AUDIT REPORT ON THE ANNUAL FINANCIAL REPORT OF ZUBIN...
Transcript of AUDIT REPORT ON THE ANNUAL FINANCIAL REPORT OF ZUBIN...
REPUBLIKA E KOSOVËS / REPUBLIKA KOSOVA / REPUBLIC OF KOSOVA
ZYRA KOMBËTARE E AUDITIMIT
NACIONALNA KANCELARIJA REVIZIJE NATIONAL AUDIT OFFICE
Document No: 22.25.1-2016-08
AUDIT REPORT
ON THE ANNUAL FINANCIAL REPORT OF ZUBIN POTOK
MUNICIPALITY FOR
THE YEAR ENDED 31 DECEMBER 2016
Prishtina, June 2017
2
The National Audit Office of the Republic of Kosovo is the highest
institution of economic and financial control which, according to the
Constitution and domestic laws, enjoys functional, financial and
operational independence. The National Audit Office undertakes
regularity and performance audits and is accountable to the Assembly
of Kosovo.
Our Mission is to contribute to sound financial management in the
public administration. We perform audits in line with internationally
recognized public sector auditing standards and good European
practices.
The reports of the National Audit Office directly promote
accountability of public institutions as they provide a base for holding
managers’ of individual budget organisations to account. We are thus
building confidence in the spending of public funds and playing an
active role in securing taxpayers’ and other stakeholders’ interests in
enhancing public accountability.
The Auditor General has decided on the audit opinion on the Annual
Financial Statements of Zubin Potok municipality in consultation with
the Assistant Auditor General, Qerkin Morina who supervised the
audit.
The opinion and report issued are a result of the audit carried out by
Xhevat Seferi (Team Leader) and Milos Petrovic and Nebojsa Ristic
(Team Members) under the management of the Head of Audit
Department Zuke Zuka.
NATIONAL AUDIT OFFICE-St. Musine Kokollari, No. 87, Prishtina 10000, Kosova Tel: +381(0) 38 60 60/1011
http://zka-rks.org
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
3
TABLE OF CONTENTS
Executive Summary ................................................................................................................... 4
1 Annual Financial Statements and other External Reporting Obligations ................. 6
2 Governance ....................................................................................................................... 10
3 Financial Management and Control ............................................................................. 15
Annex I: Audit Approach and Methodology ...................................................................... 24
Annex II: Explanation of the different types of opinion applied by NAO ...................... 25
Annex III: Prior Year Recommendations ............................................................................. 27
Annex IV: Letter of confirmation .......................................................................................... 32
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
4
Executive Summary
Introduction
This report summarises the key s arising from our audit of the 2016 Annual Financial Report of
Zubin Potok Municipality, which determines the Opinion given by the Auditor General. The
examination of the 2016 financial statements was undertaken in accordance with the International
Standards on Supreme Audit Institutions. Our approach included such tests and procedures as we
deemed necessary to arrive at an opinion on the financial statements. The applied audit approach
is set out in our External Audit Plan1 dated 05/12/2016.
Our audit focus (detailed in Annex 1) has been on:
The level of work undertaken by the National Audit Office to complete the 2016 audit is a direct
reflection of the quality of internal controls implemented by the Management of the Municipality.
Opinion of the Auditor General
Unmodified Opinion with emphasis of the matter
In on our opinion, the Annual Financial Statements for the year ended on 31st of December 2016
present a true and fair view in all material aspects.
Emphasis of matter
As emphasis of the matter we would like to mention the fact that:
The Municipality did not register and disclose assets purchased in and inherited from previous
years in the Annual Financial Statements. In addition, purchased assets during 2016 were not
presented either, although there were investments in capital projects;
Planning and payment of salaries in the amount of €77,033 for 160 employees recruited within
the project “Reconstruction of local road network”, from the category of Capital Investments (
code 31910, Advance for investments), was misclassified; and
Files, i.e. employment contracts for at least 30 employees of the municipal administration have
not been updated. The municipality did not provide new contracts for employees who had
employment contracts since UNMIK administration.
For more information, see chapter 1.1 of this Report.
Annex II explains the different types of Opinions applied by the National Audit Office.
1 The term External Audit Plan replaces the term Audit Planning Memorandum
The Annual Financial Statements
GovernanceFinancial Management
and Control
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
5
We would like to thank the Mayor and his staff for the cooperation during the audit process.
Key Conclusions and Recommendations
Response of the Mayor
The Mayor has taken into account and is reconciled with the detailed audit findings and
conclusions, and is committed to address all recommendations given.
Furthermore Mayor is committed to:
Review Audit Report at the Municipal Assembly; and
by the end of January 2018, to discuss in the Municipal Assembly the progress regarding the
implementation of the Action Plan on Audit Recommendations, before the PFV 2017 have
been submitted to the Ministry of Finance.
Emphasis of the Matter in the audit opinion reflects the shortcomings in
controls, due to inadequate classification of expenditures as a result of inappropriate planning, personnel
management, asset recording and disclosure.
The Mayor should analyse the reasons for Emphasis of Matter in 2016 and
identify the necessary actions in order to enable appropriate management of
expenditures, personnel and a true and fair presentation of assets for 2017 ( see
chapter 1.1.).
The process of preparation of AFS draft was not managed well, which has
resulted with several financial shortcomings and identified
defficiencies during the audit. The neccessary adjustments were done
only after our suggestions.
The Mayor should ensure that preparation process of AFS draft 2017
includes a formal and effective menagement review and that AFS
statement is signed once all neccessary actions are implemented ( see sub-
chapter for AFS 1.2).
Governance arrangements related to accountibility, self-assessment and risk
management, implementation of recommendations as well as
management reporting are weak. The municipality does not have strategic
and operational plans. Also, the activity of Internal Audit Unit was not
established in order to support the developemtns on this area.
The Mayor should ensure that issues deriving from the general governance field be adressed with responsibility and added attention ( see issues 2-6).
Planning and budget execution is at low level and there are shortcomings in
financial systems, including: procurement, capital investments,
wages and salaries, subsidies, as well as planing and execution of own source
revenues.
The Mayor should apply a detailed assessment of underlined areas in this report in order to identify reasons on
emerged shortcomings as well as neccessary actions towards adressing
them ( see chapter 3).
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
6
1 Annual Financial Statements and other External
Reporting Obligations
Introduction
Our review of the Annual Financial Statements (AFS) considers both compliance with the reporting
framework and the quality and accuracy of information recorded in the AFS. We also consider the
Declaration made by the Chief Executive Officer and Chief Financial Officer when the draft AFS are
submitted to the Ministry of Finance.
The declaration regarding presentation of the AFS incorporates a number of assertions relating to
compliance with the reporting framework and the quality of information within the AFS. These
declarations are intended to provide the Government with the assurance that all relevant
information has been provided to ensure that a comprehensive audit can be undertaken.
1.1 Audit Opinion
Unqualified opinion with emphasis of the matter
We have conducted the audit in accordance with International Standards on Supreme Audit
Institutions (ISSAIs). According to these standards, our responsibilities are described below in the
section 'Auditor's Responsibilities for Audit of Financial Statements'. According to the ethical
requirements which are relevant to our audit of the annual financial statements of Budget
Organizations in Kosovo, the NAO is independent from the Municipality, whereas other ethical
responsibilities are fulfilled in accordance with these requirements. We believe that the received
audit evidence are sufficient and appropriate in providing basis for the opinion.
In our opinion, the Annual Financial Statements for the year ended on 31st of December 2016 present
a true and fair view in all material respects in accordance with International Public Sector
Accounting Standards (cash based Accounting), Law no.03/L-048 on Public Finance Management
and Accountability (as amended and supplemented) and Regulation no.01/2017 on Annual
Financial Reporting of Budget Organisations by the Ministry of Finance.
Basis for the opinion
We conducted the audit in accordance with International Standards of Supreme Audit Institutions
(ISSAIs). Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the AFS section of our report. We believe that the obtained audit
evidence is sufficient and appropriate to provide a basis for the opinion.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
7
Emphasis of the matter
We draw your attention to the fact that:
The Municipality did not register and disclose in AFS, the assets purchased in and inherited
from previous years and those purchased during 2016. The Municipality has still taken no
action for the previous year’s recommendation regarding the registration and evaluation of
municipal property (buildings and other immovable property ), and other investments in
infrastructure and equipment over the past years. In addition , assets purchased during 2016
were not presented either, even though investments in capital projects were €777,409;
For the project funded by the Development Fund for the northern municipalities of Kosovo,
"Reconstruction of the Municipality local road network" worth €426,2324, the Municipality
has published a vacancy announcement for 160 employees for cleaning and maintenance of
roads based on the Mayor's decision dated on 07.01.2016. After the recruitment process, on
20.07.2016, the Municipality has signed employment contracts valid from 01.08.2016 until
31.01.2018. The total amount of monthly payment planned for 18 months was €289,644,
while for five (5) months since the start of the project €77,033 were paid for salaries. The
planning and payment of these salaries was carried out from the category on capital
investments (code 31910 Advance for investments), therefore, payments as such were
misclassified. The amount classified in wrong economic codes was also approved with the
Annual Budget Tables 2016; and
Files, i.e. Employments Contracts of at least 30 employees of the municipal administration
were not updated. The municipality did not provide new contracts for employees who work
since the UNMIK administration.
Responsibility of Management and Those Charged with Governance and AFS
The Management of Zubin Potok Municipality is responsible for the preparation and fair
presentation of financial statements in accordance with International Public Sector Accounting
Standards – Financial Reporting under the Modified Cash based Accounting and for such internal
control as management determines is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error. This includes the
application of Law number 03/L-048 on Public Finance Management and Accountability (as
amended and supplemented).
The Mayor is responsible to ensure oversight of the Municipalities financial reporting process.
Auditor General’s Responsibility for the Audit of the AFS
Our responsibility is to express an opinion on the AFS based on our audit. We conducted our audit
in accordance with ISSAIs. These standards require that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free from material misstatements.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
8
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISSAIs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they
could influence the decisions taken on the basis of these AFS.
An audit involves performing procedures to obtain evidence about the financial records and
disclosures in the AFS. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement in the AFS, whether due to fraud or error. In
making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation of the financial statements in order to design audit procedures that are appropriate in
the entity’s circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by Management, as well as evaluating the
presentation of the financial statements.
1.2 Compliance with AFS and other reporting requirements
Zubin Potok Municipality is required to comply with a specified reporting framework and other
reporting requirements. We considered:
Compliance with MoF Regulation No.01/2017 on the Annual Financial Reporting of Budget
Organisations;
Requirements of LPFMA No. 03/ L-048, as amended and supplemented);
Budgetary requirements of the Law on Budget of Kosova No; 05/L-071, as amended and
supplemented with Law No: 05/L-109 for budget review;
Compliance with Financial Rule No.01/2013 and 02/2013;
Action Plan on addressing the recommendations;
Requirements of Financial Management and Control (FMC) procedures;
Other requirements for budgetary reporting, such are: quarterly reports, including also the
nine-month statements in due time ; Operational reports (performance); and
Draft plan and final procurement plan in due time.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
9
In the context of the AFS, issues related to the reporting framework were not addressed when
preparing the draft financial statements, and as a result we have identified the following non-
compliance:
Article 13. Statement of Cash Receipts and Payments;
Article 14 The Report on Budget Execution; and
Errors in disclosure and note section: Articles 14.6, 15, 19, 21, 22, 24, 25, 26 and 28.
After our suggestions the errors have been rectified, except the section on disclosure of
information in Article 19 of AFS on disclosure of assets.
DECLARATION BY MUNICIPALITY MANAGEMENT
Given the above - the Declaration made by the Chief Administrative Officer and Chief Financial
Officer when the draft AFS are submitted to the Ministry of Finance can be considered to be correct
given, except the disclosure of data on assets.
In the context of other external reporting requirements we have no issues to raise.
1.3 Recommendations for the first part of the report
Recommendation 1 The Mayor should ensure that an analysis is conducted to determine the
causes of emphasis of matter. Actions should be taken to systematically
address the underlying causes in order to avoid errors in payments with
wrong codes, staff management and correct evaluation of capital assets. The
statement given by Chief Administrative Officer and Chief Financial Officer
should not be signed, only if all necessary actions are applied in AFS draft.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
10
2 Governance
Introduction
Effective governance arrangements are fundamental to Municipality for successfully managing the
challenges it faces and ensuring that service delivery is optimised for the benefit of taxpayers and
other service users.
A key tool supporting effective Governance is the implementation of audit recommendations as this
demonstrates that Management are seeking to develop existing processes and controls. Similarly
the self-assessment checklist completed by all Budget Organisations provides a framework for
developing enhanced Governance arrangements. It is important that the answers provided by an
individual budget organisation are supported by appropriate evidence.
The remainder of our review of governance arrangements reflects a consideration of:
those areas of Governance Arrangements where significant improvements are required and
where we believe that our recommendations can generate positive improvements including
consideration of the Internal Audit system; and
areas of Financial Management and Control identified through our audit work including
specific work directed at compliance s in key income and expenditure systems (these areas
are considered in Section 3 of this report).
Overall Governance Conclusion
Good governance procedures require the implementation and monitoring of strategic and
operational activities in effective manner. We have identified that self-assessment checklist was not
completed by the Municipality. Moreover, even the other arrangements that would support
governance development, such as the effective response to audit recommendations and the
establishment of an internal audit system, have not been completed.
Additionally, even in terms of compliance with legislation, our audit has revealed the existence of
some weaknesses/shortcomings in expenditure management, non-implementation of civil service
rules by the staff and weaknesses/shortcomings in revenue management.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
11
2.1 Progress in the Implementation of Prior Year
Recommendations
Our Audit Report on AFS of Zubin Potok Municipality for the year 2015 resulted in 14 key
recommendations. The management prepared an Action Plan stating how all recommendations will
be addressed.
The Audit Report was not discussed at Municipal Assembly, as it was recommended in the report
of the previous year.
At the end of our 2016 audit, three ( 3) recommendations have been implemented; one ( 1)
recommendation was in the process of implementation, and ten ( 10) were not addressed at all by
the management; For a more thorough description of the recommendations and how they are
addressed, see Annex III.
Issue 2 - Addressing Prior Year Audit Recommendations – High Priority
Finding From the abovementioned paragraph it is noticed that only 1/3 of the
recommendations were implemented or were in the process of being
implemented, while the majority of them were not addressed at all by the
management. This is due to the fact that the Municipality did not pay enough
attention to the issues raised by the audit on implementing the
recommendations of the Auditor General.
Risk The negligence and failure to fully implement recommendations from
municipal management has resulted particularly in:
Poor quality of internal reporting and activities to senior management;
and
Weaknesses in implementation of procurement regulations, civil
service rules by the staff, management of subsidies, assets, and
weaknesses in revenue management.
Recommendation 2 The Mayor should strengthen the control and accountability measures to the
individuals in charge of fully addressing the recommendations, so that the
actions foreseen in the action plan are implemented, and from them receive
regular reports on the progress made in implementing the recommendations.
In order to improve the process, the reports on progress of the
implementation of recommendations should be reviewed quarterly and
establish without any delay the accountability mechanism.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
12
2.2 Self-Assessment Checklist of FMC components
The Ministry of Finance has produced a detailed self-assessment checklist for Budget Organisations
to support effective governance arrangements. We have noticed that filling of the FMC self-
assessment checklist was not completed and submitted to the Ministry. In this regard, we have
summarized below all our findings.
Issue 3 – Self Assessment Checklist – High Priority
Finding As a result of our review, we found that:
The municipal self-assessment checklist was not completed by the
management of the Municipality, and this confirms that the risk
management systems were not yet functional. This is because the
initial steps have not been taken in this area;
Effective monitoring processes, comprehensive development plan
and other operational plans were not established; and
The links between the procurement plan and the budget and drafting
of adequate reports on a regular basis have not been established.
This is a result of the lack of clarity of the management related to the
importance of this checklist and who is the responsible officer using these
mechanisms to support operational improvements.
Risk Poor governance arrangements weaken strategic and operational processes
and reduce the quality of services provided to citizens due to inefficient and
ineffective activities.
Recommendation 3 The Mayor should ensure the appropriate actions are taken towards
completion of the self-assessment checklist, and proactive addressing of areas
with weaknesses. Subsequently , a mechanism should be applied in order to
confirm the accuracy of the checklist and provide supporting documentation.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
13
2.3 Specific Governance Reviews
Our work on specific areas of governance arrangements has been informed by our audit planning
which considered the context within which Municipality operates and the challenges that it faces.
2.3.1 Setting of Strategic Objectives
All budget organizations are obliged to prepare and follow strategic plans at the organization level,
such as; The Strategy on Local Economic Development, Strategy on Local Rural Development,
Strategy on Tourism Development, the Strategic Plan for the Development of Pre-University
Education, the Maintenance Plan for Public Spaces, Municipal Development Plan, Urban
Regulatory Plan, etc.
Issue 4 – The lack of Strategic Plans- High Priority
Finding The Municipality has established an overall strategy of objectives and other
operational plans, but it lacks clear responsibilities for the coordination and
development of the strategic plan which would include the strategy cost
estimation and of other operational plans as well.
Risk The lack of a general development strategy and other development plans
makes it impossible to monitor and measure the achievement of long-term
and annual objectives, which is one of the essential conditions of good
governance.
Recommendation 4 The Mayor should ensure the drafting of a general development strategy, as
well as draft an action plan for monitoring the results in the achievement of
objective and establish effective oversight functions.
2.3.2 Management Reporting and Accountability
A range of internal controls are applied by Management to ensure that financial systems and
operational activities operate as intended. It is important that these include appropriate reporting
to management to enable an effective and timely response to identified operational problems.
Although, the audit has identified the following issues;
Issue 5 – Weaknesses in Management Controls – High Priority
Finding Our review of management controls implemented in the Municipality's main
financial system has revealed weaknesses at different levels of control. As
such, overall control arrangements require strengthening, in particular with
regard to: financial reporting on expenditures and revenues, budget planning
and execution, staff management, registrations and reporting of outstanding
assets and liabilities.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
14
Risk Poor quality of management controls reduces the ability to react in timely
manner and actively manage the Municipality activities and to successfully
cope with the existing challenges. This can result in an unplanned deficit or
surplus and delay the actions needed to address them. In addition, this can
have a negative impact towards the revenues collection at the expected level.
Similarly, it may result in providing non-qualitative services to citizens.
Recommendation 5 The Mayor should ensure that a review has been carried out to determine the
appropriate form of designing management controls , financial and
operational reporting to senior management, in order to support effective
management of the activity and to ensure that an appropriate solution is put
in place within the following months.
2.4 Internal Audit System
Budgetary organizations are obliged to ensure that its activities and processes are subject to internal
audit. An adequate audit system helps management in identifying weaknesses in financial
management and municipal controls. This contributes towards the improvement of internal
controls, achievement of objectives and improvement of the services provided by the Municipality.
Issue 6 – Non- establishment of IAU – High Priority
Finding The Municipality did not manage yet to provide internal audit services, and
these services were not performed by the Municipality nor were they covered
by any other organization. This is because the municipal management did
not pay enough attention to the internal audit and improvement of municipal
activities.
Risk The lack of regular internal audit reviews may affect in the continuation of
weaknesses recurrence in key internal control systems. In addition, the
management may not be able to identify weaknesses of controls and react in
timely manner for their elimination.
Recommendation 6 The Mayor should consider recruiting an internal auditor who through a
comprehensive working program would incorporate the financial and other
risks of the Municipality and assess the effectiveness of internal control. In
addition, we suggest establishing an effective Audit Committee which should
review in critical manner the plans and outcomes of internal audit.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
15
3 Financial Management and Control
Introduction
Our work on Financial Management and Control outside of the areas of Governance referred to
above reflects the detailed work undertaken on Revenue and Expenditure Systems. As part of this
we consider Budget management, Procurement and Human Resources , and Assets and Liabilities.
Financial Management and Control Conclusion
For the Municipality, the planning and budget execution, especially for the category of capital
investments, remains very challenging. In the context of financial systems, controls over a range of
spending areas, revenue planning and collection, personnel management, subsidies, and asset
management require further improvements.
3.1 Budget Planning and Execution
We have considered the collected revenues, sources of budgetary funds, spending of funds by
economic categories. This is highlighted in the following tables:
Table 1. Own source revenues ( in €)
Description Initial
Budget Final
Budget 2016
Receipts 2015
Receipts 2014
Receipts
Collected Revenues from Municipality
42,888 50,000 2,495 1,403 1,205
Police fines 0 0 6,538 5,128 7,475
Court fines 0 0 95 0 0
Total own source revenues 42,888 50,000 9,128 6,531 8,680
The planned own source revenues were €50,000, while only €9,128 were collected, of which only
€2,495 were revenues collected from the Municipality, while the rest were revenues collected from
police and court fines. The total revenue of the Municipality reflects the execution of budgetary
projections at 18%. The low collection of own source revenues indicates poor performance and non-
serious engagement by the management of the Municipality. Regardless of the transfer of revenues
from previous years (€6,882) and collection during the current year (€9,128), the Municipality did
not spent all these revenues, and the same were carried forward in the following year.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
16
Table 2. Sources of budgetary Funds (in €)
Description Initial
Budget Final
Budget2 2016
Outturn 2015
Outturn 2014
Outturn
Sources of Funds 1,861,976 2,459,026 1,686,669 1,094,590 1,924,662
Government Grant -Budget 1,819,088 1,413,612 928,982 1,074,850 1,908,736
Carried forward from previous year3 –
0 6,882 0 11,400 8,694
Own Source Revenues4 42,888 50,000 0 0 0
Domestic Donations 0 988,532 757,687 0 0
External Donations 0 0 0 8,340 7,232
The change of the final budget compared to the initial budget (€597,050) is as a result of collection
of funds from the Development Fund (€988,532), the increase of the budget for own source revenues
for 2016 (€7,112), the collection of carried forward revenues (€6,882) and reductions in Government
Grant (€405,476).
In 2016, the Municipality has used 69% of the final budget, with an improvement of 19% compared
to 2015. However, budget execution remains at an unsatisfactory level, and below we have provided
the explanations given for the current position.
Table 3. Spending of funds by economic categories - (in €)
Description Initial
Budget Final
Budget 2016
Outturn 2015
Outturn 2014
Outturn
Spending of funds by economic categories
1,861,976 2,459,026 1,686,669 1,978,111 1,868,731
Wages and Salaries 1,619,000 738,149 662,770 1,003,883 826,771
Goods and Services 101,021 235,744 205,931 96,827 80,614
Utilities 20,000 0 0 4,597 5,435
Subsidies and Transfers 20,000 40,560 40,560 9,936 5,000
Capital Investments 101,955 1,444,573 777,409 862,868 950,911
Explanations for changes in budget categories are given below:
The budget for Capital Investment increased to €1,342,618 as a result of the implementation
of the Trust Development Fund and external donations. Despite the increase in the budget
for capital expenditures, during the year, only 54% of the budget was spent. The Program
2 Final budget – the budget approved by the assembly which was subsequently adjusted for by the Ministry of Finance. 3 Own Source Revenues unspent in previous year carried forward into the current year. 4 Receipts used by the entity for financing its own budget.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
17
for Public Investments includes on-going projects from the previous year as well as new
projects for the current year. However, the progress of project execution was not at the
expected level;
The Wages and Salaries budget cut of €880,851 was as a result of non-payment of salaries5
in the Education and Health sector;
In the category of Goods and Services, the final budget compared to the initial budget was
increased by €134,723 from the government grant and was executed at 87%; and
The budget for Subsidies and Transfers was increased from the government grant for €20,560
and it was spent 100%.
Issue 7 – Budget Execution – High Priority
Finding The budget execution was not at the expected level. While a part of the
surplus was out of Municipality control , and a large part of the expenditures
were made in the last three months of the year (€874,982). This has happened
due to poor and ungrounded planning in clear objectives. Poor budget
performance is mainly seen in capital investments. The revenue planning
may be overestimated, while collection and their utilization is too low.
Finding Inadequate budget planning and its low execution will result in failure to
achieve the organization's objectives as well as loss of credibility to potential
citizens and potential donors.
Recommendation 7 The Mayor should ensure monitoring of budget performance in systematic
manner on monthly basis and through this review to identify and address
obstacles in executing the budget at intended level. In areas where initial
budget planning is inaccurate, should be fully reflected in the final budget
position. In addition, expenditure planning should be made in accordance
with the accounting plan of economic codes divided by category.
5 The payment of salaries for employees in the education sector still remains undefined, until decision taken by the
municipality.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
18
3.1.1 Revenues
The revenues generated by the Municipality in 2016 were €2,495 (not counting court and police
fines). Sources of direct collection of own source revenues are limited to these categories:
administrative fees and taxes on birth, marriage and death certificates. The Municipality is not
applying yet the legal requirements for property tax, construction permits, utilization of public
property etc.
Since the Municipality does not issue any invoices on taxes and fees, it does not possess receivables
account and does not keep records on them. Upon submission of the certificate request, fees for
issuing various certificates are cash payments through the cashier.
Issue 8 – The lack of internal regulations for taxes, fees and charges - High priority
Finding The Municipality still does not have an internal regulation approved by the
Municipal Assembly for taxes, fees and charges for the services provided to
its citizens. As a result of the lack of this regulation, we have identified the
following issues:
The Municipality is not implementing the Law on Property Tax and
the Law on Construction, as two main sources of revenue.
Consequently, it did not generate income from property tax,
construction permits, use of public property by citizens or on other
grounds. Therefore, the level of own source revenues collection is
symbolic; and
The collected revenues of administrative taxes are not regularly
deposited into bank accounts, while records are kept manually.
Risk Failure to comply with laws and regulations on collection of property taxes,
construction permit fees and other taxes and fees by the municipal
management, reflects an ignorant approach of the management towards
applying the legal requirements in this area. This increases the risk of non-
compliance with applicable laws and reduces own source revenues, as well
as the ability to finance projects from this source of revenue.
Recommendation 8 The Mayor should initiate without delay the drafting of an internal regulation
on taxes, fees and charges of citizens for public available services, and the
same should be approved by the Municipal Assembly. Additionally, ensure
the implementation of the Law on Property Tax and Construction Tax, which
primarily aims to implement minimum legal requirements and increase the
quality of services for the citizens of the Municipality.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
19
3.1.2 Wages and Salaries
Wages and Salaries are paid through a centralized system. Key controls confirming the accuracy
and completeness of the payments are: (a) Checking payments each month, by updating and signing
the payroll list, (b) Checking any possible changes that may appear on the forms, (c) Reviewing of
the budget for that category and the reconciliation with the Treasury. The final budget for wages
and salaries in 2016 was €738,149, of which €662,770 were spent.
Issue 9 – The shortcomings in Staff Management - High Priority
Finding Management did not effectively implement the existing controls, as required
by current law and regulations. Due to ineffective controls, staff management
is associated with the following shortcomings:
The management has not managed yet to establish an organisational
structure, systematise job positions and reconcile the needs and
budget of the Municipality. This led to some job positions remaining
vacant; and
Due to the absence of a personnel manager, during 2016 the personnel
files were incomplete. This reflects a lack of clear HR staff specifics
related to the implementation of AI requirements as part of their job
descriptions.
Risk The lack of staff organizational structure and failure to appoint the human
resources manager does not provide assurance on the internal organisation
of the Municipality, assignment of tasks and the adaptability of the job
positions, in non-completion and maintaining the staff files, and in non-
updating the payrolls on monthly basis.
Recommendation 9 The Mayor should ensure that appropriate actions are taken to address issues
referred to above as an urgent matter, for the establishment of municipal
organizational structure, and that key job positions are covered with
adequate staff along with updating of the staff files , in order to ensure
quality in human resource management.
3.1.3 Goods and Services and Utilities
The final budget for goods and services as well as municipal utilities in 2016 was €235,744. Of these,
€205,931 were spent. They relate to provision of supplies with equipment and inventory, office
supplies, contractual services, derivate etc.
We have no recommendations in this area.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
20
3.1.4 Subsidies and Transfers
The final budget for Subsidies and Transfers is mainly allocated to public entities, non-public
entities and individual beneficiaries. Examples of subsidies are; sport subsidies , social assistance,
subsidies in agriculture, etc. For the year 2016 the Municipality collected the amount of €40,560,
which was used (100%).
Issue 10 – The management of subsidy allocation - High priority
Finding The Municipality has adopted a regulation for granting subsidies, although,
there was no criteria observed on the form of their granting and utilization.
In addition , the beneficiaries of subsidies do not submit feedback reports to
the Municipality in order to confirm that the subsidy is spent for the purposes
for which it was dedicated.
Risk Non-implementation of the regulation on granting subsidies and not
reporting their beneficiaries to the Municipality, increases the risk of granting
subsidies without criteria and based on different interests, as well as in failing
to achieve purposes for which it was dedicated.
Recommendation 10 The Mayor should ensure the implementation of the regulation on the
allocation of subsidies and that no subsidy is granted in contradiction with
the criteria prescribed in the regulation. Additionally, mechanisms on how to
monitor and manage subsidies should be clearly defined. The controls on
subsidy allocation should be strengthened in order to ensure effective
monitoring of funds utilization allocated from the municipal budget.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
21
3.1.5 Capital Investments
The final budget for capital investments in 2016 was €1,444,573, of which €777,409 were spent,
mainly for: investments in construction of road infrastructure, investments in health facilities,
cultural sports facilities etc. The Municipality has financed its projects from the special development
fund (€757,687) and from the Government grant (€19,722).
Issue 11 – The lack of procurement plan - High priority
Finding The implementation of procurement guidelines was not achieved due to lack
of effective management oversight and poor spending planning. The
Municipality did not prepare and approve a procurement plan for 2016 as
required by Law No. 04 / L-042 on Public Procurement in Kosovo6.
Risk Failure to carry out procurement planning, affects the project management
and in not meeting the goals of the Municipality, resulting in emergency
procurement and division of procurement requirements which are mainly
the same or interconnected.
Recommendation 11 The Mayor should add internal controls in order to ensure that the Law and
procurement guidelines are implemented, respectively to ensure that the
annual procurement plan is completed and submitted in due time in
accordance with the established rules.
6 Article 8.1 less than sixty (60) days prior to the start of each fiscal year, every contracting authority should prepare
and submit to Procurement Central Agency a procurement plan prepared in advance in writing, which will identify in details all supplies, services and works, in order to be procured during the mentioned fiscal year by the contracting authority.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
22
3.2 Assets
3.2.1 Capital and Non Capital Assets
Asset management is an important part of financial management and control in the public sector. A
sound asset management required the Municipality to have a comprehensive view of assets, control
and management procedures and constantly update the changes in its registers. Capital assets are
all assets owned by the Municipality with a cost over €1,000, while non-capital assets are worth less
than €1,000.
Issue 12 – Weaknesses in Asset Management - High Priority
Finding The Municipality, although this year has appointed an official for asset
identification and registration, has not taken yet any action regarding the
management of assets over €1,000 nor for e-assets. The Municipality did not
establish the appropriate commissions for asset valuation and inventory.
Risk Poor asset management results in non-identification, existence and failure
of fair and factual presentation of assets. In addition, this situation increases
the risk of loss, alienation or even mismanagement of assets.
Recommendation 12 The Mayor should ensure that within a reasonable period of time to establish
commissions for asset valuation and inventory. These commissions should
carry out a fair and complete registration of all properties owned by the
Municipality, and monitor the evaluation results. Also, in order to have
accurate stock records, all incoming/outgoing movable properties of under
€1,000 should be recorded through e-asset system.
3.2.2 Handling of Cash and Cash Equivalents
Petty cash is a small fund of money which is kept under the care and control of the budget
organization, department or smaller budget units depending on budget allocations and is used to
cover small value expenses (up to €100). The Municipality during 2016 has spent €5,000 for this
purpose.
Recommendations
We have no recommendations in this area.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
23
3.3 Outstanding Liabilities
The Municipality did not submit a list of unpaid liabilities to suppliers at the end of 2016.
Issue 13 - Poor management of liabilities - Medium Priority
Finding During 2016, the Municipality did not report on monthly basis the financial
liabilities to MoF, as required by financial rule No. 02/2013 on Reporting of
Unpaid Liabilities from Budget Organization. The Municipality does not
maintain a protocol book for the receipt of invoices.
The Municipality at the end of the year, did not disclose any unpaid invoices
at the end of 2016, however, during the review of the payments made in the
first four months of 2017 we found out that four bills belonging to the
previous year were not disclosed and were paid in the following year. The
value of these invoices was €1,195. This is because the managers of the
directorates did not understand the need for full consolidation and accurate
reporting on monthly basis of outstanding liabilities to MF.
Risk Weak financial controls for unpaid municipal liabilities, non-regular monthly
reporting of liabilities, or the application of financial rules, as well as entry
into obligations at the end of the year, may result in unplanned payments
from next year's budget or with double payments.
Recommendation 13 The Mayor should strengthen controls over the receipt of invoices and their
payment within the legal deadline in order to ensure that the finance
department will establish an effective system and that all outstanding
invoices will be completely and accurately reported and as such to be
disclosed in the AFS of Municipality.
This report is a translation from the Albanian original version. In case of discrepancies, Albanian
version shall prevail.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
24
Annex I: Audit Approach and Methodology
The responsibilities placed on the Auditor and Those Charged with Governance are detailed in the
Opinion set out in Section 1.2 of this report.
While a key output of our work is the audit opinion this report reflects the totality of our work with
specific focus also on Governance s including Financial Management and Control. The latter is
informed by our extensive, risk based, compliance audit programme.
The Executive Summary is intended to highlight the key finding of the audit and the key action that
the Mayor should ensure are taken to address identified management/control weaknesses.
The detailed report provides an extensive summary of our audit finding with emphasis on
determining the cause audit findings and providing appropriate recommendations to address
these. For completeness we have included s identified at the interim audit where they remain
relevant. Our findings are defined as:
High Priority - s which if not addressed may result in a material weakness in internal control and
where action will offer the potential for improvements to the efficiency and effectiveness of internal
controls; and
Medium Priority - s which may not result in a material weakness but where action will also offer
the potential for significant improvements to the efficiency and effectiveness of internal controls.
Findings considered low priority were reported separately to finance staff .
Our procedures included a review of the internal controls and accounting systems and associated
substantive testing and associated governance arrangements only to the extent considered
necessary for the effective performance of the audit. Audit findings should not be regarded as
representing a comprehensive statement of all the weaknesses which exist, or all improvements
which could be made to the systems and procedures operated.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
25
Annex II: Explanation of the different types of opinion
applied by NAO
(extract from ISSAI 200)
Form of opinion
147. The auditor should express an unmodified opinion if it is concluded that the financial
statements are prepared, in all material respects, in accordance with the applicable financial
framework.
If the auditor concludes that, based on the audit evidence obtained, the financial statements as a
whole are not free from material misstatement, or is unable to obtain sufficient appropriate audit
evidence to conclude that the financial statements as a whole are free from material misstatement,
the auditor should modify the opinion in the auditor’s report in accordance with the section on
“Determining the type of modification to the auditor’s opinion”.
148. If financial statements prepared in accordance with the requirements of a fair presentation
framework do not achieve fair presentation, the auditor should discuss the matter with the
management and, depending on the requirements of the applicable financial reporting framework
and how the matter is resolved, determine whether it is necessary to modify the audit opinion.
Modifications to the opinion in the auditor’s report
151. The auditor should modify the opinion in the auditor's report if it is concluded that, based on
the audit evidence obtained, the financial statements as a whole are not free from material
misstatement, or if the auditor was unable to obtain sufficient appropriate audit evidence to
conclude that the financial statements as a whole are free from material misstatement. Auditors may
three types of modified opinions: a qualified opinion, an adverse opinion and a disclaimer of
opinion.
Determining the type of modification to the auditor’s opinion
152. The decision regarding which type of modified opinion is appropriate depends upon:
The nature of the matter giving rise to the modification – that is, whether the financial
statements are materially misstated or, in the event that it was impossible to obtain sufficient
appropriate audit evidence, may be materially misstated; and
The auditor’s judgment about the pervasiveness of the effects or possible effects of the matter
on the financial statements.
153. The auditor should express a qualified opinion if: (1) having obtained sufficient appropriate
audit evidence, the auditor concludes that misstatements, individually or in the aggregate, are
material, but not pervasive, to the financial statements; or (2) the auditor was unable to obtain
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
26
sufficient appropriate audit evidence on which to base an opinion, but concludes that the effects on
the financial statements of any undetected misstatements could be material but not pervasive.
154. The auditor should express an adverse opinion if, having obtained sufficient appropriate audit
evidence, the auditor concludes that misstatements, individually or in the aggregate, are both
material and pervasive to the financial statements.
155. The auditor should disclaim an opinion if, having been unable to obtain sufficient appropriate
audit evidence on which to base the opinion, the auditor concludes that the effects on the financial
statements of any undetected misstatements could be both material and pervasive. If, after accepting
the engagement, the auditor becomes aware that management has imposed a limitation on the audit
scope that the auditor considers likely to result in the need to express a qualified opinion or to
disclaim an opinion on the financial statements, the auditor should request that management
remove the limitation.
156. If expressing a modified audit opinion, the auditor should also modify the heading to
correspond with the type of opinion expressed. ISSAI 170519 provides additional guidance on the
specific language to use when expressing a modified opinion and describing the auditor’s
responsibility. It also includes illustrative examples of reports.
Emphasis of Matter paragraphs and Other Matters paragraphs in the auditor’s report
157. If the auditor considers it necessary to draw users’ attention to a matter presented or disclosed
in the financial statements that is of such importance that it is fundamental to their understanding
of the financial statements, but there is sufficient appropriate evidence that the matter is not
materially misstated in the financial statements, the auditor should include an Emphasis of Matter
paragraph in the auditor’s report. Emphasis of Matter paragraphs should only refer to information
presented or disclosed in the financial statements.
158. An Emphasis of Matter paragraph should:
be included immediately after the opinion;
use the Heading “Emphasis of Matter” or another appropriate heading;
include a clear reference to the matter being emphasised and indicate where the relevant
disclosures that fully describe the matter can be found in the financial statements; and
indicate that the auditor’s opinion is not modified in respect of the matter emphasised.
159. If the auditor considers it necessary to communicate a matter, other than those that are
presented or disclosed in the financial statements, which, in the auditor’s judgement, is relevant to
users’ understanding of the audit, the auditor’s responsibilities or the auditor’s report, and provided
this is not prohibited by law or regulation, this should be done in a paragraph with the heading
“Other Matter,” or another appropriate heading. This paragraph should appear immediately after
the opinion and any Emphasis of Matter paragraph.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
27
Annex III: Prior Year Recommendations
Audit Component Recommendation given Implemented Under implementation Not implemented
1.5. Financial statements
Recommendation 1 - The Mayor should ensure that an analysis is undertaken to
determine the causes for Modification of Opinion. Action should be taken to address the underlying causes in a systematic and pragmatic manner in order to eliminate errors in the AFS for 2016, and to ensure complete recording and disclosure of municipal assets.
Recommendation 2- The Mayor should ensure that effective processes are in place to confirm that the 2016 AFS production plan formally addresses all compliance issues. This should also include the review of the draft AFS by the management, with specific focus on high-risk areas and/or areas where errors have been identified in previous years. The Declaration made by the CAO and CFO should not be submitted unless all necessary checks have been applied to the draft AFS.
Recommendation 1 is implemented, after AFS were corrected in majority, apart from the underlined issues.
Recommendation 2 is implemented.
2.3 Prior Year Recommendations
Recommendation 3: The Mayor should ensure that within 30 days from the finalisation of this report draws up an action plan wherein specific measures and actions needed to address given recommendations are set out. The plan also needs to determine the staff responsible and the deadlines within which appropriate action will be taken, with the key focus on the areas that contain a higher degree of risk. A continuous process of monitoring should also be part of this plan.
No measures were taken, only three recommendation was fully implemented, one(1) recommendations were in the process of implementation and ten (10) were not yet addressed.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
28
2.4 Self-Assessment Checklist
Recommendation 4: The Mayor should ensure that the self-assessment checklist for 2016 will be completed and submitted to the MoF. Prior submitting it to MoF it needs to be reviewed and answers provided confirmed. The Mayor should also initiate activities for preparation of a municipal strategy, which should be ready for implementation starting from 2017. This strategy should be accompanied by a cost that corresponds to municipal resources and effective mechanisms that ensure its implementation and achievement of results.
No measures were taken because the Municipality has not completed self-assessment checklist.
2.5.1 Municipal consolidation
Recommendation 5: The Mayor has to analyse the reasons behind the setback in the internal consolidation process of the Municipality, and ensure that weaknesses identified are addressed within 2016.
The recommendation was partially implemented only with regards to the trainings of municipal officials for their certification in expenditure domain, in order that expenditure process is managed by the Municipality itself.
2.5.2 Risk Assessment
Recommendation 6: The Mayor should ensure that identification, risk assessment and measures to reduce the risk to an acceptable level are reviewed at the highest levels of management. Furthermore, the Mayor should ensure that the risk management responsibility is directly delegated to a director, who in coordination with Heads of Units will manage this process and report on risks on regular basis.
No measures were taken. The Municipality does not yet have a list of risks, as well as a plan for managing and reducing risks at acceptable levels.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
29
2.5.3 Management Reporting
Recommendation 7: The Mayor should ensure that a review is implemented to determine the format of financial reporting to the senior management which is required to support effective business management and to ensure that an appropriate solution is in place by the end of 2016.
No measures were taken. The Municipality still has weak financial reporting on expenditures and revenues to the high level management.
2.6 Internal Audit System
Recommendation 8: The Mayor should consider alternatives in order to ensure that operational and financial activities are subject to the internal audit, which would serve as an important management support in achievement of objectives in a more effective manner and in providing better quality services. In addition, the Mayor has to establish the Audit Committee which would critically review plans and results of the internal audit.
No measures were taken. The Municipality has not yet managed to establish the Internal Audit Unit as well as the Audit Committee.
3.3 Budget Planning and Execution
Recommendation 9: The Mayor should ensure that budget performance is systematically monitored on monthly basis, and that this review identifies and address barriers that hinder execution of the budget at the planned level. Revenue projections should be based on proper analysis over the potential sources.
When initial budget assumptions are inaccurate, it should be fully reflected in the final budget and in the future budgetary requests.
No measures were taken, because the municipality still has poor performance of budget execution.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
30
3.4 Procurement
Weaknesses in consortium contracts
Recommendation 10: The Mayor should determine why the tender criteria have not been met and ensure that controls over the evaluation of tender criteria are operational and effective. The Mayor should strengthen controls in order to ensure that all commission members make objective and professional tender evaluation.
The recommendation was implemented.
3.5.1 Remunerations (wages and salaries)
Recommendation 11: The Mayor should analyse the reasons behind delays in appointing regular officials in the administration, and to ensure that these positions are filled by the end of 2016. The Mayor should ensure establishment of controls over staff management in order to prevent potential errors and financial losses of the Municipality and to provide necessary services to citizens.
No measures were taken, because the municipality in 2016 still do not have a Personnel Manager, and staff management controls have not yet been established.
3.5.2 Subsidies and transfers
Recommendation 12: The Mayor has to review controls over the granting of subsidies so that is ensured complete implementation of the internal regulation, and effective monitoring over the use of funds granted out of the municipal budget, in order to ensure achievement of Municipality’s objectives. The files of subsidies should be completed with all required documentation and evidence.
No measures were taken. The internal regulation has not been implemented with regard to the effective monitoring of the use of funds.
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
31
3.6 Revenues (including own source revenues)
Recommendation 13: The Mayor has to initiate immediately drafting of a regulation on taxes, fees and charges and the same submitted in the Municipal Assembly for approval. We would suggest cooperating with other municipalities that can serve as a good example in this area and use best practices to facilitate the entire process. In addition, the Mayor should ensure that all types of taxes and fees in this regulation are implemented just like in other municipalities. The Mayor should monitor this process constantly in order to ensure implementation of legal requirements.
No measures were taken because still have not initiated a draft regulation on taxes, fees and charges. Also, the Municipality is not collecting all types of taxes and fees.
3.7 Capital and Non Capital Assets
Recommendation 14: The Mayor has to address urgently the process of asset recording. The first step regarding this should be appointment of an assets officer and then proceed with identification and recording of municipal assets in the accounting register. The annual inventory of assets available should be conducted on an annual basis and in accordance with the Financial Rule 02/2013 on Assets Management. Furthermore, should be drawn clear guidelines in order to control the use of public assets,specifically including vehicles, computer equipment, telephones, business premises, and public spaces.
No measures were taken. The Municipality has not appointed officer for recording of assets and did not take any action with regard to asset management.
Number of recommendations 3 1 10
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
32
Annex IV: Letter of confirmation
LETTER OF CONFIRMATION
For having agreed on the Auditor General’s findings of 2016 and implementation of
recommendations:
To: National Audit Office Venue and date: 24.05.2017
Honoured,
We hereby confirm that:
We have received the draft audit report of the National Audit Office on the 2016 Annual
Financial Statements of the Municipality of Zubin Potok, hereinafter referred to as the
Report;
Agree on the findings and recommendations and I have no comment on the content of the
Report; and
Within 30 days from receiving the final report, I will submit the action plan on
implementation of recommendations including the deadlines and responsible staff for their
implementation.
Mayor:
Stevan Vulovic
ZYRA KOMBËTARE E AUDITIMIT - NACIONALNA KANCELARIJA REVIZIJE - NATIONAL AUDIT OFFICE
33