Financial Audit Municipality of Istog for the year ended 31 December 2007C.Compliance with laws docx

Financial Audit Municipality of Istog for the year ended 31 December 2007 21 C.. Financial Audit Municipality of Istog for the year ended 31 December 2007 22 any payment is made as requi

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Financial Audit

Municipality of Istog for the year ended 31 December 2007

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C Compliance with laws and regulations

Finding # 8

By inspection of revenues earned during 2007 from kindergarten we found that all these revenues (EUR 20 per child) were collected in cash Treasury instructions forbids cash collection of revenue each exceeding EUR 10

Recommendation

Referencing to the above cases of cash collections we recommend

management to strictly apply the related Treasury Instructions

Finding # 9

The municipality’s financial statements were not prepared as requested by the Administrative Instruction 2007/08 and were not sent to the Treasury Unit within the Ministry of Economy and Finance

Recommendation

We recommend the management of the Municipality to establish a system for preparation and presentation of the financial statement which will be in

accordance with the Administrative Instruction 2007/08 In addition we recommend the management to provide the Treasury Department within the Ministry of Economy and Finance with a copy of its financial statements for the relevant year within 30 days after the conclusion of the fiscal year, strictly following the Administrative Instruction 2007/08

Finding # 10

The Department for Geodesy, Cadastre and Property collects revenues from the following activities: issuance of certificates, field measurement,

registration of real estate, as well as registration of property and transfers Related fees applied for some of these activities are not in accordance with the Administrative Instruction no AKK 2006/01

Recommendation

We recommend the management to harmonize fees from cadastral services with the provisions of AKK Administrative Instruction no AKK 2006/01 Finding # 11

By inspection of source evidence related to the contract for office supply from supplier Meshari, we found that contract conditions have not been followed This represents non-compliance with article 7.2 of the financial rule and Treasury Instructions 02, Use of Public Funds

Recommendation

We recommend the management to strictly follow and implement the

contracts terms and conditions and to review the supply documentation before

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Financial Audit

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any payment is made as required by the article 7.2 from the financial rule and Treasury Instructions 02, Use of Public Funds

Finding # 12

By reviewing the tender documentation “procurement of food and hygiene material” in the approximate amount of EUR 38,000 we found that there were

no three responsive bids Work licenses of two out of three bidders were expired By this, the Municipality has breached section 30A.4 of Law on Public Procurement 2003/17 and regulation 2007/20 If there are no three responsive bidders the procurement officer should initiate new procurement procedures as requested by the PPL

Recommendation

The Municipality’s management is strongly recommended to apply section 30A.4 of Public Procurement Law 2003/17 and regulation 2007/20

Finding # 13

By inspection of source documentation related to tender procedure for

construction of the road Gurakoc – Istog we found certain irregularities such as:

- The competitor who was awarded the contract has signed it before

completion of all tender procedures, which is not in compliance with the PPL 2003/17 and the regulation 2007/20

Finding # 14

By inspection of source documentation related to completion of tender

procedures for building of town roads – Istog and the replacement of windows from the gymnasium “Haxhi Zeka” we found certain irregularities such as:

- The tender dossier requests that before signing the agreement with the winning entity, the winner awarded with the contract must pay an execution insurance fee amounting to 10% of the contract value with a validity of 60 days after completion of the work;

- The technical acceptance was in April 2008 and the insurance was only valid till 31 December 2007;

- The contract should have been completed within 48 days of signing the contract – 02 October 2007

The Municipality has breached section 60.5 from the Public Procurement Law 2003/17 and regulation2007/20

Recommendation

We recommend the Municipality to strictly follow the PPL 2003/17 and regulation 2007/20

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Financial Audit

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Finding # 15

By inspection of source documentation related to completion of tender

procedure for subsidizing project “Organizing Skiing Classes” by the Direcor

of Culture, Youth and Sport, certain irregularities were identified Namely, the Procurement Officer did not apply adequate procedures and the economic operators were not provided with the request for the contractor’s price

quotation Thus, by being denied an effective competition in the respective tender, the economic operators have been discriminated This case is not in compliance with the sections 30, 35.3, 35.6, 35.7, 35.8, and 35.9 of PPL 2003/17 and regulation 2007/20

Recommendation

We recommend the Municipality to strictly comply with sections 30, 35.3, 35.6, 35.7, 35.8, and 35.9 of PPL 2003/17 and regulation 2007/20

Finding # 16

By inspection of source documentation related to agreement of “Asphalt of City roads” we found that there is difference between amount stated in

contract (EUR 182,711) and reported one (EUR 168,739) in the annual report for completed contract during the 2007 As a result, the annual report

submitted to the APP was not accurate

Recommendation

We recommend the management to comply with the respective laws and regulations in relation with preparation of required reports and budgets

Finding # 17

Based on the procedures performed over certain supply transactions, we found

a case where services for car registration, insurance and technical control, are rendered from a suppliers with no procurement procedure (AD Burreli,

Dukagjin)

Recommendation

We recommend the management to comply with the respective laws and regulations in relation with procurement

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Annex I

Municipality of Istog

Financial Statements for the year ended 31 December 2007

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Annex II

Municipality Management’s Comments

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Finding

No

Part A

#1

We inform you that auditor’s findings for 2007 mentioned

on point no VII under A where you concluded non

reconciliation of revenue from license work on amounting of

2,587 Euro between client sub ledger and free balance

We inform that this non reconciliation amounting of 2,587

Euro has flow as a consequence that some owner of business

after they done payments for wok license, they didn’t bring

payment receipt for evidencing, and for this reason in non

reconciliation with free balance, because the data in free

balance are taken from bank reports, so the accurate data are

from free balance

Municipality agrees with the auditor’s findings and recommendation

12 -During the procurement it was fully applied the LPP, and

Article 30 A.4 All three bids were from responsible

companies, had valid licenses in the time of biding

The tender was closed date: 03.09.2007, all three licenses

had validity within the tendering term:

-The first biding company “Burimi-N” has the license

expiring date after closure of tender deadline: 19.04.2008

-The second biding company “Jaffa” has the license expiring

date on 18.03.2007- but by Procès-verbal no 36/07 date:

12.04.2008 the license was prolonged until: 18.03.2008 ( this

process has a total validity)

-The third biding company, “Rina”- the license of this

company expires on 24.09.2007, and by this we can

conclude that by the closure all three companies had valid

biding documents (especially the work license related to

your remarks) Attachment- The form about the requested

documents, tender opening minutes (where it is stated the

opening and closing date) and all documents from three

biding companies It was applied in total the article 60.5 of

LPP 2003/17 and regulation 2007/20

The Municipality agrees that during the auditors filed work no related source evidence was submitted to them

13 Into our evidence it doesn’t appear any procurement named

Gurakoc-Istog and because of this we were not able to give

any comment

It has to deal with project

“Ndërtimi i trotuareve ne Gurakoc”

14 Tender “Building town roads”- has 10% execution

insurance Neither banks or insurance companies can issue a

bank guaranty without the evidence for contract signing-

therefore the insurance was performed after contract signing

Execution insurance means giving a guarantee on work

completion – and not insuring the works after completion

Both projects were completed within the work deadline

-“Granit”-shpk- execution insurance valid until 30.12.2007,

whereas the report on work completion is on 15.12.2007 and

17.12.2007 Whereas regarding the procurement

“Replacement of windows from the gymnasium “Haxhi

Zeka”, we would like to inform that “A-Plast” has performed

the execution insurance until 07.02.2008, whereas work

completion by final report was on 17.12.2007 (value of 30

000 Euro, whereas GTZ participated for the other part and

the invoice is dated: 11.01.2008) thus work was completed

two months prior to execution insurance expiry

The Recommendation to the municipality regarding this finding remains

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It was respected in total Article 60.5 LPP 2003/17 and Reg

2007/20 (your dates do not match with documents in tender

files)

Please find attached acceptance reports, payments and bank

guaranty – for both projects

15 Procurement Office in moment when vehicle commitment is

done in module approval-expenditure is not dealing with

this Procurement Office is dealing with means

commitments which are done on purchase module

As per Instruction for use from procurement officials-

Purchases (maj 2006), with purchasing module are

committed: Goods and Services, and Capital expenditure

We attach instruction

16 Contract value of this contract is: 182 711 Euro All works

were completed on December 2007 Because of fund lack

for the entire project the remaining of 13 971 Euro was

carried to 2008 Therefore the report submitted to PPA states

that the foreseen value is 182 710.00 euro, whereas contract

price is 168 739.00(this amount was paid in 2007 therefore

the report contains the contracts paid during that year The

remaining amount of 13 971 euro is carried to 2008 and this

is why it is not part of expenses evidence for 2007) All

works were completed in 2007 but because of the payments

it was necessary to modify the acceptance report for the

payment carried to 2008

Municipality agrees with the auditor’s findings and recommendation

17 There is no procurement – competition for procedure on

removing custom duty because there are unique custom

tariffs and also unique and fixed administrative tax on car

registration

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Republika e Kosovës Kuvendi i Komunës-Istog Republika Kosova Skupstina opstine-Istok

Republic of Kosovo Municipality-Istog

Annual Financial Report

For the year ended 31 December 2007

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DECLARATION REGARDING PRESENTATION OF FINANCIAL STATEMENTS

To: Lulzim Ismajli, Director of Treasury

From: Permanent Secretary (Chief Executive Officer)

In our opinion, the attached consolidated financial statements and the notes to these statements for the year ended on 31 December 2007 have been prepared in accordance with the International Public Sector Accounting Standards “Financial Reporting Under the Cash Based Accounting”, adhere to all reporting requirements of the Law on Public Finance and Accountability 2003/02 and are based on properly maintained financial records

This declaration is provided in connection with the presentation of the Kosovo General Budget financial

statements of the budget organizations for the year ending on December 31, 2007

We confirm, to the best of our knowledge and belief, that:

There have been no irregularities involving management or employees which could have had a material effect

on the financial statements

The information provided and presented in the financial statements regarding the identification of funds and their expenditure related to the Kosovo Consolidated Budget is complete and accurate

The information regarding collection of revenues is accurate

There are no bank accounts related to the KCB other than the bank accounts specified in the financial statements and this specification is complete and accurate as of December 31, 2007

There has been no non-compliance with requirements of regulatory authorities that could have a material effect on the financial statements in the event of non-compliance

There are no (legal) claims pending that could have a material effect on the financial statements

All liabilities, both actual and contingent, and all guarantees given to third parties have been recorded and/or disclosed, as appropriate

All loans to external parties have been recorded and/or disclosed, as appropriate

There have been no events subsequent to period end which require adjustment of or disclosure in the financial statements or Notes thereto

Municipalities must send their reports to the Budget and Finance Committee in the Municipal Assemblies

In our opinion, the attached consolidated financial statements give a true and fair presentation of the finances and financial transactions for the year ended on 31 December 2007 of Istog Municipality

Date:

Signature and stamp:

Permanent Secretary (Chief Executive Officer)

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III

Section 9 Budget Report

Budget Report including Donor Grants

Original

Own Source Revenues Carried Forward

Budget Report

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