Newsroom
Reforms of Bosnia and Herzegovina entity budgets necessary
SARAJEVO 3 July 2001
SARAJEVO, 3 July 2001 (OSCE) - The Head of the OSCE Mission to Bosnia and Herzegovina and the High Representative express their deep concern about the state of public finances and the existing mechanisms of control over tax-payers' money in Bosnia and Herzegovina. Ambassadors Robert Beecroft and Wolfgang Petritsch had recently learned the results of the audit of the Bosnia and Herzegovina entity budgets for the year 2000, which were carried out in the last three months.
In February 2001, High Representative Wolfgang Petritsch appointed a Special Auditor to conduct an audit of the Bosnia and Herzegovina Federation budget. A similar audit of the Republika Srpska budget was conducted by an OSCE audit team in cooperation with the Entity's Supreme Audit Institution.
Transparent financial administration is a European norm. However, the reports clearly show that the current operation of governments in Bosnia and Herzegovina is not only wasteful and a fundamental source of corruption but also a hindrance to the country's economic development and to its prospects for European integration. The audits show that the existing systems of internal control are not adequate for the protection of the public assets against losses from fraud and incompetence. Though controls at the ministry level formally exist, they lack substance. Decisions to release funds are often communicated vaguely, other decisions violate statutes; often there is little or no follow-up to ensure that funds have been expended as intended, supporting documentation is incomplete, and methods of selecting vendors are inappropriate. It is evident that controls can be easily circumvented.
The audits highlight the urgent need for reform of internal control systems together with further audit work by the relevant domestic agencies. The Office of the High Representative and the OSCE therefore call upon the governments of both entities and all cantons to make progress in the following areas of reform:
- Adopt immediate measures to improve the control environment in the general accounting practices of all ministries. Such internal changes will allow the government to cut down on waste and fraud.
- Give substantially greater support to the Supreme Audit function, ensuring that these institutions can operate in a truly independent manner. For a start, the governments must fully fund the Supreme Audit institutions. Secondly, overseeing of the work of these institutions should be carried out by the respective parliaments alone, and not by the governments (who are themselves the subject of scrutiny by the Supreme Audit institutions)
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For more information please contact OSCE Acting Spokesperson, Sanela Tunovic, at +387 33 292 338 or at +387 66 134 758.
In February 2001, High Representative Wolfgang Petritsch appointed a Special Auditor to conduct an audit of the Bosnia and Herzegovina Federation budget. A similar audit of the Republika Srpska budget was conducted by an OSCE audit team in cooperation with the Entity's Supreme Audit Institution.
Transparent financial administration is a European norm. However, the reports clearly show that the current operation of governments in Bosnia and Herzegovina is not only wasteful and a fundamental source of corruption but also a hindrance to the country's economic development and to its prospects for European integration. The audits show that the existing systems of internal control are not adequate for the protection of the public assets against losses from fraud and incompetence. Though controls at the ministry level formally exist, they lack substance. Decisions to release funds are often communicated vaguely, other decisions violate statutes; often there is little or no follow-up to ensure that funds have been expended as intended, supporting documentation is incomplete, and methods of selecting vendors are inappropriate. It is evident that controls can be easily circumvented.
The audits highlight the urgent need for reform of internal control systems together with further audit work by the relevant domestic agencies. The Office of the High Representative and the OSCE therefore call upon the governments of both entities and all cantons to make progress in the following areas of reform:
- Adopt immediate measures to improve the control environment in the general accounting practices of all ministries. Such internal changes will allow the government to cut down on waste and fraud.
- Give substantially greater support to the Supreme Audit function, ensuring that these institutions can operate in a truly independent manner. For a start, the governments must fully fund the Supreme Audit institutions. Secondly, overseeing of the work of these institutions should be carried out by the respective parliaments alone, and not by the governments (who are themselves the subject of scrutiny by the Supreme Audit institutions)
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For more information please contact OSCE Acting Spokesperson, Sanela Tunovic, at +387 33 292 338 or at +387 66 134 758.