The collegium of the State Audit Institution (DR) expressed a negative opinion on the Final Budget Account of the Municipality of Tivat for 2023 and a negative opinion on the compliance audit of the Municipality's operations for the year 2023.
In relation to the local administration of Tivat, SAI issued two recommendations for financial audit and 17 recommendations for regularity audit, for which it has until September 2 to submit an activity plan for their implementation.
The leadership of the Municipality of Tivat at a press conference rejected as scandalous the report of the SAI, most of the state auditors' findings on alleged irregularities as "unfounded, malicious and trivial in relation to the state of the country" and said that the report of the SAI Collegium led by Zoran Jelić was "targeted with the political purpose of causing damage to the reputation of one of the most successful municipalities in Montenegro by all parameters".
"Improper recording of expenditures in the amount of 30 percent in relation to the total expenditures of the Municipality, which amounted to about 23,5 million euros, resulted in a negative opinion on the financial audit of the Final Account of the budget of the Municipality of Tivat for the year 2023. The audit procedure determined the financial result surplus/ the deficit of the Municipality in the amount of 1,8 million euros compared to the reported 2,8 million euros in the financial reports of the Municipality for the year 2023. The regularity audit determined the non-compliance of the operations of the Municipality of Tivat for the year 2023 with the Law on Local Self-Government, the Law on financing of local self-government, the Law on Tax Administration, the Law on Earnings of Public Sector Employees, the Law on Protection and Rescue, the Law on State Property, the Law on Public Procurement, the Rulebook on the Method of Conducting Simple Procurements, the Rulebook on the Method and Deadlines for Carrying Out Property Inventory and obligation for legal entities and the Instruction on the method of working closer to the work of the local self-government treasury and the Instruction on the method of calculating wages and compensation during temporary incapacity for work", the SAI announced.
Through the audit of regularity, the Board of the SAI, which consisted of Zoran Jelić and Nikola Kovačević, determined that during the implementation of the procedure for establishing an employment relationship, the Municipality did not take into account the evidence of meeting special conditions for workplaces - a specialist examination of psychophysical abilities in the Municipal Police sector, the Secretariat for Inspection surveillance and rescue services.
"The Municipal Council did not timely adopt a program for the development of the protection and rescue system on the territory of the Municipality. The rescue service established a working relationship with persons older than 25 years, which is contrary to the Law on Protection and Rescue. The Municipality passed a Decision on determining the increase in the salary of the employees of the Service protection and rescue for carrying out work in certain workplaces without the consent of the Ministry of Finance, which is in contradiction with the Law on the wages of public sector employees current year, paid amounts for the previous and current year and total claims at the end of the year, as the data is manually calculated," the report states.
They add that the local revenue collection department "does not keep records of the value of receivables based on the decision on forced collection, as well as the collected amount of receivables on this basis" and that "the Municipality incorrectly calculates the initial part of the salary due to temporary inability to work".
"Local communities did not submit quarterly reports on financial operations to the municipal body responsible for financial affairs, which is determined by Article 74 of the Decision on Local Communities. The supervisory function of the Municipality is not ensured over the consumption of allocated funds to transfer beneficiaries and over the consumption of allocated funds paid for capital expenditures. The Municipality is not ensured the monitoring of the implementation of public procurement contracts through the appointment of responsible persons and did not provide evidence of qualitative and quantitative acceptance of the performed works, i.e. services", the DRI points out, adding that the report on the audit of the final account of the budget of Oština Tivat for 2023 is left "for review by the Ministry of Finance and the Ministry of Public Administration, as the bodies in charge of supervising the work of local self-governments; the Committee for Economy, Finance and Budget, the Association of Municipalities as well as the Supreme State Prosecutor's Office".
The Vice-President of the Municipality of Tivat and former finance secretary for many years, Jovan Brinić (Krtoljska lista), completely rejected the negative opinion of the SAI regarding the financial operations of the Municipality, stressing that it was issued because of the way in which the Municipality records certain expenditures from the budget, which individually exceed the "so-called threshold" materiality of 250.000 euros, which the SAI has marked as the limit for giving a negative opinion".
"According to the SAI, we should have booked the funds that the Municipality sets aside for expropriation under the item 'court proceedings' in the current budget expenditure, not as capital expenditure. Imagine their attitude when we all know that through expropriation the Municipality gets new capital - real estate , when it is clearly defined by law that expropriation is part of the costs for communal equipment of the land, which are capital investments, and when we all know that all expropriation procedures, as a rule, always end up in court because the owners of the properties that are exempted always complain about them , an initially determined low expropriation fee", said Brinić, adding that the Municipality of Tivat always records the expropriation price it pays for real estate it acquires as a "capital expenditure", while the costs of court proceedings related to expropriation are always separately recorded as "court costs " on current budget expenditures.
"It is the only logical solution, and when we introduced those views to the DRI collegium, they had absolutely no arguments to disprove it," underlined Brinić, adding that the Municipality of Tivat annually spends between two and three million euros on expropriation and that it necessary for the construction of new infrastructure and public facilities, as well as that the same way of recording these expenditures in the budget was applied by the local administration for years and during the former government of the DPS, "so no one from the SAI then questioned it".
"The second alleged irregularity established by the SAI refers to the recording of KFW Bank's loan funds, which for years have been earmarked for water supply and sewerage network construction projects, and which are, par excellence, capital investments. The SAI believes that all of this should be recorded as debt' in the current and not the capital part of the budget, although we book the principal amount of those loans in the capital part because it is the only way to show and monitor investments in water and sewerage infrastructure, while all other loan costs (interest, etc.) are booked in the item 'repayment' debt' in the current part of the budget. So nothing is hidden or irregular here, and above all it is not illogical what the SAI's position is on this basis," explained Brinić, adding that the Municipality of Tivat has been receiving positive opinions from the Ministry of Finance and independent auditors on its budgets for years. and the final accounts, which are now being questioned by the SAI, seem to receive regular praise from the Union of Municipalities for transparency and efficiency.
Mayor Željko Komnenović (Narod Pobjeđuje) pointed out that such a finding by the SAI is "scandalous and ill-intentioned" for the record budget in the history of Tivat, which was realized in the amount of 31 million euros in revenue, and consumption was 23,5 million euros.
"Senator DRI Zoran Jelić, who was a member of the DPS for nine years before that, did not answer my question as to why the DRI has not carried out any audits in the Municipality of Tivat since 2010, even in 2020, when we took over the local government from the DPS, and found it devastated the city coffers, the huge debts and the general chaos that we have repaired in the meantime. Although we called them then to do an audit, they did not come, but that is why they came now when, with the enormous efforts of everyone in the local administration, we are achieving record results, when the municipality has no financial problems, everything its companies and institutions are operating positively, and capital expenditures are recording a record achievement. Such a finding by the SAI should have cast a shadow over all of this and caused undeserved damage to our reputation," Komnenović pointed out, adding that everyone in the Municipality of Tivat was over the three months that Jelic's work lasted. and Kovačević were maximally helpful and accommodating to the state auditors.
"It is particularly indicative, not to use a more difficult word, of a negative audit of regularity. A master of fire protection who is finishing his doctoral studies and who is the head of the Protection and Rescue Service according to the DRI, was illegally employed because he does not have a specialist medical examination required by the Law on Protection and he does not ask for rescue at all. They asked the head of the Communal Police to have the same, and in the meantime they both passed those examinations and received certificates, but the SAI still cites it as an irregularity that should be removed and gives a negative opinion," he said. is Komnenović, adding that the municipality "has already corrected 90 percent of the remarks that the SAI stated in the initial finding, and these 17 that they state that were allegedly not removed are trivialities in relation to what is being done in the state, including the SAI itself." .
"Imagine - the former DPS administration of the city once employed two people in the Protection Service as auxiliary workers, and in practice they then performed the work of firefighters-rescuers. When we came to power, we officially employed those people in the positions of firefighters, which they even though we actually legalized the employment of those people, now the DRI considers it an irregularity that they are employed as firefighters even though they are older than the legal limit of 25 years since they were employed as cleaners in the meantime who are expected to put out the fire, of course they are old. What should we have done - to fire them," said Komnanović, who pointed out that "if I were to send the Internal Audit Service of the Municipality of Tivat to investigate the work and operations of the SAI, they would surely found many more and more serious irregularities there".
He claims that in Tivat during the DPS administration there were "much more and much more serious irregularities that the DRI did not establish or investigate at the time", and that with this behavior, that institution "creates unnecessary administrative barriers for the current city government, due to which we cannot achieve the basic functions of local administration".
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