Roundtable "The internal control and external audit in Serbia"

11 November 2011.
Roundtable "The internal control and external audit in Serbia"
External audit and internal financial controls in the public sector occupy an important place in the reform of public finances, especially in the part relating to the transparency. So it should not be considered in addition to budget and accounting functions, the President of the State Audit Institution (SAI) Radoslav Sretenović said. While opening the Roundtable titled "Internal Control and External Audit in Serbia", Sretenović stressed that the internal controls in the public sector represent an important subject to external audit conducted by the State Audit Institution. In order for the General Auditor, Council of State Audit Institution, and general internal auditor, head of the Central Harmonization Unit, to build trust, integrity and professionalism, they need an appropriate degree of independence, Sretenović said. He added that it is necessary that the relations between internal and external auditors be based on understanding and trust.Ms Bianca Breteche, senior advisor in the audit and financial control Sigma emphasized that the main task of national audit institutions is to examine whether public money is spent economically, efficiently, effectively and in accordance with the rules and regulations. In order for the state audit institutions to adequately perform the audit, the institutions must be independent, and methods of audit should be at the highest level, assessed Breteche. As a prerequisite for the existence of independent supremen audit institutions, she emphasized the eight principles of the Mexico Declaration of Independence of Supreme Audit Institutions. One of the principles of independence pertains to managers and members of state audit institutions. In some countries, such as Montenegro and Slovenia, the appointment of the management of state audit institutions is defined by the Constitution, which provides additional safety. It is important that the mandates of the managers be ensured, as in this case they perform the function without pressure. Members of the Council of State Audit Institutions of the Republic of Serbia have been appointed for a of five-year term , with possibility of renewal, which is quite a short period and in the international context can be interpreted as an obstacle to independence, said Breteche. According to her, the important principle refers to the existence of effective mechanisms to monitor implementation of recommendations made by the State Audit Institution. Many parliaments set up special committees to consider solely reports of Supreme Audit Institutions, concluded Breteche.

Round Table, organized by the State Audit Institution and Sigma, was attended by members of the Finance Committee of the National Assembly. Zoran Krasic, Chairman of the Finance Committee, said that it is important to the National Assembly that the state is cheaper for taxpayers, wherein the State Audit Institution has an important role. State Audit Institution, together with the Anti-Corruption Council, puts an emphasis to the possible forms of corruption in the society, said Krasic. Deputy Chairman of the Finance Committee, Branko Ljiljak, said that the State Audit Institution in its work has the full support of all members of the Finance Committee. According to Jorgovanka Tabakovic, a member of the Finance Committee, the State Audit Institution, through its reports, improves laws that are not sufficiently good. State Audit Institution has the courage to open the issue in a competent manner, without coming to silence of the government and media, said Tabakovic. She added that the State Audit Institution found the tricks the Government used to increase state revenues through tricks and thus reduces expenditures in their documents. Using the methodology of the World Bank, the Supreme Audit Institution has found that successful countries using IMF methodology distorts the picture, she said Tabakovic. Member of the Finance Committee, Radojko Obradovic, said that it is essential that internal auditors have, primarily, a personal responsibility to ensure that their reports are independent. If we want to have successful internal audit of budget users, it must have greater independence and more authority, said Obradovic. According to the opinion of Zoran Kasalovic, a member of the Finance Committee, the current session of Parliament saw the need for state audit institutions to be functional in the full scope. This is important because the National Assembly, through quality reports received from the State Audit Institution, is trying to control implementation of laws passed by the Assembly.

Goran Cvejic, Deputy Minister of Finance, Central Harmonization Unit, said that the system of internal financial controls in the public sector has been intensively developed since 2009, when it adopted the "Strategy of Development of Public Sector Internal Financial Control in the Republic of Serbia", as evidence of government commitment to develop a modern system of financial management. Ministry of Finance or the Central Harmonization Unit, has produced 68 certified internal auditors and set up a certification scheme for the acquisition of this brand new titles and forms of civil servants. So far, established internal audit covers 91 percent of the budget of the Republic of Serbia, said Cvejic. He warned that there are still some limitations, such as lack of highly educated employees, low wages, insufficient funding, lack of formal requirements and competitive private sector.

Jose Viegas Ribeiro, Deputy General Inspector, General Inspection for Finance, Ministry of Finance of Portugal, said that the taxpayers need to explain how every penny from the budget is spent. Internal and external auditors are required to assist the Parliament in controlling money expenditure from the budget, providing it clear reports. If auditors submit reports to Parliament that are not understandable, they can not expect support, said Ribeiro. During his presentation, he explained the development of internal audit in Portugal. Sigma expert, Jan Pieter Lingen, has introduced a system of internal control and budget management in the Netherlands, from the perspective of Parliament. In his opinion, it is important that internal control systems are non-political.
Representatives of all parties that participated in the discussion during the roundtable - the Finance Committee of the National Assembly, Ministry of Finance, and/or Central Harmonization Unit and the State Audit Institution - agreed that it is necessary to improve the stability of financial management in the Republic of Serbia, in order for the public funds to be spent legally and properly, and with the desired effect. In addition, all participants agreed that this goal could be achieved through mutual and constructive cooperation.