In its Annual Financial Report for 2023, the Water Administration incorrectly stated expenditures for software development and maintenance in the total amount of 192.935,85 euros under the capital expenditure item instead of the current expenditure item, which is not in accordance with the Law on the Budget of Montenegro for 2023 and the Rulebook on the Unified Classification of Accounts for the Budget of Montenegro and Municipal Budgets.
This was announced today by the State Audit Institution (DRI).
The statement states that the SAI has published a Report on the Audit of the Annual Financial Report and Regularity of Operations of the Water Administration for 2023.
"The State Audit Institution has audited the Annual Financial Report and the audit of the regularity of the operations of the Water Administration for 2023. The competent Collegium of the SAI, which managed the audit, consisting of: Head of the Collegium Siniša Čađenović, member of the Senate and Chairman of the Senate Zoran Jelić - member of the Collegium, expressed a qualified opinion on the Annual Financial Report and an adverse opinion on the regularity of the operations of the Water Administration for 2023," the statement states.
The SAI said that the audit of the regularity of the Water Administration's operations for 2023 identified non-compliance with the provisions of the following laws and by-laws: the Law on Budget and Fiscal Responsibility, the Law on Management and Internal Control in the Public Sector, the Law on State Property, the Law on Civil Servants and Employees, the Law on Public Procurement, the Instructions on the Work of the State Treasury, the Regulation on the Method of Keeping Records of Movable and Immovable Property and on the Inventory of State-Owned Property, and the Instructions on the Detailed Method of Conducting an Inventory of Movable and Immovable Property in State Ownership.
"The Water Administration has not established an efficient system of recording calculated and collected water fees, which represents a fundamental violation of the principle of transparency in the financial management of public revenues. The absence of an efficient system of recording and supervision has resulted in the accumulation of taxpayer debts in the total amount of 2.510.420,55 euros, with 70,35% of that debt being related to entities that are in bankruptcy, which further reduces the possibility of collection and generates fiscal risks for the budget. In relation to the implementation of the Law on Management and Internal Controls in the Public Sector, the internal audit unit of the Ministry of Agriculture, Forestry and Water Management, which is also responsible for the internal audit of the Water Administration, did not conduct an internal audit of the Administration for the period from 2020 to 2024," the statement reads.
The SAI added that the Administration did not adopt a Management and Control Improvement Plan, and that it also did not ensure the separation of duties of persons responsible for execution, recording or control.
"The Administration does not ensure the maintenance of the General Ledger with records of assets in accordance with the applicable Rulebook, but rather reports based on data from the General Ledger of the State Treasury. The Water Administration did not timely submit to the State Property Administration the Annual Inventory Report in accordance with the prescribed deadline for submitting data on movable and immovable property. The data on the square footage of business premises in the Water Administration's business books are not aligned with the data from the State Property Administration's real estate list," the SAI said.
They state that the Administration should develop and implement an internal procedure to more closely define the method of conducting an inventory and keeping records of movable and immovable property in state ownership.
"In the Public Procurement Plan, the Water Administration incorrectly planned and implemented the procurement of the service of Preparation and phases of complex detailed hydrogeological and geophysical surveys of the Cijevna River Basin, whose estimated value exceeds the legal limit for implementing a simple procurement, but it should have been planned and implemented according to the procedures prescribed in Article 51 of the Public Procurement Law," the SAI said.
The institution also said that the Water Administration is obliged to submit an Action Plan for the implementation of the recommendations by May 19, 2025, and a Report on the implementation of the recommendations by October 22, 2025.
"The subject report has been submitted for information to the Parliament of Montenegro, the Committee for Tourism, Agriculture, Ecology and Spatial Planning and the Ministry of Agriculture, Forestry and Water Management. The interested public can familiarize themselves with the Report on the Audit of the Annual Financial Report and Regularity of Operations of the Water Administration for 2023 on the official website of the State Audit Office, section www.dri.co.me", the DRI statement reads.
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