Institute for Construction Banja Luka refuses to accept an audit engagement and refuses to make available documentation and information to the Supreme Audit Office of the Republic of Srpske Public Sector, thus preventing the implementation of the audit provided for in the Annual Plan for 2024 for the first time since the establishment of the Supreme Audit Office, and this case has been officially notified The Audit Committee of the National Assembly of the Republic of Srpska for the purpose of taking measures within its jurisdiction.
In accordance with the Law on Auditing the Public Sector of the Republic of Srpska, ISSAI audit standards and the prescribed practice of the Supreme Audit Office, the Institute for Construction Banja Luka, for the purpose of conducting a financial audit, the Letter of Engagement for Audit No. 34.05/023.1-166/24 dated February 7, 2024 was submitted. year and request for submission of documentation (information, tabular overviews, photocopy of documentation) number 34.05/023.1-166-1/24 dated February 7, 2024.
In the period from 14.02. until 18.03.2024. In 2008, the Supreme Audit Office addressed or responded to the documents of the Institute for Construction through four documents o whom the director of this institution refused to confirm the submitted Letter of engagement and accept the audit engagement, and to submit the requested documentation, with the explanation that: ” Institute for Construction should not be the subject of an audit by the Supreme Audit Office of the Republic of Srpska”, “the Institute cannot be subsumed under the public sector”, “the registered activity of the Institute cannot be determined as an activity of general interest”, “it needs additional time as consent would be obtained for the audit of the Institution’s bodies – the Management Board and the Assembly of the company)” and the like.
In the public space, one could see the position of the management of the Institute for Construction that they are “protecting the rights of their shareholders” in this way.
Although there has been a change of management in the meantime, there has been no change in the attitude of this public sector entity, and due to the aforementioned, the implementation of the audit foreseen in the Annual Plan for 2024 has been made impossible.
The Supreme Audit Office is of the opinion that the Institute for Construction Banja Luka has no reason or right to hide or not provide the requested information and documentation and refuses to cooperate with the Supreme Audit Institution of the Republic of Srpska. The rights of shareholders are protected by doing exactly the opposite – by disclosing all important information related to the work and operations of the Institute for Construction Banja Luka.
In this way, we once again obtain arguments that confirm that the Institute for Construction Banja Luka is a public company and therefore represents a public sector entity of the Republic of Srpska, for whose financial audits the Supreme Audit Office is responsible.
The general powers of the Supreme Audit Office are determined by Article 16 of the Law on Auditing the Public Sector of the Republic of Srpska, so among other things, according to the provisions of paragraph 3 of the same article, the Supreme Audit Office is authorized to audit public institutions, public and other companies in which the Republic has direct or indirect ownership stake.
Also, we hereby point to the main goal of the Supreme Audit Office, which is clearly stated in Article 3 of the Law on Auditing the Public Sector of the Republic of Srpska, to provide independent opinions on the application of laws and other regulations, budget execution, financial reports, use of resources and management of state property in the institutions and public sector of the Republic of Srpska. In accordance with the basic objective, the powers of the Supreme Audit Office also arise.
On the other hand, Article 2 of the Law on Public Enterprises (“Official Gazette of the Republic of Srpska”, no. 75/04 and 78/11) defines the concept of a public enterprise, so a public enterprise is considered a legal entity that is registered in the court register as a company in the form of a joint-stock company or a limited liability company, for the purpose of carrying out activities of general interest and in whose basic capital the Republika Srpska or a unit of local self-government directly or indirectly has majority ownership.
Bearing in mind that the Construction Institute Banja Luka is a joint-stock company in which the City of Banja Luka has the majority ownership (71.86% of the share capital), the conditions for the Construction Institute to be considered a public company are met, i.e. the fact that according to the regulation the business entity is registered or for which activity it is registered.
Additionally, we highlight the fact that the Government of the Republic of Srpska based on Article 2a. paragraph 2 of the Law on Public Enterprises adopted the Regulation on the Transparency of Financial Relations between the Republic of Srpska, i.e. local self-government units and public enterprises (“Official Gazette of the Republic of Srpska” No. 114/11), which obliged public enterprises to “ensure the necessary prerequisites for effective external supervision” – Article 4, paragraph 1, item d), and the Supreme Audit Office represents external parliamentary supervision, i.e. supervision by the National Assembly of the Republic of Srpska.
Although non-compliance with the provisions of Article 39 of the Law on Auditing the Public Sector of the Republic of Srpska entails misdemeanor liability in accordance with the provisions of Article 47 of the Law, and activities based on the authority to collect information for audit purposes from Articles 39 and 40 of the Law on Auditing the Public Sector of the Republic of Srpska are not limited by any other law (Article 41), the planned audit and audit activities in the Institute for Construction Banja Luka cannot be carried out without access to information, documentation and responsible persons of the subject of the audit.
The Supreme Audit Office will not give up the implementation of this financial audit and will take all measures available to it in accordance with the regulations of the Republic of Srpska to carry out the said audit and inform the public through the audit report of all the relevant information to which it is entitled.
