for Vocational
training 3.036.267,49 €, Ministry of Defence 2.759.019,69 €, Directorate for Forests
2.261.000,00 € and Compensation Fund 2.028.990,91€.
In the procedure of audit State Auditors Institution has requested confirmation for
paid transfers to the Pension and Disability Insurance Fund of the Republic, Health
Insurance Fund of the Republic and Employment Agency. Based on received
confirmations it was stated that paid funds based on transfers correspond to records kept
in the Budget, except for the Health Insurance Fund of the Republic, which shown
discrepancy of 93.993.35 €. Discrepancy refers to the paid equipment for protection from
the possible bird flu epidemic which was paid based on request for payment of the
Ministry of Health, and accordance was not given by the Health Insurance Fund.
3.3.2.4. Capital expenditures
Capital expenditures were realised to the total amount of 31.625.081,20 € which is
11.25% less than the planned amount, or in absolute amount for 4.008.997,11 €. In the
following table, and overview of the structure of capital expenditures is given.
Capital expenditures Realised in 2006 Share in capital expenditures
Share in total expenditures of the Budget %
Costs for infrastructure of common interest 7.094.330,46 22,43% 1,22%
Costs for local infrastructure 4.319.222,0 13,66% 0,74%
Expenditures for buildings 8.998.202,17 28,45% 1,55%
Costs for equipment 4.780.835,14 15,12% 0,82%
Expenditures for investment maintenance 5.942.489,98 18,79% 1,02%
Expenditures for stocks 490.001,45 1,55% 0,08%
Total: 31.625.081,20 100,00% 5,45%
Izdaci za opremu- costs for equipment; izdaci za investiciono odrzavanje-costs for investment maintenance; izdaci za zalihe-expenditures for stocks; izdaci za infrastrukturu od opsteg znacaja-costs for infrastructure of common interest; izdaci za lokalnu infrastrukturu-costs for local infrastructure; izdaci za gradjevinske objekte- expenditures for buildings
It was established with the control that on the account of capital expenditures of the
Ministry of Maritime Affairs, Transportation and Telecommunication expenditure was
booked on 26.12.2006 to the amount of 197.055,76 € and 94.032,15 €, and which
represents payment for deposit in the Crnogorska Komercijalna Banka, for securing of
funds for procurement of equipment. Transferred funds to the business bank by the
Ministry of Maritime Affairs, Transportation and Telecommunication should be used for
payments to suppliers the latest by 31.12.2006. Not paying of undertakings until 31.12. of
current year defies the Article 36 of the Budget Law, which stipulates that the allocated
funds to spending units can be used until 31st December of fiscal year, an the Article 45
of Guidelines for the Work of State Treasury which regulates that the proposal for
spending which leads to the direct spending of state funds, is previously filed as
undertaking from available budgetary funds. Because of this, it is necessary for Ministry
of Finance – State Treasury in case of forming of deposits, which should already be filed
as expenditure, to prolong the fiscal year and effectuate authorised payments.
Overview of capital expenditures by spending units is given in the following table:
Capital expenditures Name of the spending unit
Planned Realised
Individual share in realisation in %
Parliament of the Republic of Montenegro 120,000.00 119,812.80 0.38%
Government of the Republic of Montenegro 923,328.08 22,085.24 0.07%
Constitutional Court 2,000.00 2,000.00 0.01%
Montenegrin Academy of Science and Arts 28,000.00 27,994.39 0.09%
Protocol of the Republic 4,000.00 3,994.14 0.01%
Ministry of Finance 72,000.00 63,956.22 0.20%
Ministry of Education and Science 1,566,992.00 1,564,078.60 4.95%
Ministry of Labour and Social Welfare 500,000.00 498,499.70 1.58%
Ministry of Internal Affairs 2,317,640.00 2,317,487.20 7.33%
Ministry of Maritime Affairs, Transportation and Telecommunication
1,200,000.00 1,199,989.00 3.79%
Ministry of Agriculture, Forestry and Water Management
1,522,000.00 1,522,000.00 4.81%
Ministry of Justice 38,600.00 38,491.66 0.12%
Misdemeanour bodies 11,000.00 11,000.00 0.03%
Office of the Prosecutor 15,000.00 15,000.00 0.05%
Judiciary 100,000.00 99,920.40 0.32%
Ministry of Economy 342,000.00 322,359.43 1.02%
Ministry of Tourism 20,000.00 20,000.00 0.06%
Ministry of Culture and Media 554,948.66 553,083.83 1.75%
Ministry of Health 1,669,426.57 497,731.46 1.57%
Ministry of Foreign Affairs 10,000.00 9,999.48 0.03%
Ministry of Economy- Market Inspection of the Republic
40,000.00 40,000.00 0.13%
Ministry of Environmental Protection 149,222.00 141,345.23 0.45%
Ministry for Human and Minority Rights 16,300.00 15,478.70 0.05%
Administration for Joint Services of the Republic Bodies
3,968,000.00 3,829,235.74 12.11%
Directorate for Public Works 7,780,000.00 7,779,999.60 24.60%
Tax Administration 40,896.00 40,226.91 0.13%
Customs Administration 379,125.00 193,718.52 0.61%
Secretariat for Legislation 10,000.00 9,553.15 0.03%
Secretariat for Development 510,000.00 474,436.05 1.50%
Real-Estate Administration 779,000.00 749,779.17 2.37%
Hydrological and Meteorological Service 170,000.00 167,936.90 0.53%
Statistical Office of the Republic of Montenegro 90,000.00 80,474.96 0.25%
ZAMTES 23,750.00 3,884.76 0.01%
Montenegro Seismological Observatory 20,650.00 20,595.14 0.07%
Commissariat for Refugees 2,400.00 1,378.32 0.00%
State Archives of Montenegro 50,000.00 39,719.63 0.13%
Institution for effectuation of criminal sanctions and notaries
1,719,000.00 698,604.69 2.21%
Ministry of Defence 561,000.00 374,697.43 1.18%
Ministry of International Economic Relations 11,040.00 10,320.53 0.03%
Education and Teacher Training Agency 5,000.00 4,998.08 0.02%
Protector of Human Rights and Freedoms 2,850.00 2,577.40 0.01%
Administration for Prevention of Money Laundering 22,010.00 22,009.28 0.07%
Commission for Conflict of Interest 25,000.00 24,720.06 0.08%
Maritime Safety Department 218,000.00 218,000.00 0.69%
The Human Resources Management Authority 50,000.00 50,000.00 0.16%
Court of Serbia and Montenegro 5,000.00 4,100.00 0.01%
State Directorate for Water Management 739,000.00 612,392.65 1.94%
Directorate for Traffic 6,200,000.00 6,194,710.67 19.59%
Agency for National Safety 1,030,000.00 910,704.09 2.88%
TOTAL: 35,634,078.31 31,625,081.20 100.00%
3.3.2.5 Permanent and current budgetary reserves
Ministry of Finance in sense of the Article 13 of the Law on Budget of the Republic
of Montenegro for 2006 («Official gazette of the Republic of Montenegro» No. 77/05 and
70/06) with previous approval of the Government, decides on usage of funds of
permanent and current budgetary reserve which are planned for financing of emergent,
unplanned and insufficiently planned expenditures of budget beneficiaries during the
year.
Pursuant to the Article 13 of the Law on Budget of the Republic of Montenegro for
2006, funds of the current budgetary reserve were planned for following purposes:
1 Meal allowance to the amount of .......................................5.829.129,13 € 2 Funds for needs of Judiciary…................................................700.885,00 € 3 Funds for needs of Office of prosecutor...................................489.000,00 € 4 Funds for needs of misdemeanour bodies….................................192.000,00 €
5 Funds for needs of Constitutional Court.......................................20.000,00 € 6 Funds for payment of union membership fees, funds of solidarity and for emergent and unplanned expenditures................................12.059.318,44€
Usage of funds of permanent and current reserves
Difference between planned and realised budgetary reserve:
Name Plan 2006 Realised 2006 Difference from the plan
%
1 2 3 4=2-3 5=4/2
Current budgetary reserve 22.779.308,40 20.796.434,78 -1.982.873,62 -870
Permanent budgetary reserve 6.452.954,12 6.407.999,53 -44.954,59 -0,70
Total budgetary reserves 29.232.262,52 27.204.424,31 2.027.878,21 -6,94
Planned funds of current budgetary reserve fro 2006 amounted 22.779308,40 €. They were used to the amount of 20.796.434,78 €, which is 1.982.873,62€ less than planned or for 8,70%.
In the following table an overview of realised expenditures of current and permanent
budgetary reserves in 2005 and 2006 are given in€
Name Realised 2005 Realised 2006 Difference (3-2) %=4/2
1 2 3 4 5
Current budgetary reserve 16.252.855,28 20.796.434,78 4.543.579,50 27,96
Permanent budgetary reserve 846.902,70 6.407.999,53 5.561.096,93 656,64
Total budgetary reserves 17.099.757,98 27.204.424,31 10.104.676,33 59,09
Funds of current budgetary reserve were spent for following purposes:
Ordinal number Description Amount
1 Medical treatment 1.580.149,50
2 Improvement of the financial situation 1.692.380,00
3 Education 490.795,00
4 Legal persons 2.085.472,45
5 Governmental bodies 13.520.935,31
6 Other 1.426.702,52
TOTAL 20.796.434,78
Funds of current budgetary reserve for needs of governmental bodies to the amount of 13.520.935,31 € refer to payments based on missing funds for:
1 Meal allowance to the amount of.............................................2.217.383,50 €, 2 Recourse to the amount of.................................................... 2.293.639,89 €, 3 Missing funds for work of governmental bodies to the amount of 8.915.906,32 €, used by the following Governmental bodies: President of the Republic of Montenegro 130.700,73 €
Parliament of the Republic of Montenegro 679.645,52 €
Government of the Republic of Montenegro 914.463,20 €
Constitutional Court 24.445,22 €
Montenegrin Academy of Science and Arts 12.491,84 €
Ministry of Education 1.695.906,97 €
Misdemeanour bodies 177.436,35 €
Office of Prosecutor 377.385,35 €
Judiciary 1.087.754,93 €
Ministry of Economy 278.332,42 €
Ministry of Tourism 390.562,58 €
Ministry of Culture 406.856,31 €
Ministry of Health 439.620,43 €
Ministry of Foreign Affairs 1.220.499,15 €
Secretariat for Sports 45.000,00 €
Department for Public Revenues 16.000,00 €
Ministry of Finance 111.600,00 €
Tax Administration 41.104,00 €
Secretariat for Development 514.897,77 €
Statistical Office of the Republic of Montenegro 21.986,48 €
Ministry for Economic International Relations 39.646,88 €
Human Resources Management Authority 43.116,32 €
State Directorate for Water Management 121.889,81 €
Agency for National Safety 58.522,50 €
Other Governmental bodies 73.041,56 €
Permanent budgetary reserve
Permanent budgetary reserve were planned for 2006 to the amount of 6.452.954,12 €
and were used to the amount of 6.407.999,53 € or less than planned for 44.954,59 € or
0,70%.
Funds of permanent budgetary reserve in 2006 were spent for financing of planned
activities, such as:
Ordinal number Purpose of funds Amount % of share
1 Referendum 4.097.022,00 63,94
2 Parliamentary elections 2.310.779,53 36,06
TOTAL 6.407.999,53 100,00
Based on performed control, using the method of random sample, State Auditors
Institution has determined that payments of funds of permanent budgetary reserve in
2006 were performed based on Resolutions of the Republic of Government of
Montenegro.
It was observed during the audit of current budgetary reserve that the part of current
reserve had been used for balancing of the range and structure of expenditures which
exceeded the planned limit. Although it was legally provided possibility, we find the usage
of current budgetary reserve for stated purposes opposing the basic purpose of usage of
reserves. We think that this way of usage of current budgetary reserve creates possibility
for usage of funds of current reserves for covering of overrun of the budget. In that sense
it is necessary to limit the usage of current reserves and to adjust the planning with real
needs of spending units.
3.3.2.6. Cash payment
In 2006, from the Main account of the Treasury cash was paid for spending units to
the amount of 8.458.719,29 €. The highest among of cash payments refers to payments
of costs for business trips 2.588.220,48 € or 30,60%, contract services 1.336.239,51 € or
15,80%, costs for material to the amount of 894.894,49 € or 10.57% and salaries to
employees to the amount of 415.918,93 € or 4,92%.
Procedure regarding cash payments from the State Treasury are regulated in
Articles 318 to 341 of Guidelines for Work of the State Treasury (»Official gazette of the
Republic of Montenegro« No. 64/01) and Decree on compensations and other income of
Civil Servants and State Employees (»Official gazette of the Republic of Montenegro«
24/05,42/05 and 79/06).
In the Ministry of Finance- State Treasury it is necessary to improve the control of
claims for cash payments, because the officer for authorisation in the State Treasury
pursuant the Article 64 has the right and is obliged to demand from spending unit to
provide the supporting documentation, related to the claim for payment, which verifies the
credibility of the submitted claim. In the Ministry of Finance, registry is not being kept
accurately in which the data are kept on issued and their authorised advance deposits.
Claims for budgetary spending and payment in the Ministry of Finance- State Treasury
are being signed by only one person- officer of the Treasury for authorisation. However,
in the form which is integral part of the Guidelines for Work of the Treasury it is stipulated
that the claim for budgetary spending and payment are signed by two persons: officer of
the Treasury for authorisation and officer of Treasury for payment. Minister of Finance
pursuant the Article 14, of the Guidelines for Work of the State Treasury should appoint
officer for authorisation, who is, in sense of the Article 63 of the stated Guidelines, to
check if the claim for payment is regularly filled in, certified and approved by the
authorised officers for finance in the spending unit, if the claim for payment is recorded in
the ledger of the Treasury, of there are sufficient allocated funds for relevant budget item,
which are available for the spending unit for realisation of payments and if there is
enough money at the state bank account for realisation of the payment. It was
determined with the control that in some cases officers in spending units, which have
taken special cash advance payment do not authorise un accordance with the Article 333
of the Guidelines for Work of the State Treasury and Article 10 of the Decree on
Compensations and Other Income of Civil Servants and State Employees within 3 days
by notes, invoices, receipts or other credible documentation.
3.3.2.7. State property
Pursuant the Article 20 of the Law on Property of the Republic of Montenegro
(«Official gazette of the Republic of Montenegro» No. 44/99), governmental bodies, units
of local self-government and organisations which perform public service and use public
property are obliged to keep records on account and movement of that property in
accordance with the Law. Contents and way of keeping records on state property
stipulates the Government (Article 20, paragraph 2 of the Law). Article 23 of the Law
stipulates the obligation of the Government, i.e. of the competent body of the unit of the
local self-government, to submit the report on condition of the state property which it
uses, along with the annual financial statement of the budget. Article 54, paragraph 1
item 15 of the Budget law stipulates the obligation of the Ministry of Finance- State
Treasury to keep records on state property. Keeping of records on state property is not
additionally regulated by bylaws and there are no adequate records on non-financial
property and reporting system.
4. FINDINGS AND RECOMMENDATIONS
4.1. By comparison of data shown in annual financial reports and data shown in the
ledger of the Treasury, it is determined that correspondence was realised between total
expenditures which were realised in spending units and expenditures which are booked
in the ledger of the Ministry of Finance- State Treasury. However, the control has
determined that the structure of expenses which is presented in some spending units
does not correspond to the planned budgetary spending.
It is necessary for spending units, which have made payments that do not correspond to shown purposes, to increase in the following period fiscal discipline and to intendedly use planned funds, with increase of efficiency by way of preventive and internal control of the Ministry of Finance.
4.2. The audit procedure shown that financial reports of the Budget of the Republic for
2006 were not drafted in accordance with the Rule Book on way of preparation, drafting
and submitting of annual financial reports and statements of the budget, extra-budgetary
funds and units of local self-government.
Pursuant the Rule Book, it is necessary to draft financial reports of the Budget of the
Republic in stipulated forms:
1 Report on cash flows I- economic classification, 2 Report on cash flows II- functional classification 3 Report on consolidated public spending 4 Report on call in arrears
4.3. Surplus in the Annual financial statement of the Budget of the Republic of
Montenegro for 2006 is shown, according to interpretation of the Ministry of Finance, in
accordance with recommendations of the International Monetary Fund.
Cash deficit or surplus needs to be determined in accordance with the Budget Law and
stipulated methodology in the Rule Book on way of preparation, drafting and submitting
of annual financial reports and statements of the budget, extra-budgetary funds and units
of the local self-government.
4.4. It was determined with the audit that the Tax Administration did nod make Annual tax
financial statement in accordance with applicable regulations.
Tax Administration is to make annual tax financial statement after the end of fiscal year,
on stipulated form and to submit it to the Ministry of Finance in the statutory term until
31st March, pursuant the Rule Book on Tax Book-keeping.
4.5. It was determined with the audit that a mistake has been made during the year in
correct book-keeping of some budgetary items, which resulted at the end of the fiscal
year with discrepancies between these items- accounts which were booked in the ledger
of the Treasury and statement shown in the Draft of annual financial statement of the
Budget of the Republic for 2006.
It is necessary that the bookings in the ledger of the Treasury during the year are performed in accordance with the Rule Book on unique classification of the statements for Budget of the Republic, budgets of extra-budgetary funds and budgets of municipalities
4.6. It was determined with the audit (in one case) that with bookings of payments of
transfers to the Health Insurance Fund of the Republic, payment burdening Fund was
entered, for which the Fund did not give its accordance, but the claim for payment was
given from the competent ministry.
It is necessary for the payments of transfers to be approved only with accordance of the end user, in this case it is the Health Insurance Fund.
4.7. Officer for authorisation in the Ministry of Finance- State Treasury pursuant the
Article 64, should use the right to provide from spending units following documentation,
related to the claim for payment, which will support the credibility of the submitted claim.
In the Ministry of Finance registry, in which the data on issued and authorised advance
payments are recorded, is not being accurately kept.
It is necessary that the Ministry of Finance- State Treasury applies in total regulations
stipulated by the Guidelines for Work of the State Treasury, and to have the claim with
budgetary spending and payment signed by two officers of the Treasury for authorisation
and for payment.
It was determined with the control that in some cases, officers which have taken the
special cash advance payment do not authorise un accordance with the Article 333 of the
Guidelines for Work of the State Treasury and Article 10 of the Decree on
Compensations and Other Income of Civil Servants and State Employees.
It is necessary to congruously apply the Guidelines for Work of the State Treasury and
the Decree on Compensations and Other Income of Civil Servants and State Employees
regarding the payment of special advance payments, and authorisation of the taken
advance payments.
4.8. It is necessary to re-examine causes of non-execution of the plan of donations and in
accordance with that to re-examine the structure and relation with donors.
4.9. It is necessary to make the sample analysis of the cause for non-execution of the
plan for collection of profit tax and its reduction in the share in total receipts in 2006, and
for non-execution of plan for excises in production.
4.10. It was determined with the control that, on the account capital expenditures in the
Ministry of Maritime Affairs, Transportation and Telecommunication on 26.12.2006,
expenditure was entered to the amount of 197.055,76 € and 94.032,15 €, and which
represents payment for deposit in Crnogorska komercijalna banka, for securing of funds
for procurement of equipment. Transfer of funs into business bank for securing following
payments is contrary to the Article 36 of the Budget Law, which stipulates that the funds
allocated to spending units can be used until 31st December of the fiscal year, and to the
Article 45 of the Guidelines for Work of the State Treasury, which regulates that proposal
for spending which leads to the direct spending of the money of the Republic, has to be
previously recorded as the contracted liability from available budgetary funds.
It is necessary for the Ministry of Finance- State Treasury to prolong the fiscal year and to realise the earmarked payments in case of forming of deposits which have already been recorded as expenditures, and are not justified based on contracted liabilities by the end of the fiscal year. If the Ministry if Finance-State Treasury does not provide realisation of funds in the prolonged fiscal year, than for the amount of reserved funds expenditures will be cancelled, and the deposit will be increased.
4.11. During the audit procedure it was determined that there are no bylaws on way of
keeping records on state property, and adequate records of non-financial property and
the reporting system.
It is necessary for the Article 20 of the Law on the Property of the Republic of Montenegro to adopt bylaws which are in accordance with the International Accounting Standards for public sector, which refer to establishment of adequate records of non-material property and providing of adequate reporting system.
5. OPINION
Audit of the Annual financial statement of the Budget of the Republic of Montenegro
for 2006, was performed by the State auditors from the State Auditors Institution, in
accordance with the Law on State Auditors Institution and International Accounting
Standards (INTOSAI). Audit of regularity of the Annual financial statement reflects in the
evaluation whether the amounts given in the Annual financial statement of the Budget of
the Republic of Montenegro correspond to the amounts stated in the records and
whether the controlled revenues and expenditures are regularly documented.
The audit was performed by the method of random sample, which is used for confirmation of amounts and information in the Annual financial statement of the Budget of the Republic of Montenegro for 2006, and for evaluation of applied accounting principles- International Accounting Standards for Public Sector, harmonisation with legislation and publishing of information in the Annual financial statement of the Budget of the Republic of Montenegro for 2006. We believe that the audit which we have performed provides reasonable base for our opinion.
According to the opinion of the State Auditors Institution, Annual financial statement of the Budget of the Republic of Montenegro for 2006, by significant material aspects gives truthful and objective preview of shown receipts and expenditures on the cash base. Furthermore, there are no materially significant deviations in application of applicable regulations, and we have pointed to these deviations, irregularities and mistakes through analysis and recommendations of the State Auditors Institution. The audit has disclosed a part of data which were not mentioned in comments of the Annual financial statement of the Budget of the Republic of Montenegro for 2006, which provided significant adequate range and quality of information on all relevant and materially relevant segments related to spending of budgetary funds of the Republic of Montenegro.
3. STATEMENTS FROM INDIVIDUAL AUDITS 1. STATEMENT FROM THE REPORTS ON AUDIT OF FINANCIAL STATEMENT OF THE
HEALTH INSURANCE FUND OF THE REPUBLIC FOR 2006 Lawful cause for performance of the audit- Pursuant the Article 4 of the Law on State Auditors
Institution2 and Decision of the Board of Directors on audit of financial reports of the
Health Insurance Fund of the Republic3, audit was performed of Financial
Statements of the Health Insurance Fund of the Republic for 2006. Audit was performed in accordance with the Law on State Auditors Institution, Guidelines for Work of State Auditors Institution4, Rule
Book of the State Auditors Institution5 and International Auditing Standards
for Public Sector (INTOSAI).
Objective of the audit – Objective of the audit in financial reports of the Health Insurance fund of
the Republic on 31.12.2006, is the audit of harmonisation of operations of
the Fund with laws and other regulations whose application significantly
reflects to the financial reports. Main objective of the audit refers to the
substantiality of financial reports in the accounting period in the part of
truthfulness, objectivity and harmonisation with valid accounting standards
and principles, and of harmonisation of operations of the Fund with the Law
on Health Insurance6, Law on Health Protection7 and Law on Public Procurement8. Objective of audit is observed as: 1. Regularity of financial reports 2. Regularity of operations.
2 Official gazette of the Republic of Montenegro, No.28/04 from 29.04.2004 3 SRI-SR 123 No.: 01-35 from 14. September 2006 4 Official gazette of the Republic of Montenegro, No.2/05 from 18.01.2005 5 Official gazette of the Republic of Montenegro, No.2/05 from 18.01.2005 6 Official gazette of the Republic of Montenegro, No.39/04 from 09.04.2004; 23/05 from 12.05.2005; 29/05 from 09.05.2005 7 Official gazette of the Republic of Montenegro, No.39/04 from the 09.04.2004 8 Official gazette of the Republic of Montenegro, No.
Final objective of the audit is presenting of opinion on truthfulness and credibility of financial reports of the Health Insurance Fund of the Republic for health insurance and regularities (lawfulness) of realisation of the Financial plan for 2006.
Subject of the audit – Subject of audit are Financial reports of the Health Insurance Fund of the
Republic for health insurance for 2006. Pursuant the Rule Book on way of preparation, drafting and submitting of annual financial reports and statements of the budget, extra-budgetary funds and units of local self-government9, Health Insurance Fund of the Republic is obliged to submit to the Ministry of Finance the annual financial reports on forms 1,2,4,5 and these are: 1. Report on cash flows I- economic classification. 2. Report on cash flows II- functional classification. 3. Report on call in arrears. 4. Report on consolidated public spending.
Planning of the audit- Audit was planned and performed in accordance with International
Auditing Standards (INTOSAI). In accordance with the standards the audit was planned and performed in a way which allows us to ensure that financial reports do not encompass wrong, materially significant assertions. Audit includes examining of arguments based on checking of samples which are used for confirmation of amounts and positions published in financial reports. Audit also includes evaluation of applied financial principles, of evaluations which were made by the management, and estimation of presented financial reports, which gives the audit presenting reasonable base for expressing opinion.
1. Activities of the Health Insurance Fund of the Republic
Health Insurance Fund of the Republic of Montenegro (hereinafter: the Fund) is
the organisation which performs public authorisations in the sphere of rights and
obligations from health protection and health insurance. Fund acts as legal person, with
rights, obligations and responsibilities determined by the Law on Health Insurance and
Statute of the Fund.10
Health Insurance Fund of the Republic was established in accordance with
9 Official gazette of the Republic of Montenegro, No. 03/06 from 24.01.2006 10 Statute of the Health Insurance Fund of the Republic was adopted at the session of the board of directors of the
Health Insurance Fund on 22.07.2005.
provisions of the Law on Social Activities, based on Resolution on Establishment of the
Health Insurance Fund of the Republic, which was adopted on 26.07.199011. With Law
Amending and Supplementing the Law on Social Activities, provisions regarding
establishment and competences of extra-budgetary funds were erased, and
competences of the Fund were regulated by provisions of the Law on Health Protection12
and the Law on Health Insurance13
.
Pursuant the applicable regulations the Fund was enlisted in the Central Registry
of the Commercial Court under the register number 8-0012414/03, and on 14.06.2006,
change of data was registered.
Registered office of the Health Insurance Fund of the Republic is in Vaka Đurovića
Street in Podgorica.
Bodies of the Health Insurance Fund are the Board of Directors and the Director.
X Board of directors is the managing body of the Fund. Members of the Board
are appointed and acquitted of duty by the Government. Executive body of the Fund is
the Director of the Fund. Director of the Fund is appointed and acquitted of duty, based
on vacancy notice by the Board of Directors, with previous approval of the Government.
Director is responsible for legitimacy of operations of the Fund. He is responsible for his
work and the work of the Fund to the Board of Directors. In the time of performance of
audit, responsible person is Ramo Bralić.
Main activities and assignments of the Fund are to provide:
o conduction of health protection and performance of health services, o rights for health protection and other rights from the sphere of social
insurance o funds and other conditions for harmonised work of health institutions.
2. System of records
System of records of the Health Insurance Fund of the Republic is organised on a
modified accounting system according to which the expenditures, independently of
payments, are admitted based on occurrence of business event in the related reporting
period, and revenues are recorded based on cash transactions in the reporting period.
System of records does not support totally accounting basis in the sphere of
11 Official gazette of the Republic of Montenegro No.19/90, 25/90
12 Official gazette of the Republic of Montenegro, No. 39/04 from 09.04.2004
13 Official gazette of the Republic of Montenegro, No.39/04 from 009.04.2004, No.23/05 from 12.04.2005 and 29/05
from 09.05.2005
expenditures14, because the amount of the amortisation, in accordance with the Rule
Book, is directly burdening its own capital and it does not represent integral part of
calculated expenses. This way the Fund has increased results of operating activities in
2006, for the amount of unexpressed amortisation.
Non-financial property, short-term and long-term liabilities, capital and determining
of the results of operating activities are also booked in business records of the Fund.
Liabilities to the public health institutions which are assumed by the Health Fund, during
the accounting year, are booked at the balance sheet, and expenditures are shown as a
balance to occurred liabilities.
Records do not provide quality data for timely updating of cash flows, so the Fund
does not posses sufficiently precise picture of the level of realised cash deficit and
possibility for more efficient cash management.
Public health institutions apply accounting system for determination of revenues and
expenditures and results of operating activities. Transactions conduct in a unique way as
in enterprises and are booked in the same way. Non-financial property, financial property,
liabilities, capital and determining of the results of operation activities, revenues and
expenditures are being booked in business records of public health institutions.
The Fund combines financial reports of public health institutions on cash and
accounting basis, whose basic purpose is compensation of mutual liabilities and claims,
and informing of the Government, Ministry of Finance, management body of the Fund on
expediency of usage of public revenues in the sphere of organisation and providing of
public health services. We also think that financial reports of the Fund must be regularly
published and available to public eye through electronic and written media.
Health Insurance Fund of the Republic keeps business records in accordance with
the Rule Book on accounting and account plan of the budget and extra-budgetary funds15
wich was put out of force by application of the Rule Book on Unique Classification of the
Statements of the Budget of the Republic, extra-budgetary funds and budgets of
municipalities.
By memorandum of the Ministry of Finance16 the consent was given for the Health
Insurance Fund of the Republic to apply the existing account framework and to keep the
existing records and to initiate amendments and supplements of the new Rule Book on
unique classification, which would enable the Fund to keep records by current system. It
was determined during the audit that amendment and supplement of the stated Rule
Book was not realised besides its application.
14 This system of records is harmonised with the Rule Book used by the Fund in its records, so the text does not imply
the possible irregularities. 15 Official gazette of the Republic of Montenegro, No. 04/03
16 No. 03-8691/1 from 21.12.2005
3. Cash flows
It was determined by the insight in the turnover of commercial accounts of the Fund in
business banks, that the cash balance on U 01.01.2006 amounted 2.842.574,49 €. Initial
cash balance represents addition of deposits at sight to the amount of 1.542.860,02 €
and term deposits to the amount of 1.339.714,47 €, which is reduced for 40.000,00 € as
collateral funds in Crnogorska komercijalna banka. Term deposits were in: Crnogorska
komercijalna banka to the amount of 688.024,78 €, Podgorička banka 600.000,00 € and
Montenegro banka 11.689,47 €. Inflow of funds in 2006 amounted 128.863.656,55 € and
outflow 129.383.340,20 €, so that the cash balance on 31.12.2006 amounted
2.322.890,84 €17. Presented cash flows include foreign credit to the amount of
4.108.250,00 €, which was used for procurement of equipment for public health
institutions, which has not yet been booked as turnover transaction on commercial
accounts of the Fund and represents non-cash transaction in 2006.
CASH FLOWS
Ordinal number
DESCRIPTION TURNOVER DEBIT TURNOVER CREDIT
1 Cash on 31.12.2005 2.842.574,49
2 Turnover of the debit side consolidated 126.863.656,55
3 Turnover of the credit side consolidated 129.383.340,20
4 Cash on 31.12.2006 2.322.890,84
131.706.231,04 131.706.231,04
Promet duguje-turnover debit; promet potrazuje-turnover credit
Analytics of cash transactions in 2006 is shown in the following table:
ACCOUNT TURNOVER- CASH FLOWS
Deposits/cash at the 2.842.574,49 116.318.498,77 Current expenditures
17According to the Draft Law on Annual financial statement of the Budget of the Republic of Montenegro for 2006,
page 110 of commentary on the Law it is said that the cash deposits of the Health Insurance fund of the Republic are
expressed in 1000 to the amount of 3.499,00 EUR. This is significantly different from the statement determined by
audit and confirmations of commercial banks which confirmed that the Fund disposes of cash deposits, expressed in
1000, to the amount 2.322,89 EUR
beginning of the period
Contributions for health insurance and other revenues
86.239.208,86 137.000,00 Loans and credits
Contributions for health insurance of pensioners
24.654.415,85 5.506.725,32 Capital expenditures
Contributions for health insurance of unemployed persons
320.775,09 7.421.115,82 Repayment to domestic sources of financing
Revenues from the Budget 6.841.006,65 2.322.890,84 Cash at the end of accounting period
Loans and credit 10.808.250,00 0,29 Mistakes
TOTAL TURNOVER 131.706.231,04 131.706.231,04 TOTAL TURNOVER
Turnover of the debit side amounted 131.706.231,04 € and is equal to the turnover
of the credit side in 2006, with negligible mistake of 0,29 €. Inflow of funds was provided
with the payment of contributions for health insurance to the amount of 86.239.208,93 €,
contributions for health insurance of pensioners to the amount of 24.654.415,85 €,
contributions for health insurance of unemployed persons to the amount of 320.775,09 €,
transfers of the Budget 6.841.006,65 € and loans and credits to the amount of
10.808.250,00 €, which were provided from domestic sources to the amount of
6.700.000,00 € and foreign sources to the amount of 4.108.250,00 €. Outflow of funds
based on current expenditures amounted 116.318.498,77 €, loans and given credits
137.000,00 € and repayments to domestic sources of financing 7.421.115,82 €.
If the cash flows are reduced for the amount of non-cash transactions, than the
turnover level is reduced but the final cash balance is not changed on 31.12.2006 as
shown in the following table:
ACCOUNT TURNOVER- CASH FLOWS
Deposits/cash at the beginning of the period
2.842.574,49 116.318.498,77 Current expenditures
Contributions for health insurance and other revenues
8.239.208,96 137.000,00 Loans and credits
Contributions for health insurance of pensioners
24.654.415,85 1.398.475,32 Capital expenditures
Contributions for health insurance of unemployed persons
320.775,09 7.421.115,82 Repayment to domestic sources of financing
Revenues from the Budget 6.841.006,65 2.322.890,84 Cash at the end of accounting period
Loans and credit 6.700.000,00 0,29 Mistakes
TOTAL TURNOVER 127.597.981,04 127.597.981,04 TOTAL TURNOVER
4. Report on cash flows
Pursuant the Article 5 of the Rule Book on way of preparation, drafting and
submitting of annual financial reports and statements of the budget, extra-budgetary
funds, and units of local self-government, Health Insurance Fund of the Republic has the
obligation to submit to Ministry of Finance the Report on Cash Flows (form RCF-1) and
the Report on Cash Flows (form RCF–2). Furthermore, the Fund is obliged to make and
submit to the Ministry of Finance Consolidated annual financial report which will include
public health institutions which are in the public health system. Deadline for submitting of
financial reports to the Ministry of Finance is 31. March of the current year for previous
year.
The Fund has made stipulated reports, which were taken by the State Auditors
Institution during the audit, and these are the reports:
Report on Cash Flows I- economic classification;
Report on Cash Flows II- functional classification;
Report on Consolidated Public Spending and
Report on Call in Arrears.
Pursuant the Article 12 of the Statute of the Fund of the Republic, Board of Directors
adopts annual and six-month reports on financial transactions with the report on audit of
annual financial statement- financial reports.
Statement of receipts and expenditures was compared with trend of cash flows on
2006, aiming analytical interpretations of the presented cash and verification of
accounting accuracy of realised cash transactions. Ordinal Number
Cash flow- economic classification Planned in 2006
Realisation in 2006
Realisation in 2005
Index realised/planned
1 2 3 4 5 6
Receipts
1 Current revenues (1.1+1.2+1.3+1.4+1.5)
105,043,017.00 111,173,810.00 97,840,871.00 105.84
1.1 Taxes
1.2 Contributions 103,690,000.00 110,592,983.00 97,009,755.00 106.66
1.3 Duties
1.4 Compensations
1.5 Other revenues 1,353,017.00 580,827.00 735,202.00 42.93
1.6 Inflows from interests 95,914
2 Receipts from credit repayment 40,590.00 27,778.00
3 Donations and transfers 7,050,000.00 6,841,007.00 5,695,453.00 97.04
3.1 Donations
3.2 Transfers 7,050,000.00 6,841,007.00 5,695,453.00 97.04
I Total receipts (1+2+3) 112,093,017.00 118,055,407.00 103,564,102.00 105.32
Expenditures
4 Current expenditures 3,763,978.00 4,062,500.00 10,949,126.00 107.93
4.1 Gross salaries and contributions payable by employer
1,092,422.00 1,133,894.00 1,050,738.00 103.80
4.2 Other personal income 159,989.00 179,158.00 111.98
4.3 Costs for material and services 2,139,567.00 2,240,500.00 9,462,198.00 104.72
4.4 Current maintenance 132,000.00 173,429.00 131.39
4.5 Interests 240,000.00 211,781.00 282,787.00 88.24
4.6 Rent 123,783.00 153.403.00
4.7 Subsidies
4.8 Other expenditures
5 Transfers for social protection 13,629,855.00 16,479,822.00 4,083,260.00 120.91
5.1 Rights from the sphere of social protection
5.2 Funds for redundancies
5.3 Rights from the sphere of pension and disability insurance
5.4 Other rights from the sphere of health 9,108,984.00 10,828,245.00 118.87
protection
5.5 Other rights from the sphere of health insurance
4,520,871.00 5,651,577.00 4,083,260.00 125.01
6 Transfers to institutions, individuals, non-government and government sector
91,233,490.00 95,776,177.00 88,480,776.00 104.98
7 Loans and credits 137,000.00 40,000.00
II Total expenditures (4+5+6+7+8+9+10) 108,627,323.00 116,455,499.00 103,553,162.00 107.21
III Net cash flow (I-II) 3,465,694.00 1,599,908.00 10,940.00 46.16
Cash flow based on investments
11 Receipts from sale of non-financial property
12 Receipts from sale of financial property
13 Capital expenditures 3,465,694.00 5,506,725.00 183,557.00 158.89
IV Net cash flow based on investments (11+12+13)
(3,465,694.00) -5,506,725.00 -183,557.00 158.89
Cash flow based on financing
14 Loans and credits 10,808,250.00 11,600,000.00
15 Credit repayments 7,421,116.00 11,846,670.00
V Net cash flow based on financing (14-15)
3,387,134.00 -246,670.00
VI Increase/reduction of cash (III+IV+V) -519,683,00 -419,287.00
VII Cash at the beginning of period 2,842,574.00 3,261,861.00
VIII Cash at the end of the period (VI+VII) 2,322,891.00 2,842,574.00
Report on cash flows was prepared by the Fund based on data presented in the
gross account. Shown account of the deposits at the end of the year was harmonised
with the account in business banks, which they affirmed by their confirmations.
Comparison of turnover of debit and credit side of commercial accounts in
business banks with RCF form made by the Fund for 2006, was realised by the audit. It
was determined by the control that the turnover shown in the RCF form was lower for
528.535,95 € or only 0,4 % of the turnover shown in commercial accounts based on data
from the gross account. Responsible person in the Fund informed us that the stated
amount is the result of transactions which increase the turnover and have neutral effect
on receipts and expenditures of the Fund.
Cash and cash equivalents on day 31.12.2006
Name of the business bank Cash holdings on accounts 01.01.2006
Cash holdings on accounts 31.12.2006
Difference
Crnogorska komercijalna banka 565,212.72 1,139,898.15 574,685.43
Hipotekarna banka 2,028.43 5,888.37 3,859.94
Atlasmont banka 557,426.23 211,668.80 -345,757.43
Podgoricka banka 390,810.52 889,503.26 498,692.74
Hipotekarna banka- foreign currency account 140.50 140.50 0.00
Hipotekarna banka- foreign currency account 2,367.48 2,752.48 385.00
Crnogorska komercijalna banka- foreign currency account
3,406.13 55,856.25 52,450.12
Podgoricka banka- foreign currency account VAL 987 EUR
12,744.34 12,561.01 -183.33
Montenegro banka- foreign currency account 1,964.78 1,973.77 8.99
Crnogorska komercijalna banka- foreign currency account
4,114.65 0.00 -4,114.65
main treasury 2,644.24 2,648.25 4.01
Montenegro banka- other short-term placing 11,689.47 0.00 -11,689.47
Crnogorska komercijalna banka-deposit 688,025.00 0.00 -688,025.00
Podgoricka banka-deposit 600,000.00 0.00 -600,000.00
TOTAL 2,842,574.49 2,322,890.84 -519,683.65
Cash at sight, which is located in business banks and cash in the treasury are
shown in the previous table. Funds on term deposit to the amount of 40.000,00 € are not
included in the Report on Cash Flows as cash at the end of the period (because of the
repayment period), but are booked as collateral funds and represent part of the
consolidated account, and are intended for acquiring of short-term loans for covering of
non-liquidity.
According to the report on cash flows, realised inflows, without loans on
31.12.2006, amounted 118.055.407,00 € and current expenditures, without repayment of
capital sum and capital expenditures, amount 116.455.499,00 €, so that the cash inflow
based on current transactions is positive and amounts 1.599.908,00 €. Total receipts do
not include extra extraordinary income to the amount of 4.152,45 € because it does not
represent cash flows, while the income from repayment of given credits to the amount of
40.590,00 € is included. In the gross account this amount is shown through the change of
the structure of assets, by means of reduction of claims and increase of the amount of
deposit, and the same amount was shown by the Fund as the inflow on the cash basis in
the RCF form. Receipts also include inflows from contributions based on realised
compensations to the amount of 15.831.781,72 €, which means that 13,41% of total
realised revenues was realised.
Net cash flow based on investments amounts 5.506.725,00 €. Cash flow based on
investments includes the procurement of medical equipment for needs of public health
institutions to the amount of 4.108.250,00 € which was financed from foreign credits of
Erste Bank from Austria, related costs of procurement (VAT and customs) to the amount
of 827.119,66 €. The amount of 827.119,66 was effectuated by adjustment of mutual
liabilities and claims from the Health Insurance Fund, Pension and Disability insurance
fund of the Republic and Budget of the Republic of Montenegro in accordance with
Resolution of the Government of the Republic of Montenegro No. 03-10241 from
29.12.2006. Beside the mentioned, payments were realised for non-financial property
which refer to equipment of the Fund to the amount of 354.555,66 € and purchase and
construction of apartments to the amount of 216.800,00 €.
Net cash flow based on financing amounts 3.387.134,00 €. Inflows based on taken
credits in the reporting period amount 10.808.250,00 €, out of which 6.700.000,00 €
refers to credit from business banks in the country, and to foreign credits from Erste Bank
Austria 4.108.250,00 € which is shown as inflow of funds based on financing. These
funds were not recorded through accounts in business banks, but the stated bank paid
funds to foreign supplier based on submitted invoices for delivered equipment.
By Resolution of the Government of the Republic of Montenegro No. 03-8394 from
19.10.2006 compensation was performed of mutual liabilities and claims of the
Government of the Republic of Montenegro and Health Insurance Fund of the Republic
to the amount of 4.829.871,07 €. This Resolution reduces the liabilities of the Fund based
on the indebtedness in commercial banks to the amount of 2.965.719,20 € assumed by
the Government of the Republic of Montenegro.
Report on cash flows shows that capital expenditures were financed, partly from
surplus of funds realised in current transactions, inflow based on taken credits and cash
at the beginning of the period.
Fund possesses certain number of open accounts in business banks, through
which in 2006 there was no turnover and we suggest that the Fund should close
accounts in commercial banks which do not serve to performing of financial transactions
in the health system.
5. Cash deficit
Cash deficit of the Fund in 2006 amounts 3.906.842,48 € and derived from data
shown in the following table:
Ordinal number Description Cash flows over the account
1 Contributions for health insurance 86,239,208.96
1.1 Contributions for health insurance of employees 49,258,237.05
1.1.1 Contributions for health insurance of employees in economy 24,736,800.63
1.1.2 Contributions for health insurance of employees in economy- compensations
6,089,168.60
1.1.3 Contributions for health insurance of employees in non-economy
15,280,311.03
1.1.4 Contributions for health insurance of employees in non-economy- compensations
701,376.34
1.1.5 Contributions for health insurance of employees in private enterprises
2,272,063.73
1.1.6 Contributions for new employees 178,516.72
1.2 Contributions for health insurance payable by employer 36,121,318.38
1.2.1 Contributions for health insurance payable by employer in economy
24,033,284.58
1.2.2 Contributions for health insurance payable by employer in non-economy
12,088,033.80
1.3 Contributions for health insurance from copy rights 29,621.36
1.4 Contributions for health insurance of farmers 198,982.80
1.7 Revenues based on interests and penalties 75,335.58
1.8 Other revenues 555,713.79
I Total revenues 86,239,208.96
2 Current expenditures 116,318,498.77
2.1 Gross salaries of employees and contributions payable by employer
1,133,894.00
2.2 Other personal income 179,157.70
2.3 Costs for material and services 2,070,744.89
2.4 Current maintenance 173,428.71
2.5 Interests 211,781.00
2.5.1 Podgoricka banka 63,337.36
2.5.2 Pljevaljska banka ad Pljevlja 6,451.72
2.5.3 Atlasmont banka 31,793.16
2.5.4 Crnogorska komercijalna banka 89,276.45
2.5.5 Delta banka ad Beograd 16,398.58
2.5.6 Share of cash exchange rate band 4,523.73
2.6 Indebtedness costs 169,755.11
2.6.1 Commission costs paid to Podgoricka banka 13,000.00
2.6.2 Commission costs paid to Pljevaljska banka 2,500.00
2.6.3 Commission costs paid to Atlasmont banka 14,600.00
2.6.4 Commission costs paid to Crnogorska komercijalna banka 31,000.00
2.6.5 Other indebtedness costs 108,655.11
2.7 Deficit in exchange differential 0.00
2.8 Rent 123,737.88
2.9 Other expenditures 0.00
2.10 Transfers for social protection 16,479,822.00
2.10.1 Other rights from sphere of social protection 10,828,245.00
2.10.2 Other rights from sphere of health insurance 5,651,577.00
2.11 Transfers to institutions, individuals, non-government and public sector
95,776,177.48
2.11.1 Transfers to public health institutions 95,776,177.48
2.11.1.1 Medical services 64,767,223.08
2.11.1.2 Investments in public health institutions 3,578,095.50
2.11.1.3 Medications 27,430,858.90
3 Loans and credits 137,000.00
4 Capital expenditures 5,506,725.32
4.1 Buildings and construction objects 216,800.00
4.1.1 Purchase of business premises 57,050.00
4.1.2 Apartments for business needs 159,750.00
4.2 Equipment 4,462,805.66
4.2.1 Equipment from foreign countries 4,108,250.00
4.2.2 Equipment in the country 354,555.66
4.3 Related costs of procurement 827,119.66
II Total expenditures 121,962,224.09
III Cash deficit without received transfers -35,723,015.13
5 Sources for covering of the deficit from transfers 31,816,197.59
5.1 Contributions for health insurance of pensioners 24,654,415.85
5.2 Contributions for health insurance of unemployed persons 320,775.09
5.3 Revenues from the Budget 6,841,006.65
Unexplained amounts and mistakes 0.29
IV Cash deficit after receiving of transfers -3,906,817.54
6 Sources for covering of deficit after receiving of transfers 3,906,817.83
6.1 Domestic financing -721,115.82
6.1.1 Loans and credits from domestic sources of financing 6,700,000.00
6.1.1.1 Podgoricka banka 0.00
6.1.1.2 Pljevaljska banka ad Pljevlja 600,000.00
6.1.1.3 Atlasmont banka 2,500,000.00
6.1.1.4 Crnogorska komercijalna banka 3,700,000.00
6.1.1.5 Delta banka ad Beograd 0.00
6.1.1.6 Unknown 0.00
6.1.2 Repayment to domestic sources of financing 7,421,115.82
6.1.2.1 Podgoricka banka 1,300,000.00
6.1.2.2 Pljevaljska banka ad Pljevlja 500,000.00
6.1.2.3 Atlasmont banka 1,762,500.00
6.1.2.4 Crnogorska komercijalna banka 3,233,615.82
6.1.2.5 Delta banka ad Beograd 625,000.00
6.2 Foreign financing 4,108,250.00
6.2.1 Loans and credits from foreign countries 4,108,250.00
6.2.2 Repayment of foreign credits 0.00
7 Deposits/cash at the beginning of the period 2,842,574.49
7.1 Podgoricka banka 1,003,554.86
7.2 Pljevaljska banka ad Pljevlja 0.00
7.3 Atlasmont banka 557,566.73
7.4 Crnogorska komercijalna banka 1,260,758.50
7.5 Delta banka ad Beograd 0.00
7.6 Hipotekarna banka 4,395,91
7.7 Montenegro banka 13,654.25
7.8 Treasury 2,644.24
7.9 Unexplained 0.00
8 Increase/reduction of cash 519,683.65
8.1 Podgoricka banka 101,490.59
8.2 Pljevaljska banka ad Pljevlja 0.00
8.3 Atlasmont banka 345,757.43
8.4 Crnogorska komercijalna banka 65,004.10
8.5 Delta banka ad Beograd 0.00
8.6 Hipotekarna banka -4,244.94
8.7 Montenegro banka 11,680.48
8.8 Treasury -4.01
8.9 Unexplained 0.00
9 Cash at the end of the period 2,322,890.84
9.1 Podgoricka banka 902,064.27
9.2 Pljevaljska banka ad Pljevlja 0.00
9.3 Atlasmont banka 211,809.30
9.4 Crnogorska komercijalna banka 1,195,754.40
9.5 Delta banka ad Beograd 0.00
9.6 Hipotekarna banka 8,640.85
9.7 Montenegro banka 1,973.77
9.8 Treasury 2,648.25
9.9 Unexplained 0.00
Cash deficit after the received transfers DESCRIPTION AMOUNT
Deficit before transfers
35.723.015,13
Transfers to the Health insurance fund
31.816.197,59
Difference 3.906.817,54
Cash deficit of the Fund before received transfers amounts 35.723.015,13 €, which is covered: by transfers of the Pension and Disability Insurance through contributions for health insurance of pensioners to the amount of 24.664.415,85€; transfers from the Employment Agency of the Republic through contributions for health insurance of unemployed persons to the amount of 320.775.09€ and transfers from the Budget of the Republic of Montenegro to the amount of 6.841.006,65€. After received transfers, cash deficit of the Fund amounts 3.906.817,54€
AMOUNT
Difference of uncovered deficit after the received transfers amounts 3.906.817,54 €18
and is caused by the foreign credit of Erste Bank to the amount of 4.108.250,00 € which was used for financing of procurement of equipment for public health institutions. Namely, cash flow of the Fund in 2006 shows that additional sources of financing were provided to the amount of 4.627.933,16 € such as:
o Foreign credits.....................................................................4.108.250,00 €
o Reduction of deposits.............................................................519.683,65 €
These sources of financing were used for covering of deficit and reduction of debt to
commercial banks:
o Cash deficit..........................................................................3.906.817,83 €
o Reduction of debts to domestic banks....................................721.115,82 € 6. Modified cash deficit
Modified cash deficit represents the addition of cash deficit and net increase of
liabilities during fiscal year. Net increase of liabilities of the Fund in 2006 amounted
3.407.792,00 € which is shown in the following table:
Ordinal
Description Account of liabilities on 31.12.2005
Account of liabilities on 31.12.2006
1 2 3 4
18 It is stated in the Draft Law on Annual Financial Statement of the Budget of the Republic of Montenegro for 2006,
on page 139 of Comments, that transfers to the Fund were paid to the amount of 6.935.000,00€
1 Liabilities for current expenditures (1.1+2.2+1.3) 696,965.00 389,187.00
1.1 Liabilities for gross salaries and contributions payable by employer 0.00 0.00
1.2 Liabilities for other personal income
1.3 Liabilities for other current expenditures 696,965.00 389,187.00
2 Liabilities by transfers for social protection 2,319,718.00 3,854,597.00
3 Liabilities for transfers to institutions, individuals by foreign credits 9,431,518.00 11,612,209.00
Account of liabilities at the end of accounting period (1+2+3+4+5+6+7) 12,448,201.00 15,855,993.00
If the cash deficit to the amount of 3.906.817,54 € increases for the amount of net
increase of liabilities to the amount of 3.407.792,00 € we come to the modified cash
deficit to the amount of 7.314.609,54 €.
MODIFIED CASH DEFICIT neto povecanje neizmirenih obaveza-net increase of call in arrears gotovinski deficit- cash deficit
7. Consolidated spending
The audit for 2006 did not include control of regularity of presented cash flows in
public health institutions, but the control was performed of accounting accuracy of data
on consolidated cash flows in 2006, and it is shown in the following table:
CONSOLIDATED CASH FLOWS IN 2006
RECEIPTS OF THE SECTOR DESCRIPTION Health insurance
fund Health treatment centers
hospitals Health institute Montefarm
TOTAL
Revenues from the real sector
86,239,208.96 3,371,073.00 2,587,577.00 1,412,857.00 16,633,956.00 110,244,671.96
Taxes 0.00 0.00 0.00 0.00 0.00 0.00
Contributions 85,409,176.79 0.00 0.00 0.00 0.00 85,409,176.79
Other revenues 830,032.17 3,371,073.00 2,587,577.00 1,412,857.00 16,633,956.00 24,835,495.17
Expenditures 26,186,046.61 33,777,927.00 56,075,520.00 2,519,727.00 27,257,657.00 145,816,877.61
Current expenditures 20,679,321.29 33,166,084.00 54,225,429.00 2,519,727.00 27,218,516.00 137,809,077.29
Extra-budgetary expenditures
0.00 0.00 0.00 0.00 0.00 0.00
Capital expenditures 5,506,725.32 611,843.00 1,850,091.00 0.00 39,141.00 8,007,800.32
Surplus/deficit 60,053,162.35 -30,406,854.00 -53,487,943.00 -1,106,870.00 -10,623,701.00 -35,572,205.25
TRANSFERS
Central budget of the Government
6,841,006.65 0.00 0.00 0.00 0.00 6,841,006.65
Pension and Disability Insurance Fund
24,654,415.85 0.00 0.00 0.00 0.00 24,654,415.85
Health Insurance Fund
0.00 0.00 0.00 0.00 0.00 0.00
Employment Agency
320,775.09 0.00 0.00 0.00 0.00 320,775.09
Transfers outside the health Fund system
Local self-government
0.00 0.00 0.00 0.00 0.00 0.00
Total receipts 31,816,197.59 0.00 0.00 0.00 0.00 0.00
I Net transfers outside the Fund system
31,816,197.59 0.00 0.00 0.00 0.00 31,816,197.59
Health Insurance Fund
0.00 30,364,662.00 53,399,224.00 1,208,135.00 10,804,156.00 95,776,177.00
Health Treatment centres
0.00 0.00 0.00 0.00 0.00 0.00
Hospitals 0.00 0.00 0.00 0.00 0.00 0.00
Health Institute 0.00 0.00 0.00 0.00 0.00 0.00
Transfers in the Health Fund system
Montefarm 0.00 0.00 0.00 0.00 0.00 0.00
Total receipts 0.00 30,364,662.00 53,399,224.00 1,208,135.00 10,804,156.00 95,776,177.00
II net transfers in the Fund system
-95,776,177.00 30,364,662.00 53,399,224.00 1,208,135.00 10,804,156.00 0.00
Available funds 22,279,229.55 33,735,735.00 55,986,801.00 2,620,992.00 27,438,112.00 142,060,869.55
Surplus/deficit -3,906,817.06 -42,192.00 -88,719.00 101,265.00 180,455.00 -3,756,008.06
Sources for deficit financing 3,906,817.83 42,192.00 88,719.00 -101,265.00 -180,455.00 3,756,008.83
Credits 3,387,134.18 10,841.00 5,794.00 0.00 60,455.00 3,463,864.18
Domestic credits -721,115.82 10,841.00 5,794.00 0.00 60,455.00 -644,385.82
Foreign credits 4,108,250.00 0.00 0.00 0.00 0.00 4,108,250.00
Donations 0.00 21,250.00 50,000.00 0.00 0.00 71,520.00
Financial property 519,683.65 3,191.00 31,125.00 -101,265.00 -240,910.00 211,824.65
Issue of the loan 0.00 0.00 0.00 0.00 36.000.00 36,000.00
Deposits/cash 519,683.65 3,191.00 31,125.00 -101,265.00 -276,910.00 175,824.65
Sale of non-financial property
0.00 7,000.00 1,800.00 0.00 0.00 8,800.00
Data in the table correspond to data presented by the Fund in consolidated public
spending. Deficit level which includes donations amounts 3.756.008,06 €, and if we
exclude transfers based on donations to the amount of 71.520,00 deficit amounts
3.684.488,06 €.
Public health institutions, Health Institute and Public Pharmaceutical institution
Montefarm have realised their own revenues to the amount of 24.005.463,00 € in
following amounts:
Public health institutions keep these revenues at the account and use them for financing
of their activities during the accounting period. Larger part of expenditures in the public health institutions is financed from the transfers provided by the Fund based on inflows from abroad fro health protection of employees, pensioners and unemployed persons. Consolidated data on financing of the health system in Montenegro show that it is necessary to organise more efficient cash management and to gradually reduce differences of paid advance payments by the Fund and paid expenditures by public health institutions. 8. Balance sheet and Income Statement of the Fund for 2006
Balance sheet of the Fund for 2005 and 2006, is shown based on data from gross balance which represented the starting report for control and testing of data in the audit procedure of real and cash flows. Balance account derived from data presented in the gross balance for 2006 is presented in the following table:
BALANCE SHEET OF THE HEALTH INSURANCE FUND FOR 2006 AND 2005
DESCRIPTION 2005 2006
I ASSETS 22,165,165.81 30,266,954.14
1.1 Non-financial property 9,084,322.22 9,253,229.17
1.1.1 Fixed assets 5,164,060.27 4,968,507.01
1.1.2 Land 2,735,353.00 2,735,353.00
1.1.3 Non-financial property in construction 130,243.00 477,783.15
1.1.4 Common investments into fixed assets 1,054,665.95 1,071,586.01
1.2 Financial property 13,080,843.59 21,013,724.97
1.2.1 Claims 457,711.94 535,977.35
1.2.2 Cash 1,542,676.69 2,322,890.84
1.2.3 Short-term placement 7,502,034.18 6,202,924.72
1.2.4 Advance payments 3,578,420.78 7,843,176.17
1.2.5 Prepaid expenses 0.00 4,108,755.89
II LIABILITIES 22,165,165.81 30,266,954.14
2.1 Liabilities 30,968,510.55 38,762,200.56
2.1.1 Liabilities on domestic credits 4,125,000.04 3,403,884.18
2.1.2 Liabilities on foreign credits 0.00 4,108,250.00
2.1.3 Liabilities based on salaries 1,702.90 1,020.09
2.1.4 Liabilities to Medical chambers and Board of directors 10,577.40 7,009.46
2.1.5 Liabilities to suppliers 22,145,509.96 22,148,920.09
2.1.6 Liabilities to public health institutions 11,000.00 11,048.55
2.1.7 Accrued costs 4,674,720.25 9,082,068.19
2.2 Net financial results -8,803,344.74 -8,495,246.42
2.2.1 Own sources of funds -8,464,293.59 8,121,248.20
2.2.2 Increase of own sources -2,444,672.49 651,488.46
2.2.3 Other capital 213,188.76 213,188.76
2.2.4 Surplus/lack of revenues from the previous period -15,036,154.60 -17,480,827.09
The accuracy of data shown in the balance sheet was confirmed by the audit, with
deviations which could not significantly change validity of conclusions which were
reached during the audit procedure of accuracy.
Data show the following: o Net increase of assets to the amount of 8.101.788,83 € was financed by
payment of liabilities to the amount of 7.793.690,01 € and from net increase of results to the amount of 308.098,92 €.
Ordinal number DESCRIPTION +/-
1.1 Liabilities 7.793.690,01
1.2 Net increase/reduction of the value of capital 308.098,32
TOTAL ASSETS 8.101.788,33
Addition of difference of net financial property and net liabilities to the amount of
139.131,97 € and net increase of non-financial property equals shown results of business
activities:
Ordinal number DESCRIPTION +/-
1.1 Difference financial property and liabilities 139.191,37
1.2 Non-financial property 168.906,95
TOTAL ASSETS 308.098,32
Comparison of data from the Balance sheet and Income Statement was realised by
the accuracy audit, and received results show that net change of capital value
corresponds to the result to the amount of 308.098,32 € in 2006.
BALANCE SHEET OF ECONOMIC FLOWS
Ordinal number
DESCRIPTION 2005 2006
1.1 Revenues of the Fund 106,447,445.83 118,018,968.86
1.1.1 Contributions for health insurance 96,992,807.80 110,583,350.53
1.1.2 Revenues based on interests and penalties 95,914.32 75,335.58
1.1.3 Other revenues 3,662,707.45 515,913.00
1.1.4 Favourable currency differentials 563.55 3,363.10
1.1.5 Transfers of the Budget 5,695,452.71 6,841,006.65
1.2 Expenditures of the Fund 108,892,118.32 117,367,480.40
1.2.1 Direct costs of the Fund 3,651,020.33 3,774,818.65
1.2.2 Invoiced realisation of public health institutions 91,665,020.33 88,095,642.83
1.2.3 Advance payments to public health institutions 3,560,912.01 7,773,404.25
1.2.4 Other expenditures 9,854,284.40 14,562,464.96
1.2.5 Health treatment centre 0.00 3,031,677.39
1.2.6 Health protection by conventions 160,093.08 129,472.32
1.3 Business performances -2,444,672.49 651,488.46
1.4 Depreciation of non-financial assets 343,045.00
1.5 Net result 308,443.46
1.6 Increase/reduction of non-financial assets 168,906.95
1.7 Increase/reduction of financial assets 7,932,881.38
1.8 Increase/reduction of liabilities 7,793,690.01
1.9 Net increase of results 308,098.32
As already mentioned, amortisation is not integral part of expenditures. For the amount of
accounted amortisation, and written-off fixed assets, the Fund has directly reduced net
value of the capital. However, by including of reduced value of property (amortisation +
written-off non-financial property) the business performance to the amount of 651.488,46
€ comes to the amount shown in the balance sheet to the amount of 308.488,46 €.
Revenues are booked on the cash basis with the relatively small deviations are
identical with the presented inflow statement in the RCF form for 2006.
Expenditures in the previous table were reclassified to the basic lines, which are
used to provide easy survey of expenditures on basic aggregates which refer to the
functioning of the system of the health protection through the Fund. Expenditures
referring to the Fund are separated, to invoiced realisation of public health institutions,
pilot projects of health treatment centres, prepaid advance payments in 2006, (the Fund
presents them as expenditures of the current period) and health protection by
conventions. Other expenditures refer to refundment, orthopaedic aids, travel costs and
treatment in foreign countries and other fixed costs payable by the Fund beside invoiced
realisation by public health institutions.
Our opinion is that other expenditures should be clearly reclassified in the future
period by the way of financing in order to get the clear picture on which part of share as
the accounting category is assumed by the Fund during the accounting period.
If the invoiced realisation of public health institutions and Public pharmaceutical
institution Montefarm is compared with the account of liabilities presented in the balance
sheet, which were confirmed as true by the audit, we come to the derived statement in
2006, which is identical to documentations which is submitted to the audit for
consideration. Data and findings of the audit were systemised in the following table19:
DESCRIPTION Balance 31.12.2005
Changes Balance 31.12.2006
Liabilities based on invoiced realisation from public health institutions
9,612,299.69 -791,630.01 8,820,669.68
Increase of liabilities 76,424,986.87
Reduction of liabilities 77,217,616.88
Liabilities to Montefarm 9,431,518.18 865,499.61 10,297,017.79
Increase of liabilities 11,669,655.96
Reduction of liabilities 10,804,156.35
LIABILITIES FROM JOINT ACTIVITIES 19,043,817.87 73,869.60 19,117,687.47
Other suppliers 3,101,692.09 -70,459.47 3,031,232.62
Liabilities to public health institutions 11,000.00 48.55 11,048.55
Liabilities based on salaries 1,702.90 -682.81 1,020.09
Liabilities to medical commissions and Board of directors
10,577.40 -3,567.94 7,009.46
LIABILITIES FROM CURRENT OPERATIONS 3,124,972.39 (74,661.67) 3,050,310.72
Accrued costs 3,560,912.01 4,212,492.24 7,773,404.25
Increase of invoiced realisation 7,773,404.25
Reduction of invoiced realisation 3,560,912.01
Other accrued costs 1,113,808.24 194,855.70 1,308,663.94
ACCRUED COSTS 4,674,720,25 4,407,347.94 9,082,068.19
TOTAL 26,843,510.51 4,406,555.87 31,250,066.38
Invoiced realisation of public health institutions in 2006, amounted 88.095.642,83 € and with the initial debt balance from 2005 amounts 107.139.460,70 €. Liabilities on invoiced realisation at the end of the year were closed through advance payments to the amount of 88.021.773,23€, so that the balance account to public health institutions and Montefarm at the end of 2006 amounted 19.117.687,47 €, out of which over 50% of debt or 10.297.017,79 € refers to Montefarm. If we add to the advance payments prepaid advance to the amount of 7.773.404,25 € we get the total amount of advance payments to the amount of 95.795.177,41 € in 2006.
It is necessary for the Fund to systemise the total debt balance by public
institutions and in the following period, through more rigid control of advance payments to
adopt the program which will gradually reduce the debt to public institutions and provide
more rational cash use. The programme should be established based on consolidated
19 Data do not include liabilities based on credit indebtedness in 2006
plan which will be adopted by the Fund for 2007, through the medium-term strategy for
development and reform of the financing of the Fund.
9. Opinion with draft recommendations and measures
In accordance with the findings determined in the audit procedure and presented
through the Report on Audit of Financial Reports of the Health Insurance Fund of the
Republic for 2006, State Auditors Institution has given opinion with draft
recommendations and measures, and here we present the most important parts:
Health Insurance Fund (hereinafter: the Fund) has quality structured electronic
data base, which provided relevant information for efficient audit procedure and
preparation of analytical foundation for the drafting of Minutes and Report. Cooperation of
responsible persons and employees in the Fund with the State Auditors Institution
represents important factor which contributed to the quality of made Minutes and Report.
The Audit, mostly confirmed validity of financial reports of the Fund, therewith, we
consider it necessary to point at the elements which could affect efficiency and quality of
reporting, and the activities of the Fund in the next period. In accordance with comments
and presented reserves, measures and recommendations are suggested, which we find
to be useful for the Fund, and to the efficient consolidation of the public spending system
in the following years.
It was determined by the audit that cash flows, mostly, correspond to the balance
shown in the gross balance sheet. Namely, initial balance sheet of the cash and realised
revenues in 2006, reduced for payments in the same period, give cash which is
confirmed by the commercial banks through which the Fund makes cash transactions. As
for cash flows, the Institution expresses reserves in opinion:
By the audit procedure, comparison was performed of turnover of debit and
credit side of commercial accounts by business banks with INT (Report on
Cash Flows) form which was made by the Fund for 2006.
It was determined by the control that the turnover expressed in the form INT is
lower for 528.535,95 € or only 0,4 % from the turnover presented in
commercial account based on data from the gross balance sheet. Responsible
person in the Fund has informed the Institution that the stated amount is the
result of transactions which increase the turnover and have neutral effect to
receipts and expenditures of the Fund.
We think that the stated amount is not materially significant, when it comes to financial reports of the Fund and that statements of responsible persons are correct. In accordance with that it is suggested that the Fund should make analytical recapitalisation in the part referring to the cash transactions and to state in the special addendum the reasons for this
deviation.
The Fund possesses certain number of open accounts in business banks,
through which in 2006 there was no turnover and we suggest that the Fund
should close accounts in commercial banks which do not serve to performing
of financial transactions in the health system.
Beside the accounting accuracy of data in financial reports (Report on Cash Flows
I - economic classification, Report on Cash Flows II- functional classification, Report on
Consolidated Public Spending and Report on Call in Arrears) the Fund does not possess
with sufficiently quality statistical base for reclassification of data in RCF (Report on Cash
Flows) forms, so the analytics is partially imprecise.
We suggest to the Fund in the next period, beside the records in its possession, to regularly classify payments in accordance with the economic classification which is stipulated by the Rule Book on unique classification for the Budget of the Republic, budgets of extra-budgetary funds and budgets of municipalities. We also think that the Financial reports of the Fund must be regularly published and available to public through the electronic and written media.
The audit 2006 did not encompass the regularity control of presented cash
flows in public health institutions, and only the control of accounting accuracy
of data on consolidated cash flows was performed. Regularity audit in
presenting of consolidated data shows that data were presented in form which
respects basic principles and rules of consolidation.
Aiming more efficient cash management and gradual reduction of liabilities to public
health institutions we think it is necessary for the Fund to take the following steps:
-To base the advance payments of transfers on documentation, which proves accuracy of accounting amounts,
- To establish the functioning of the internal control which will at least once a month compare advance payments by purposes by the Fund with real payments in the public health institutions.
- To perform gradual adjusting of the advance payments level by the Fund to the invoiced realisation of public health institutions.
- to perform the systematisation of public debt by public health institutions, to provide more efficient control of advance payments and to adopt the Programme, which will be used for gradual reduction of debt to public health institutions.
- The Programme should be based on consolidated plan which would be adopted by the Fund for 2007, through medium-term strategy for development and reform of the financing of the Fund.
Beside the previously mentioned weaknesses, aiming the improvement of the
activities of the Fund needs:
o to form adequate documentation which would be used for authorisation of spending fuel, telephone bills and other costs.
o To ensure the authorisation of costs by individual accounts for taken amounts of fuel and other expenditures, with clear internal rules on rights on spending.
o To have the Service for Planning and Analysis monitor the realisation of planned expenditures by all classifications, not only on the levels of health protection, but also by expenditures planned for operations of the Fund.
Data reached by the audit procedure served to the Institution for publishing of data, which were presented in the balance sheet and income statement forms and analytically explained by each materially significant amount. In that way, we have come to the reasonable belief that:
o Data were objectively presented and their checking by different classification statements is consistent.
o Data of the Fund referring to the materially significant statements are based on legally stipulated documentation, and the Fund has during 2006 worked in accordance with regulations regulating its operations.
o With previously stated reserves, we consider that the financial reports of the Fund were made in the form which does not have materially significant wrong statements, and that objectivity and accuracy of data was provided which represents the good base for decision making, realisation and acceptance of recommendations expressed in the Report.
o Institution found it necessary to point to mistakes which were not in the direct competences of the Fund, but which can affect the quality of the briefing system in the sphere of public finances and in accordance with that has suggested assuming of adequate measures.
Pursuant the Draft Law on Annual Financial Statement of the Budget of the Republic
of Montenegro for 2006 on page 110 of commentary of the Law it is stated that the cash
deposits of the Health Insurance Fund of the Republic, expressed in thousands, amount
3.499,00 €. This amount significantly differs from the account determined by the audit
and confirmations of commercial banks which confirmed that the Fund possesses cash
deposits, expressed in thousands to the amount of 2.322,89 €. We find it necessary for
the Fund to harmonise the account with the Ministry of Finance in order to avoid
discrepancies with stated amounts during the Debate on the Law on Annual Financial
Statement of the Budget of the Republic of Montenegro for 2006. We should add that the
Draft Law on Annual Financial Statement of the Republic of Montenegro for 2006, on
page 139 of commentary, it is stated that transfers of the Fund were paid to the amount
of 6.935.000,00 € and they are different from data presented in records of the Fund.
Determined difference is not materially significant but like data on cash deposits leads to
the conclusion that it is necessary for the Ministry of Finance and the Fund to periodically harmonise statements of liabilities and claims, and the cash statement aiming avoiding discrepancies of data and doubts in their accuracy.
Institution thinks it is necessary to assuming the following measure: to harmonise differences before Debate on the Law on Annual Financial Statement of the Budget of the Republic of Montenegro for 2006 in the Parliament of the Republic of Montenegro.
10. Undertaken measures of the Health Insurance Fund of the Republic
Board of Directors of the Health Insurance Fund of the Republic, at the session
held on 27.07.2007, is familiar with the Report on Audit of Financial Reports of the Health
Insurance Fund of the Republic for 2006 and opinion with draft recommendations and
measures.
Regarding expressed reserve in opinion and given recommendations and
measures in the Report; the Fund has informed the State Auditors Institution on
undertaken measures on realisation of given recommendations and measures:
1. Regarding the expressed reserve in opinion that the turnover of debit and credit
side of commercial accounts by business banks does not correspond to the
turnover shown in the RCF made by the Fund for 2006, in addition we give you
specification of non-cash transactions, which explains the deviation to the
amount of 528.535,95 € such as: X Revenues from Pension and Disability Insurance Fund Beograd (collected based on contract on debt assumption) to the total amount of 456.519,72 € : -contract No. 01-202 from 02.02.2006, to the amount of 121.281,79 –contract no. 01-753 from 30.03.2006, to the amount of 123.863,55 –contract No. 01-2683 from 15.11.2006, to the amount of 211.374,38 X Revenues from the Pension and Disability Insurance Fund (by contract on settlement of liabilities per contra No.63/1) Tax Administration-Harbour Bar to the amount of 41.182,55€ X Booked and cancelled compensations which did not go through the account to the amount of 2.747,55 €. X Other to the amount of 28.086,13 €.
2. Gradual adjustment of the level of advance payments to invoiced realisation:
- Board of Directors of the Health Insurance Fund of the Republic, at the session held
on 27.07.2007, has adopted the Resolution on increase of prices for health services
provided by health institutions which are financed from funds of the Health Insurance
Fund of the Republic. In this way the disproportion between advance payments by the
Fund and invoiced revenues by public health institutions will be reduced.
- Proposal of criterion for conclusion of contracts with providers of health services in
the primary health protection was determined, which is a presumption for conclusion of
contracts, and was forwarded to the Ministry of Health to further procedure for
adoption;
- Within the Project on Promotion of the Primary Protection System, a new way of
financing and new model of payment in the primary health protection is being
introduced (there is ongoing Pilot project Health Treatment Centre Podgorica and
Pilot project in Health Treatment Centres Rožaje, Danilovgrad and Tivat),
- There is an ongoing procedure of selection of consulting agency for optimisation of
the secondary and tertiary level of health protection, which implies making of service
packages, normatives and standards and defining of new models of payment for
secondary and tertiary level of the health protection;
3. Programme for debt reduction to public health institutions: mentioned in the previous paragraph will define more clearly relations between providers of health services and the Fund, which should lead to the gradual debt reduction to public health institutions. 4. Forming of adequate documentation for authorisation of spending of fuel and telephone bills: aiming more rational spending of telephone impulses and reduction of costs for these purposes, director of the Fund has made a Resolution on determination of limits in spending of telephone impulse for all cordless phone numbers and mobile telephone numbers in the telephone exchange of the Fund and in the regional units of the Fund. Also, the Director of the Fund has made a Resolution which appoints persons which have right to provide fuel for use of official vehicles and Direction on records of trip orders for use of official vehicles and authorisation of fuel costs;
2. STATEMENT FROM REPORT ON AUDIT OF THE ANNUAL FINANCIAL STATEMENT OF THE BUDGET OF THE MUNICIPALITY KOLAŠIN FOR 2006
Audit of the Annual financial statement of the Budget of the Municipality Kolašin
was performed by authorised auditors of the State Auditors Institution, and in
accordance with the Law on State Auditors Institution and International Auditing
Standards (INTOSAI). These regulations stipulate that the audit is planned and
performed in the way which allows us to make sure that the amounts given in the Draft
Resolution on Annual financial statement of the Budget of Municipality Kolašin for
2006, correspond to amounts stated in records, and whether the controlled revenues
and expenditures were correctly documented.
The audit includes checking of evidences based on samples which confirm amounts
and information in the Draft Resolution on Annual financial statement of the Budget of
Municipality Kolašin for 2006, and evaluation of applied accounting principles-
International standards for public sector, harmonisation with legal regulations and
publishing of information in the Draft Resolution on Annual financial statement of the
Budget of Municipality Kolašin for 2006.
In the Draft Resolution on Annual financial statement of the Budget of Municipality
Kolašin for 2006, the following account of budget performance was determined:
1 Receipts .......................................................................... 3.001.435,01 € 2 Expenditures ................................................................... 2.994.951,12 € 3 Unallocated receipts on 31.12.2006…………. ................ 6.483,89 €
It was determined by the audit that the Budget of the Municipality Kolašin in 2006
was financed from own sources and joint revenues with 2.712.789,01 € or 90,4% from
the subventions from the Budget of the Republic with 228.646,00 € or 7,6% and credits
60.000,00 € or 2,0%.
Current expenditures in 2006 were realised in 2006 to the amount of 1.445.139,79
€.
Capital expenditures in 2006, according to the Draft Resolution on Annual financial
statement of the Budget of Municipality were presented to the amount of 939.410,73 €.
Transfers to institutions, individuals, non-government and public sector were presented in
2006 to the amount of 300.213,96 €. Loans and credits in 2006, amounted 66.274,45 €.
Expenditures based on repayments from previous years amounted 190.910,93 €, and
expenditures from reserves in 2006 amounted 11.200,00 €. Municipality Kolašin finished
fiscal year 2006 with shown deficit to the amount of 1.035.071,33 €.
• Report on Cash Flows I- economic classification
REPORT ON CASH FLOWS I- economic classification
Year 2006
Month 01.01.-31.12
Ordinal number
Cash flow- economic classification Plan Realisation in the comparable period last year
Realisation in the stated period next year
1 2 3 4 5
RECEIPTS
1 Current revenues (1.1+1.2+1.3+1.4+1.5) 1.803.660,00 1.228.536,37 1.664.826,11
1.1 Taxes 545.000,00 366.284,39 478.501,53
1.2 Contributions
1.3 Duties 485.000,00 412.605,41 564.900,46
1.4 Compensations 400.000,00 351.407,45 411.366,27
1.5 Other revenues 373.660,00 98.239,12 210.057,85
2 Receipts from repayment of credits
3 Donations and transfers 228.646,00 283.574,00 228.646,00
3.1 Donations
3.2 Transfers 228.646,00 283.574,00 228.646,00
I TOTAL RECEIPTS (1+2+3) 2.032.306,00 1.512.110,37 1.893.472,11
EXPENDITURES
4 Current expenditures 1.452.831,00 670.708,37 1.445.139,79
4.1 Gross salaries and contributions payable by employer
874.317,00 429.405,01 871.696,95
4.2 Other personal income 123.156,00 64.400,00 120.591,00
4.3 Costs for material and services 278.675,00 159.442,50 276.602,42
4.4 Current maintenance 153.366,00 13.928,87 157.044,49
4.5 Interests 18.105,00 2.004,74 18.063,64
4.6 Rent
4.7 Subsidies
4.8 Other expenditures 1.212,00 1.527,25 1.141,29
5 Transfers for health protection 0
5.1 Rights from the sphere of health protection
5.2 Funds for redundancies
5.3 Rights from the sphere of pension and disability insurance
5.4 Other rights from the sphere of health protection
5.5 Other rights from the sphere of health insurance
6 Transfers to institutions, individuals, non-governmental and public sector
316.717,00 169.845,81 300.213,96
7 Loans and credits
8 Repayment of guarantees
9 Repayment of liabilities from previous period 192.356,00 234.582,92 190.910,93
10 Reserves 31.842,00 11.200,00
II TOTAL EXPENDITURES (4+5+6+7+8+9+10) 1.993.746,00 1.075.137,10 1.947.464,68
III Net cash flow (I-II) 38.560,00 436.973,27 -53.992,57
Cash flow based on investments
11 Receipts from the sale of non-financial property 950.000,00 4.169,00 1.047.829,67
12 Receipts from the sale of financial property
13 Capital expenditures 981.989,00 450.861,67 981.211,99
IV Net cash flow based on investments (11+12-13) -31.989,00 -446.692,67 66.617,68
Cash flow based on financing
14 Loans and credits 60.000,00 65.000,00 60.000,00
15 Repayment of credits 66.571,00 55.147,37 66.274,45
V Net cash flow based on financing (14-15) -6.571,00 9.852,63 -6.274,45
VI Increase/reduction of cash (III+IV+V) 0 133,23 6.350,66
VII Cash at the beginning of the period 133,23 133,23
VIII Cash at the end of the period (VI+VII) 133,23 133,23 6.483,89
EVALUATIONS AND RECOMMENDATIONS GIVEN WITH THE REPORT ON AUDIT OF THE ANNUAL FINANCIAL STATEMENT OF THE BUDGET OF THE MUNICIPALITY KOLAŠIN FOR 2006
According to the opinion of the State Auditors Institution, Draft Annual Financial Statement of the Budget of Municipality Kolašin for 200, by significantly material aspects, gives truthful and objective overview of presented receipts and expenditures on cash basis.
In the Report, State Auditors Institution has pointed at certain mistakes which should be
corrected, so that on the occasion of adoption of the Annual financial statement of the
budget of Municipality Kolašin for 2006, local self-government bodies have informed
Municipal Assembly that they have acted in accordance with recommendations of the
State Auditors Institution. By removal of noticed shortfalls and by implementation of given
recommendations, local self-government bodies will lead to the improvement of their
activities in the system of accounting records, financial reporting, system of internal
procedures and controls and to the general approach of responsible persons in local self-
government bodies towards state accounting, financial issues and reporting.
Recommendations which stem from the Audit of the Annual Financial Statement of the Budget of Municipality Kolašin for 2006, are mostly related to obeying of the validity of operations relative to state property management, use of budgetary reserves, accounting records and financial reporting, which cause the more efficient functioning of the system of the Municipal Budget, and therefore we emphasise the following:
1. it is recommended to Municipality to increase the efficiency of the tax service regarding collection of revenues, and to provide adequate and accurate records on all tax-payers of Municipality, pursuant the Law in Tax Administration.
2. it is recommended to the Municipality, to perform the presentation of financial reports and presentation of deficit and surplus in accordance with the Rule Book on way of preparation, drafting and submitting of financial reports of the budget, extra-budgetary funds and units of local self-governments (“Official gazette of the Republic of Montenegro, No.3/06) at the stipulated form: - Report on Consolidated Public Spending
3. It is recommended to the Municipality, pursuant the Law on Public Procurement, to appoint the officer who will also be authorised for performance of all public procurement (works, goods and services).
4. It is recommended to the Municipality to consistently apply the Law on Public Procurement and other legislations regulating this area, in obeying of procedure for procurement of goods, services and ceding of works. 5. It is recommended to the Municipality to provide recording of all transactions in business books, based on credible and complete accounting documentation pursuant the Rule book on unique classification of statements for the Budget of the Republic, budgets of extra-budgetary funds and budgets of municipalities. 6. It is recommended to the Municipality to use the funds determined by the budget pursuant the Article 37 of the Law on the Budget of the Republic of Montenegro and the Resolution on the Budget of Municipality by approved dynamics and for purposes within the funds provided by the budget. 7. It is recommended to the Municipality Kolašin to provide the analytic book-keeping of records pursuant the Rule Book on Unique Classification of Statements
for the Budget of the Republic, budgets of extra-budgetary funds and budgets of municipalities, and the Rule Book on classification of material and non-material property by groups and methods for determination of the amortisation of budgetary and extra-budgetary beneficiaries.
8. It is recommended to the Municipality Kolašin, aiming regular harmonisation of the state of the registry of real-estates with the real-estate registry of the Real-Estate Administration, to perform the connecting of its computer system with the computer system of the Real-Estate Administration, for securing the accurate data base.
9. It is recommended to the Municipality, to ensure in selling of property, application of provisions of the Law on Property of the Republic of Montenegro, Law on Construction Land, Law on Basis of the Property Legal Rights and bylaws adopted based on above mentioned Laws.
ACTIONS OF THE MUNICIPALITY KOLAŠIN ON RECOMMENDATIONS OF THE STATE AUDITORS INSTITUTION
Municipality Kolašin has informed the State Auditors Institution, while expressing their comments on results of the annual financial statement of the budget of Municipality, that it accepts the given recommendations aiming improvement of management of the government property, revenues and expenditures and that it accepts assuming of measures for their realisation.
3. STATEMENT FROM THE REPORT ON AUDIT OF THE ANNUAL FINANCIAL STATEMENT OF MUNICIPALITY ULCINJ FOR 2005
Audit of the Annual Financial Statement of the Budget of Municipality Ulcinj was performed by authorised auditors from the State Auditors Institution, and in accordance with the International Auditing Standards (INTOSAI). These standards stipulate that the audit is planned and performed in the way which allows us to make sure that the Draft Resolution on Annual Financial Statement of the Budget of Municipality Ulcinj for 2005 does not contain wrong, untrue information of material significance.
Audit includes checking of evidences based on samples, which are used for confirmation of amounts and information in the Draft Resolution on Annual Financial Statement of the Budget of Municipality Ulcinj for 2005, and evaluation of applied accounting principles- International Accounting Standards for public sector, harmonisation with legal regulations and publishing of information in the Draft Resolution on Annual Financial Statement of the Budget of Ulcinj for 2005.
In the Proposal of the Annual Financial Statement of the Budget of the Municipality
Ulcinj for 2005, the following realisations of the budget are given:
-Receipts 2.211.481,59 €
-Expenditures 2.194.938,06 €.
It was determined by the audit that the Proposal of the Annual Financial Statement
of the Budget of the Municipality does not contain the funds transferred from previous
year and the balance of deposits at the end of the period.
The following general data were determined during the audit of the Annual
Financial Statement of the Budget of Municipality Ulcinj for 2005:
planned Realised
Realisation in %
Receipts 3.283.000,00 2.181.724,90 66,46%
Expenditures 3.289.000,00 2.202.438,69 66,96%
By the Resolution on the Budget of Municipality of Ulcinj for 2005 (“Official gazette
of the Republic of Montenegro” – municipal regulations No.17 from 12.05.2005) receipts
were planned to the amount of 3.283.000,00 € out of which 2.181.724,90 € was realised,
or percentage of realisation was 66,46%. Expenditures were planned to the amount of
3.289.000,00 € and the realisation amounted 2.202.438,69 € or 66,96%.
In cases when during the fiscal year it comes to reduction of planned revenues or
reduction of expenditures, change of the Budget is being performed by procedure
stipulated for its adoption. Municipality Ulcinj did not perform the revision of the budget,
even though during the fiscal year a significant reduction of planned revenues occurred,
i.e. higher discrepancy between plan and realisation, which is contrary to the Article 45 of
the Law on Local Self-Government Financing.
According to the Draft Resolution on Annual Financial Statement of the Budget of
Municipality Ulcinj for 2005, Budget of Municipality Ulcinj was financed from its own
sources with 1.519.884,96 €, from common revenues with 237.187,47 €, from
subventions 304.409,16 € and from revenues from domestic debits with 150.000,00 €.
Data indicate that the expenditures of the Budget of Municipality Ulcinj were mostly
financed from own revenues 68,73%, than from subventions from the Budget of the
Republic 13,76%, common revenues 10,73% and revenues from domestic debits 6,78%. Data on sources of financing in 2005 and their structure are shown in the
following table and graph:
Ordinal number Description Amount in € Structure in %
1 Own revenues 1.519.884,96 68,73%
2 Common revenues 237.187,47 10,73%
3 Subventions from the Budget of the Republic 304.409,16 13,76%
4 Revenues from domestic debits 150.000,00 6,78%
5 TOTAL: 2.211.481,59 100,00%
Sopstveni prihodi-own revenues; zajednicki prihodi-common revenues; dotacije iz budzeta Republike-
subventions from the Budget of the Republic; Primanja od domacih zaduzivanja-revenues from domestic
debit
EVALUATIONS AND RECOMMENDATIONS GIVEN WITH THE REPORT ON AUDIT OF THE ANNUAL FINANCIAL STATEMENT OF THE BUDGET OF THE MUNICIPALITY ULCINJ FOR 2005
Certain irregularities and mistakes were discovered by the audit of the Annual
Financial Statement of the Budget of Municipality Ulcinj for 2005, which were stated in the Report on Audit. According to the opinion of the State Auditors Institution, Draft Resolution on Annual Financial Statement of the Budget of Municipality Ulcinj for 2005, by significantly material aspects, in the part referring to revenue account, data in the cash flow balance, and non-possession of the balance sheet, does not present objective and accurate financial account, it is not drafted in accordance with the accounting standards, and activities of municipal bodies in this part, were not fully harmonised with the applicable regulations.
In the Report, State Auditors Institution has pointed at certain shortfalls and mistakes which should be corrected, in order to have the local self government bodies inform the Municipal Assembly that they have acted in accordance with the recommendations of the State Auditors Institution, on the occasion of adoption of the Annual Financial Statement of the Budget of Municipality 2005. By correcting noticed shortfall and by implementation of the given recommendations, local self-government bodies will improve their operations in the area of accounting records, system of international procedures and controls and a general approach of responsible persons in local self-government bodies towards state accounting, financial issues and reporting.
Recommendations which stem from the audit on Annual Financial Statement of the Budget of Municipality Ulcinj for 2005, are mostly related to obeying of validity of operations, which cause the more efficient functioning of the system of the Municipal Budget, and therefore we emphasise the following:
• It is necessary to arrange for all financial transactions to be supported by complete documentation, and to provide accurate book-keeping documentation by all bases of expenditures and revenues in accordance with the Rule Book on Unique Classification of Statements. • It is necessary to provide analytic and book-keeping records of total non-financial property owned by the Municipality Ulcinj and to harmonise it with the Real-Estate Directorate pursuant the Article 16 of the Law on Tax on Realty (“Official gazette of the Republic of Montenegro” No.65/01). • In case when during the fiscal year it comes to reduction of planned revenues or increase of planned expenditures, it is necessary, pursuant the Article 45 of the Law on Local Self-Government financing, to make changes of the budget by procedure for its adoption.
• It is necessary to organise tax book-keeping which will provide reliable records on indebtedness and debt balance on all types of source revenues realised by the Municipality, and pursuant the Articles 67 and 75, the Law on Local Self-Government Financing and Article 6 of the Law on Tax Administration. Furthermore, we suggest the establishment of the separate collection service (they should have in mind the possibility for using the internal human resources within
the existing number of employees), which will at the area of Municipality Ulcinj assume all measures regarding collection of source revenues of Municipality in accordance with legal regulations, coordinate tax collecting measures, draft the operative plan of collections and monthly report on financial results of all source revenues of Municipality.
• It is recommended to the Secretariat for Economy and Finances of Municipality, to organise treasury business, in accordance with the Article 67 of the Law on Local Self-Government Financing, aiming more efficient realisation of functions of the financial planning, management of cash, debt, more accurate and efficient keeping of the budgetary accounting and financial reporting, and management of financial information system. • It is necessary on of concluding of short-term credits, to consistently apply the Law on Local Self-Government Financing i.e. to apply the Article 61, item 3 of the Law. • In performing of public procurement it is necessary to consistently apply the Law on Public Procurement in the sphere referring to the initial procedure of public procurement, realisation of public procurement works, estimation of value of public procurement, transparency of public procurements, tender documentation, conditions and aptness of tenderers, deadlines in the procedure of granting of contracts on public procurement, selection criteria, public opening of biddings, valuing of offers and making the decision in the public procurement procedure. • to introduce the system of the internal control which should encompass monitoring over routine transactions performed by certain officers. Management of Municipality should provide consistent application:
- legal regulations, - protection of property and information, - prevention of frauds, misuse and mistakes and - quality of accounting documents and timely submitting of reliable financial reports.
• Aiming more efficient performing of works in the local self-government bodies of the Municipality Ulcinj, it is necessary to put in function the information system, to do networking, and to provide access to data for system users under certain stipulated procedures. Only approved data can be entered into the system, which is provided by stipulated internal controls.
III OTHER ACTIVITIES OF THE STATE AUDITORS INSTITUTION
Beside the regular assignments which refer to the audit, the Institution had in the
reporting period significant activities at the plan of reorganisation, further institutional,
organisational, personnel and infrastructural strengthening. At the same time, a
significant progress was made in the area of defining of the Institution, adoption of
bylaws, education, and development of the international cooperation. Issue of the
regulation of the material position of state auditors and other employees, has been
raised.
Most of these activities happened in cooperation with the Board for Economy,
Finances and the Budget of the Parliament of the Republic of Montenegro and German
Organisation for Technical Cooperation GTZ, as partners in realisation of the project
“Establishment and Forming of the Supreme Auditors Institution in Montenegro”.
1. Cooperation with the Parliament of the Republic of Montenegro- participation in the public Debate on Draft Constitution of the Republic of Montenegro
In the procedure of adoption of the new Constitution of Montenegro, Institution
has had intensive cooperation with the Parliament of the Republic of Montenegro,
especially with the Board for Economy, Finance and Budget. Principles from the
Declaration from Lima were taken for the starting point, which specify the position of the
Institution and emphasise its independence as a guarantee of high level of initiative and
autonomy in comparison with the representative body. This document recommends the
regulation of mutual relation through the constitutional solutions, in order to confirm the
significance of the auditors institution in the parliamentary system.
In the previous period, with the Board of the Parliament and German
Organisation for the Technical Cooperation (GTZ) several common projects were
realised in the sphere of the constitutional positioning of the Institution, promotion of the
audit through strengthening of the control role of the Parliament in spending of state
money, application of the international standards for audit of the public sector and
education of personnel.
Institution has organised, in cooperation with the Board, two international
assemblies on “Role and Position of the Auditors Institution in the System of the
Parliamentary Democracy and the Constitution of Montenegro”, in which, beside
organisers also participated presidents and representatives of auditing institution of
Bulgaria, Croatia, Slovenia, Macedonia and Hungary, representatives of governmental
bodies of Montenegro and international organisations in Montenegro. Opinions were
exchanged in assemblies on experiences regarding with establishment of supreme
auditing institutions in national constitutional systems, institutional and functional
independence of auditors institutions and personal independence of functionaries.
It has been concluded that only independence and sovereignty of supreme
bodies of the state audit provides sufficiently high level of objective control of regularity
and economy of spending of public funds.
It was specially emphasised that without adequate control institutions, no country
can be competitive any more in accession of European Integration and that their
independence must be standardised in the Constitution. Based on harmonised
recommendations, the Board for Economy, Finance and Budget has adopted the
amendment on Draft Constitution of the Republic of Montenegro, which has clearly
defined adequate constitutional position and role of the Institution, in accordance with the
accepted international practice and standards.
2. Harmonisation of the Law on State Auditors Institution with the international auditing standards
In accordance with the statutory powers, competence of the Institution is to
control the application of regulations and general standards during collecting of public
revenues, financing of expenditures, disposal and management of property, investments
into realisation of planned objectives etc, whereat the subjects of the audit are bodies
and organisations which manage the budget and state property, local self-government
units, funds, Central Bank of Montenegro and other legal persons where the State is the
shareholder. In the competence of the Institution are also subjects who perform part of
the budget, and subjects that do business with the subject of the audit.
Last November, a legal solution was changed in the part regarding conditions for
appointing of members of the Senate of Institution. Further adjustments of legal solutions
will be focused on strengthening of administrative and internal capacity of the State
Auditors Institution, aiming the faster reception of Montenegro into EU integration.
3. Relation of the Institution with the Government of the Republic of Montenegro and other governmental bodies
Implementation of structural reforms in the area of public finance system, puts
upon the need for promotion and strengthening of the Institution, its competences and
capacities, through undisturbed functioning of three unbreakable functions of the
Institution: to advise, to control and to monitor realisation of recommendations.
In recommendation of relevant international institution, a role and importance of
Institution was recognised, and the necessity of the adequate positioning in the public
sector system. Beside further reform of management of public finances, in sense of
transparency, comprehensiveness, credibility, further strengthening of the internal audit
and promotion of public procurement, it is necessary to continue the reforms in the
sphere of public supervision. In that sense promotion is planned and institutional
definition of the cooperation with the competent institutions, such as: State Prosecutor,
Ministry of Finance, Agency for Anti-Corruption Initiative, Administration for Prevention of
Money Laundry, Commission for Control of the Public Procurement Procedure, Human
Resources Management Authority, Tax Administration, etc.
4. International Cooperation
International cooperation of the Institution, in the reporting period, was intensive
and was conducted through visits of representatives of other national auditing
organisations, representatives of international organisations and through organisation of
international assemblies, aiming promotion of state audit in Montenegro through the
exchange of experiences with countries in the region, education of employees and
implementation of international standards, organisation of seminars, work-shops and
other training programmes.
All these activities contributed promotion of already established regional and
international cooperation, which will help Montenegro to apply the best international
practice and standards from this area, which will cause management of public finances
and their supervision.
After the renewal of the Montenegrin statehood and international recognition of
Montenegro as independent country, State Auditors Institution has on 15. June 2006,
repeated request for full time membership in INTOSAI and EUROSAI, international
organisation consisted of supreme auditing institutions of EUROPE and the world. We
have been informed that the Institution has met all conditions and we expect to become
full time member of INTOSAI- International Organisation of Supreme Auditing Institution
at the beginning of November.
4.1. Cooperation with GTZ- German Organisation for Technical Cooperation
Cooperation with the German organisation for technical cooperation (hereinafter
GTZ), was in the reported period extremely intensive and of high quality, which resulted
in adoption of decision of partners from Germany on continuation of the Project and
cooperation in 2008.
Namely, within the framework of the Stability Pact for South-East Europe, the
Government of the Republic of Montenegro and Federal Republic of Germany have
agreed in 2001 on bilateral cooperation and on Project “Establishment and Forming of
the Supreme Auditing Institution in Montenegro” as contribution to transparency and
responsibility in public sector.
German Federal Ministry for Economic Cooperation and Development (BMZ)
has provided the necessary funds and has authorised the German Organisation for
Technical Cooperation (GTZ) for implementation of this Project. The Project should have
ended at the end of 2007, however, after the evaluation on success in the realisation of
the Project in recent period, upon request of GTZ and the Institution, the Federal Ministry
for International Development and Cooperation has provided the funds for continuation of
the Project in 2008, appreciating achieved results in recent period and need for the
further development of the Institution, as independent body.
“Commentary of the Law on State Auditors Institution” was made, published and
promoted in cooperation with GTZ. Commentary of the Law was prepared by Professor
Gerd K. Bauer, former member of the Senate of the Federal Accounting Court of
Germany, current collaborator of GTZ.
4.2. Regional cooperation
Open cooperation with partners from the region was established, with common
interests for further strengthening of administrative and institutional capacities of auditing
national institutions in the process of European integration, acceptance and exchange of
international knowledge and standards.
The Institution has organised in March 2006, in Podgorica, the first International
Conference of Supreme Auditing Institutions of Middle and South-East Europe, with the
theme “Role of Supreme Auditing Institutions in prevention of corruption”.
During the conference with the theme “Role and position of the State Auditors
Institution in the System of Parliamentary Democracy and Constitution of Montenegro”,
held in April 2007 in Podgorica, initiative was accepted for forming of International
Education Centre for Training and Education of State Auditors with headquarters in
Montenegro-Cetinje, respecting the fact that education of state auditors is important
foundation for achievement of high international standards, and therefore it is a
precondition of the quality, timely and professional audit.
Since the Supreme auditing institutions do not have long tradition of existence,
further strengthening of administrative and institutional capacities of institutions in the
process of European integration is necessary, and so is accepting of and exchange of
international knowledge and standards in the environment of open regional cooperation.
The role and significance of auditors institution in the overall system of public finance
additionally supports the need for establishment of educational Centre, in order to
accumulate knowledge and experience, and thus contribute to the upgrading of the
financial culture as a guarantee to regular and economy spending of public funds in this
part of the Europe.
Whishing to create also formal preconditions for promotion of the knowledge of
state auditors, and of the professional public through exchange of information and
following of world experiences in this area, many institutions from the region have
expressed the interest for this type of long term education, which was confirmed by
adoption of special resolution of participants of the mentioned international assembly.
5. Human Resources Management (personnel)
Through the drafting and adoption of internal enactments the Institution has
created conditions for performance of its statutory powers. In the reporting period, the
following enactments were adopted: Rule Book on way of State Auditors Examination,
Statute of the State Auditors Institution and Rule Book on internal organisation and
systematisation of work places.
These bylaws regulate decision making, way of work and performing of jobs in
the Institution, competences of the sector for performing of audits and way and procedure
of state auditors’ examination.
In the reporting period, there were 26 employees in the Institution, out of which
19 in audit and 7 in administration. Beside the Senate Members, in audit only 14 work
places are occupied: 13 state auditors and 1 advisor for information system.
With the new Rule Book on Internal Organisation 69 work places were
systemised. For jobs of audit 57 work places were systematised, and for administration
12 work places. Plan for Employing of State Auditors in this and in next year is prepared.
It is planned for the Institution to have 50 employees by the end of 2007, out of which 38
on jobs of audit.
Due to the fact that for its future development the Institution has to employ state
auditors faster, which are hard to find at the labour market, because uncommon
knowledge and permanent education is needed for performing of audit, the Institution has
started the initiative on integration of the Society for audit of Financial statements
„Montrev" d.o.o. with the Institution. The idea has been accepted by the Government of
the Republic of Montenegro, as the owner, and its realisation is underway, which will help
providing the needed number of qualified personnel necessary for the Institution.
The Institution has continued with the activities on permanent training of state
auditors and administrative personnel aiming creating of professional and competent staff
for performing of audit business, in accordance with the Law and international standards.
Training Programme and Specialisation of auditors was made in cooperation with the
German Organisation for Technical Cooperation (GTZ), and it envisages the training of
the management personnel, state auditors and general part of Specialisation for all
employees in the Institution. Part of the training for management personnel and state
auditors is financed by German Organisation for Technical Cooperation (GTZ) and the
general part of the training programme was realised through the Human Resources
Management Authority.
Training programme organised in cooperation with the German Organisation for
Technical Cooperation (GTZ) in the reporting period encompassed the following courses
and seminars:
X Seminar on audit on efficiency and effectiveness of the state financial control in Germany,
X Audit of construction measures, organisational audit etc.); X Work-shop on application of INTOSAI auditing standards on individual examples; X Seminar on audit of the annual financial audit of municipalities- experiences of accounting courts in Germany; X Seminar on management of documents in the State Auditors Institution; X Work-shop on application of information system in the audit; X Work-shop for the use of audit software (data analysis and sampling);
Institution has, also, adopted Rule Book on State Auditors’ Examination, thus
creating legal-formal conditions for licensing of state auditors in Montenegro. The Senate
has appointed the Commission for State Auditors’ Examination, and appointed members
of the Senate and professionals hired from outside the Institutions have drafted the
Manual for audit exam.
Programme for vocational training of the Human Resources Management
Authority, beside the governmental employees hired on works of public finances, was
attended by the large number of state auditors. As a result of developed cooperation with
audit courts and institutions in the region, the Institution has realised vocational training in
the Accounting Court in the Republic of Slovenia and training of state auditors in the
Supreme Auditing Institution of Poland. Training of Members of the Senate in the Federal
Accounting Court of Germany and Provincial Accounting Court is planned at the end of
the year, in cooperation with GTZ.
Study tour was also organised for members of the Board for Economy, Finance
and Budget of the Republic of Montenegro and two members of the Senate of the
Institution to Germany, and visit to the Federal and Berlin Parliament Board for Budget
control, and to the Federal and Berlin Accounting Court.
Programmes of vocational training were thought of through the cooperation of
the Institution with the Faculty of Economy in Podgorica, in accordance with the
Agreement on Cooperation, signed in July 2007. By exchange of experiences and
knowledge in the sphere of public finances, and with common projects of the Faculty of
Economy and the Institution, knowledge will be promoted and practical work will be
enabled for students of the Faculty of Economy, professional knowledge of professors
will be applied for the further development of Institution and arrangement of the public
finances system in Montenegro. Simultaneously, in a specific way it will be taken care of
the professional personnel and their further employment.
6. Information system
The Institution has continued developing the information system aiming creating
of conditions for more efficient performing of audit. Information system enables faster and
easier procedure of audit, simpler and safe data analysis, and faster search of requested
information, better accessibility and layout of information, higher quality of data exchange
during the audit, higher safety of keeping of information and data on audit.
Software called IDEA, of the Canadian company CASEWARE is used, and it is
designed for collection, analysis and sampling of data for audit. Software was provided
by the German Organisation for Technical Cooperation (GTZ) as a donation.
In cooperation with the same donor (GTZ) there are ongoing activities on
acquisition of the software solutions for management of documents in the Institution,
through monitoring of the audit process, exchange of data during the audit, keeping of
data on performed audits and application of office business in the electronic form. We
believe that until the end of the year, programme for electronic management of
documents will be installed in the Institution.
Information system of the Institution is consisted of sever, 25 computers, 20
notebooks, 12 printers and networking equipment. The equipment is licensed and
procured by the German Organisation for Technical Cooperation (GTZ).
IV PLANNED ACTIVITIES OF THE INSTITUTION AND FINAL REMARKS
By participating in the procedure of accession of Montenegro to EU, Institution
will influence the more efficient management of public finances and their monitoring, and
realisation of competences stipulated by the Law regarding the plan of declaring on
realisation of the Budget and rational use of funds, which were allocated for use to
subjects of audit, account of the state property, borrowing and guarantees given during
the year. Especially, the Institution will commit itself to giving of recommendations for
amendments and supplements of laws in cases there is the information that these laws
produce or can produce negative consequences or are not leading to planned results.
Determination of the Institution is, during next years, to take more active position
in the process of reforms and strengthening of institutional mechanisms, which will be
based on further development of capacities, continuous education of employees, and
membership in the international and European Organisation of Supreme Auditing
Institutions (INTOSAI and EUROSAI). By increase of Institution’s resources, resources
for monitoring and responsibility of institutions will be strengthening.
Necessary precondition for further development is the further normative
organisation of the Institution, drafting of international audit standards and bylaws of the
Institution, harmonisation and adjustment of way and methodology of work with the EU
standards. Significant impetus will be the expected accession of the Institution into the
full time membership of the world association of supreme auditing courts- institutions at
the XIX Congress of INTOSAI.
By exchange of knowledge and experiences, initiation and participation in the
regional initiatives, and common projects, regional cooperation will be deepened as te
long-term interest of the Institution.
Beside the continuation of the institutional strengthening, assignment of the
Institution in the following period will be the transparent informing of the Parliament,
Government and citizens on the way of management of funds and property, which are
being audited. In that sense, the Institution will define the courses of further development
and more active positioning in 2008, by definition of specific goals aiming realisation of its
main mission.
Achieved macro-economic stability and reforms implemented in the financial and
fiscal sector led to higher transparency and rationalisation of the spending of public
funds. With respects to the achieved progress and present moment in the development
of the economic and legal system of Montenegro, main assignment of the Institution is to
contribute to the more efficient management of public finances and their monitoring, by
application of the international practice and standards. Constitutional framework for
quality external control of public finances was established and created, and preconditions
were created for strong, competent, independent and supreme institution for external
audit.
By constitutional positioning of the Institution as a body of the supreme state
control of public finances and state property, the Institution will be able to help increase of
transparency, lawfulness and economy by its work and advice.