The National Assembly of the Republic of Srpska adopted the Annual Audit Report for the year 2024 at its eleventh regular session, and took note of the Report on the Financial Audit of the Consolidated Annual Financial Report for Budget Users of the Republic of Srpska for the period from January 1 to December 31, 2023. year.
The Supreme Audit Office of the Republic of Srpska submitted to the National Assembly of the Republic of Srpska, together with the report on the audit of the Consolidated Annual Financial Report for the users of the budget of the Republic of Srpska, and the Annual Audit Report for 2024, which includes the most important findings and recommendations from the financial audit and performance audit for the past reporting period, from August 1, 2023 to July 31, 2024.
In accordance with the audit activity plans for 2023 and 2024, a total of 90 individual engagements of financial audits were carried out in the indicated reporting period. These are five engagements to check the status of previously given recommendations and 85 financial audits, which include the audit of financial statements and, together with it, the audit of compliance.
These are audits:
– 21 beneficiaries of the budget of the Republic for whom, according to the law, a financial audit is mandatory every year,
– four social protection funds,
– Consolidated annual financial report for the beneficiaries of the revenue of the budget of the Republic of Srpska for the year 2023,
– 22 local self-government units (of which 13 were conducted in the period 1.8 – 31.12.2023 (for 2022) and 9 audits until 31.7.2024 (for 2023);
– 12 institutions from the field of health and social protection;
– eight joint stock companies (mainly utility companies) and one limited liability company;
– eight public institutions and eight other entities (republic administration, agency, service, etc.).
In addition, in the reporting period, as in the previous year, the Supreme Audit Office audited the financial statements of the State Audit Institution of the Republic of Serbia.
Based on the conducted financial audits for the previously mentioned entities, the following opinions were given:
– opinion on financial statements:
- unqualified opinion for 29 subjects;
- qualified opinion for 51 reports and
- fice adverse opinions.
– opinion on compliаnce:
- unqualified for 32 subjects;
- qualified opinion for 50 reports and
- three adverse opinions.
Of the 21 entites where the financial audit is mandatory every year, unqualified opinions (both for financial statements and for compliance) were expressed for 15 of them, while qualified opinions were expressed for the other subjects, and qualified opinions were expressed for four ministries. both for financial statements and for compliance, for one ministry and the Consolidated annual financial report of the users of the budget of the Republic for 2023, an qualified opinion for financial statements (with a unqualified opinion for compliance) was expressed, and for one subject there was an qualified opinion for compliance.
Implementation of recommendations from the financial audit report for the previous year
Within the financial audit audit reports issued in this reporting period, the Supreme Audit Office made a total of 865 recommendations or an average of 10 recommendations per audit report (which is at the level of the previous year), of which 409 related to the elimination of irregularities and errors observed in the financial reports and 456 related to the elimination of non-compliance with regulations. In this reporting period, of the 865 financial audit recommendations given, part refers to the audited period of 2022 (461 recommendations), and part to 2023 (404 recommendations).
Although almost a third of the financial audit reports in this audit cycle refer to subjects of mandatory audit (budget users and funds defined by the Law), the smallest number of recommendations (an average of 2.9 per report) were addressed to these subjects, with the highest percentage of auditor’s unqualified opinions (over 70%).
On the other hand, the largest number of given recommendations, more precisely 327 or almost 38% of all given recommendations in this reporting period were sent to local self-government units (through 22 financial audit reports, including 13 audits in the period from 01.08. to 31.12.2023 and 9 which were implemented in 2024). The complexity of the financial audit of local self-government units (consolidated FR that includes lower budget users; conducting audits every 3-4 years) is clearly reflected in the scope of identified deficiencies, but also in the number and structure of recommendations. An average of 15 recommendations per LGU report indicates that it is necessary to strengthen and improve the system of financial reporting and internal financial control in municipalities/cities, as well as the mechanisms and modalities of parliamentary supervision.
Almost 40% of all recommendations were given to audit subjects that are not audited in regular annual cycles, and in this case they were mainly public institutions (from the field of health and social care, high schools and others), as well as administrative organizations, institutes and other institutions , a total of 332 ie. 157 for financial statements and 175 for compliance. The fact that these entities were given an average of 11.5 recommendations per report suggests the conclusion that in connection with these audits, it will be necessary to carry out at least one more engagement to check the status of the given recommendations. A similar conclusion applies to the companies (JSC and LLC) that were the subject of a financial audit in this audit cycle (an average of 16 recommendations per report).
According to data from the publicly available register of audit recommendations, the status of all verified financial audit recommendations is as follows:
55% refers to fully implemented recommendations,
17% on partially implemented,
26% are recommendations that have not been implemented, while
2% of recommendations that are not current due to changed circumstances for their implementation.
Performance audit
By choosing the areas of audit and topics that are the subject of performance audits, the Supreme Audit Office is in the function of achieving the general goals established by the strategies and policies of the Republic of Srpska and in the function of improving general and financial management in the public sector of the Republic of Srpska. In order to fulfill the general goal of the performance audit, through the audit process, it includes several public sector institutions that have certain roles, responsibilities and responsibilities related to the processes and activities that are the subject of the audit for a long period of time.
In the indicated reporting period, six performance audits were carried out, which were planned in the Annual Audit Plan for 2023. All performance audit reports were published in accordance with the plan in the period from 1.10. until 29.12.2023. and in addition, four follow-up reviews of the implementation of the recommendations from the performance audit report were conducted.
In order to harmonize the performance audit results, six focus groups were held where the audit findings were presented to representatives from 72 public sector institutions included in the performance audit engagements.
Through six performance audit reports, the Supreme Audit Office sent a total of 45 recommendations to the Government of the Republic of Srpska, ministries, public enterprises, public institutions, local governments and other public sector institutions that are competent and responsible for managing the processes and activities that were the subject of the performance audit.
The comments submitted by the institutions included in the audit were considered with due care, and the well-founded and documented comments were accepted and included in the final audit reports. An overview of the number of institutions included in the audit and the number of institutions that submitted comments, as well as the scope, character and substance of the comments, indicates a high level of conformity of findings, conclusions and recommendations between the Supreme Audit Office and the institutions included in the audit.
Implementation of performance audit recommendations
The joint activities of the institutions included in the audit, the Audit Committee of the National Assembly of Republika Srpska and the Supreme Audit Office continued the trend of increasing the number and quality of action plans for the implementation of performance audit recommendations, compared to previous audit cycles.
In accordance with the annual audit plans, in the previous period including this audit cycle, 20 follow-up reviews were conducted and 138 previously given performance audit recommendations were checked, and the results of the check are:
– Fully implemented 19%
– Partially implemented 49%
– Implementation in progress 13%
– Not implemented 19%.
In the reporting period, in addition to audit engagements, the following activities and presentations of performance audit findings were held with the participation of auditors from the Supreme Audit Office, which indicates the importance of performance audit functioning:
– A study visit to the SAI of Malta organized by the United Nations Development Program, which was an opportunity to exchange practices and experiences regarding the audit of the implementation of Sustainable Development Goals and to present performance audits related to the Sustainable Development Goals, October 2023;
– Several workshops (September-December 2023) within the Project of Parallel Audit of the Performance of Gender Equality, in which representatives of five SAIs participated (State Audit Institution of Serbia, State Audit Institution of Montenegro, Office for Audit of Institutions of Bosnia and Herzegovina, Office for Audit Federation of Bosnia and Herzegovina and the Suprme Audit Office of the Republic of Srpska Public Sector) with the support of the United Nations Agency for Gender Equality and Women’s Empowerment;
– Presentation of the results of the Parallel Performance Audit of Gender Equality Project and presentation of the publication “Regional Parallel Performance Audit of Goal 5 of Sustainable Development – Achieving Gender Equality”, March 2024.
