The role of the Audit Institutions ignored, and their reports without any effect

Unlike most countries in the European Union, legal, political and regulatory grounds for the work and jurisdiction of audit institutions in BiH has not been set in the current Constitutions / Statutes of the Entities and Brčko District, and they are not familiar with the functions of the public and parliamentary monitoring of the executive authorities, public institutions and public finances. Without constitutional grounding, independency and expertise of the SAI in BiH has been left to the will of the political leaders and parties, their parliamentary majority, making of the audit institutions a possible target for illegal influences of the executive authorities, political leaders and parties.

The results of a comparative research of the financial audits in BiH show huge differences in annual and three-year structure and trends of opinions and ratings given by the financial auditors. So, in the period from 2010 to 2012 the highest shares of positive audit opinions were given by SAI BiH (78%), followed by the Supreme Office for the Republic of Srpska Public Sector Auditing (37 %). The lowest share of positive audit opinions was given by SAI FBiH (0%) and the Office for Brčko District Pubic Administration Auditing (14%). The highest share of negative audit opinions were given by SAI FBiH (22%) and the Office for Brčko District Pubic Administration Auditing (14%), and the lowest by SAI BiH (1,5%) and the Supreme Office for the Republic of Srpska Public Sector Auditing (2,3%). In the past three years the most reviews with the ‘’qualified audit opinion’’ has been given by SAI FBiH (77%) and the Supreme Office for the Republic of Srpska Public Sector Auditing (59%). During the past three years the number of the negative audit opinions has slightly increased in SAI BiH and SAI FBiH, and decreasing in the Supreme Office for the Republic of Srpska Public Sector Auditing and the Office for Brčko District Pubic Administration Auditing. The number of positive audit opinions is increasing in SAI BiH and the Supreme Office for the Republic of Srpska Public Sector Auditing, stagnating in the SAI FBiH and decreasing in the Office for Brčko District Pubic Administration Auditing.

Financial audits in all four SAIs fail annually to cover even 10% of the institutions and organizational units of the public sector in BiH- from about 2500 organizational units only 200 to 220 financial audits are conducted annually, so off the radar of the financial control are often business of the local institutions, public enterprises, the entity, cantonal and municipal institutions on the periphery (educational organizations, social welfare, health institutions, hospitals, clinical centers, institutes, departments and agencies).

An additional problem is lack of effects of the audit reports- their weak and unprofessional use in the parliament, particularly during the process of the budget adoption or the budget execution reports, as well as the constant absence of the consequences for irresponsible and nontransparent management of the public institutions.  The main reason for this situation is the absence of will and responsibility of the members of the Assembly to oversee the work of the government in BiH, as well as the lack of the systematic cooperation mechanisms between the audit institutions and judiciary with the aim of sanctioning illegal and irresponsible spending of public funds. Auditor’s recommendations are not followed by the public institutions- annually about half of the recommendations remain unrealized or partly realized, which leaves a great impact on the truthfulness and accuracy of the accounting records and the management of the public finances.

It is necessary to mention the Amendments to the Law on Public Sector Auditing of the Republic of Srpska prepared by the RS Government and the Ministry of Finance, which is a secret to most Members of Parliament and members of the Parliamentary Committee responsible for the revision of the RSNA, and for the auditors of the SOA of the RS. The very way of making the Law raises doubts that the new solution will be able to maintain the current level of independency of the SOA of the RS or harmonize the external audit of the public sector in BiH, but just the opposite.

Based on the findings of the Monitoring, it is clear that representatives of the legislature and the executive authorities in BiH sill do not take seriously the role of the Supreme Audit Institutions, and there is no interest in establishing the efficient control over the expenditure of public funds, while at the same time they are trying to achieve stronger control over the findings.