Montenegro

Together on the same task: Committed to strengthening the financial control mechanisms in Montenegro

Podgorica, 21 October 2011

“It is indeed an important topic for Montenegro – internal financial control in public administration and their practical applications are a critical precondition for the integration of candidate countries into the EU,“ said Ms. Lovita Ramgutee, UNDP Deputy Resident Representative to Montenegro at the conference “Financial control mechanisms in Montenegro – Together on the same task” organized by the NGO Institute Alternative and UNDP Montenegro. Participants in the conference agreed that it was necessary to strengthen cooperation between the actors involved in the development of financial control. The aim of the event was to gather all stakeholders involved in the control of public finance to exchange views on possibilities of coordination and cooperation.

The conference gathered leaders from relevant institutions involved in internal and external control, including the Ministry of finance, State Audit Institution, Parliament, civil society, and Ms. Annie Demirjian, Team Leader on Democratic Governance from the UNDP Regional office in Bratislava, to present the current framework, achievements and challenges. At the same time, UNDP and the NGO Institute Alternative presented some best practices in relation to mechanisms of control and NGOs involvement in the oversight of the budget preparation and execution.  

The event represented an opportunity to examine the current situation in the field of control of public finances, strengthening the efforts of various actors in the field of control of public finances, exchange experiences and raise awareness of the need for communication, cooperation and coordination, but also to place emphasis on the role of civil society organizations. The participants sent a message that coordination and cooperation is necessary among the institutions involved in the control of the budget, while contribution of the civilian sector can be an important mechanism in this field.

The following topics were discussed at the conference: “Internal financial control in the public sector – achievements and challenges in the implementation” (Ms. Ana Krsmanović, Ministry of Finance, Assistant Minister for central harmonization of financial management and control, and for the internal audit in public sector); “Novelties in the Law on State Audit Institution (SAI) and expected strategy for development of the SAI” (Mr. Dragiša Pešić, member of the  SAI Senate); “Parliamentary oversight through budget control – between the efficiency and the political will” (Mr. Aleksandar Damjanović, President of the Board for economy, finance and budget of the Parliament of Montenegro); “Comparative examples of checks and balances systems of internal and external control” (Ms. Annie Demirjian, Democratic Governance Cluster Leader, UNDP Bratislava Regional Centre), and “Role of the civil society organizations in strengthening the budget oversight“ (Mr. Marko Sošić, Project Associate at the Institute Alternative).

“There is no effective budget control without substantial political will. There are some developments and emerging political will to extend this process to the Parliament, so that all its committees can discuss budget and deliver the opinion of the parent committee which discusses the budget during three or four days,” said the Chairman of the Parliament's economics committee Mr. Aleksandar Damjanović. He reminded that the annual budget bill is being submitted to the Parliament in late September and the audit report in late October. “Waiting for the State Audit Institution’s (DRI) report we enter November, when discussions on the budget for next year are already starting – and this should not happen at the same time. Time has come for the DRI to be bolder in scores and not to change negative findings into the conditional positive thinking, although it is likely an incentive for the consumer to correct the irregularities. Although DRI has the option of filing criminal charges, it should be done by the prosecution on the basis of audit findings. I suggest to the Ministry of Finance to establish penalties through changes in the budget law,” said Mr. Damjanović.

The Parliamentary Committee on Economics should soon give opinion on the DRI’s budget for next year, which predicts an increase by a fifth compared to this year. Mr. Damjanović expects that the budget will be adopted with respect to broad support from many parties.

Member of the DRI Senate Mr. Dragiša Pešić explained that the DRI forms opinions in line with international standards, but without fully developed criteria. “There is little difference between negative and conditionally positive reviews, but the nuances can be distinguished. There are no barriers to separate reports on the audit of final accounts and the budget law, where a provision that tolerates the opening of commercial bills to the consumer units was subsequently inserted, which is problematic. The exemption of the judiciary, prosecutors and the parliament from the law on the budget is not a good solution, because all consumers should have the same treatment,” said Mr. Pešić, who also thinks that the allocations of the audit authority for IPA funds beyond the pale of DRI is a big handicap in terms of staffing. He also thinks that the lack of personnel or the inability to employment must not be an obstacle in communication between the institutions. “We delegated the best staff we have to the DRI, thus so far we have completed only a third of jobs, and we are faced with the outflow of staff to other institutions. The State Audit Institution is very interested in the project of internal audit, and the results of internal audit could facilitate and accelerate the work of government auditors. None of our audits should begin without previous familiarizing and reviewing of the results of internal audit and internal control in an audited entity. “This is where we need to start from and draw some of the data,” Mr. Pešić concluded.

Assistant Minister of Finance Ms. Ana Krsmanović said that tax revenues do not correspond to the funding needs. “Everybody requires an increase in salaries, but we must be aware that one's income is expenditure of another person. If we increase profits in one sector, these funds must be offset by higher taxes or borrowing. I am afraid there is no room to increase spending but to reduce it,” explained Ms. Krsmanović. She said that for now the Ministry of Finance formed only 19 of the 26 internal audit units. “What we have to be aware of is that essentially we have eight officers in the public sector who have been involved in the audit at the central level, while the internal audit has been centralized in the Ministry of Finance and most people appointed for internal auditors have or maybe do not have enough experience,” Mr. Krsmanović underlined.

UNDP Deputy Resident Representative to Montenegro Ms. Lovita Ramguttee emphasized that the mechanisms of internal control in state administration and their practical implementation are a key requirement for country’s integration with the EU. “An important aspect of this process is the improvement in the quality of public administration and public institutions. However, we need to be able to measure the improvements and the quality, and do so in a transparent and accountable manner. When we speak about accountability, then, one of the very important topics is the mechanism of financial control, the internal and external oversight mechanisms. In the context of economic crisis and new pressure on public finances, it is becoming increasingly important to better understand the framework and opportunities for a stronger partnership between the government, civil society and international organizations leading to transparent, effective and accountable public spending for greater and more sustainable impact. Indeed, the role of think thanks such as Institute Alternative is very important for improvement of overall accountability of public administration, public finance management and oversight mechanisms of public finance. I am glad that UNDP is partnering with the Alternativa as we believe that this kind of events could promote further partnerships and cooperation,” Ms. Ramguttee stressed.

Ms. Annie Demirjian, Team Leader on Democratic Governance from the UNDP Regional office in Bratislava: How it should be: Civil society and Government partner on financial accountability