C O N T E N T
1. AUDITOR’S OPINION
2. SUMMARY
3. AUDIT FINDINGS AND RECOMMENDATIONS
3.1. Internal controls system
3.2. Budget control system
	Income from budget
	Expenditures out of budget
3.3. Financial reports
3.4. Accounting
3.5. Donations
3.6. Correspondence with the client
4. ATTACHMENTS
	Balance sheet, December 31, 2001
	Income statement, December 31, 2001

1. AUDITOR'S OPINION

1.1. We performed the audit of financial reports and operations (including the management's decisions) of the CONSTITUTIONAL COURT OF BOSNIA AND HERZEGOVINA (hereinafter: The Court), for financial year 2000. It is our responsibility to, according to generally accepted audit standards and the INTOSAI standards, perform an annual audit of public accounts, and, according to Article 13 of the Law on Auditing of Financial Operations of the Institutions of Bosnia and Herzegovina ("Official Gazette of BiH" number 17/99) to report about the following:

• if the accounts have been made according to the valid legislation – legal regulations;
• do the reports present a true and fair view of operations during the year and the status at the end of the year
• on economy, efficiency and effectiveness of use of funds that the Court used for performing of its functions.

1.2. It is a responsibility of the Court to fulfill legal obligations in an effective way and in accordance with valid legislation. Court is also responsible for financial reports. We performed audit according to generally accepted audit standards and INTOSAI standards. These standards demand audit to be planned and performed in order to achieve reasonable grounds for estimating if the financial reports present a true and fair view of the operations during the year. That is why audit has been examining sample of significant transactions and decisions of the Court (those relating to financial operations of the Court).

We did not perform audit of financial reports for previous years, neither did some other audit institution.

1.3. In a Chapter 3 (item 3.1.) of this audit report, financial statement that were subject to this audit do not present a fair and true view of the operations during the year and the status at the end of the year, in a part that relates to income in an amount of 38.826,00 KM transferred in January of 2001, and belonging to year 2000. Based on this financial reports show deficit of income in an amount of 30.416,00 KM, instead of surplus of income over the expenditures in an amount of 8.410,00 KM.  

We believe that the audit performed gives reasonable grounds for expressing of our opinion.

According to our opinion, except for the reserve stated in item 1.3. here, financial reports present, in all significant aspects, fair and true view of the operations during the year and the status at the end of the year.

2. RESUME

We have audited operations of the Court through systems of income, expenditures, assets and liabilities. Also, we have encompassed by this audit significant decisions of the environment in which the Court was functioning.

Audit findings have been classified according to most important irregularities, and relating to: internal controls system, mechanisms of management and control over the budget funds, non-existence of measures that would provide improvement of efficiency, and financial reports presentation.

Income allocated in January 2001, and belonging to year 2000 has not been presented in the financial reports of the Court for year 2000. This also relates to part of the income allocated from budget in an amount of 38.826,00 KM. Based on this, Court underestimated the income in an amount of 38.826,00 KM in an income statement, and at the same time, and for the same amount, in a balance sheet, it underestimated short-term cutoffs.

Based on that, Court has shown income as lower than the expenditures in an amount of 30.416,00 KM, instead of presenting a surplus of income over the expenditures in an amount of 8.410,00 KM.

Donations that have been allocated to the Court have been audited and shown as a finding in Chapter 3 (see item 3.5.).

3. AUDIT FINDINGS AND RECOMMENDATIONS

3.1. Internal controls system

Audit has noted weaknesses in budget funds management. These, first of all refer to non-existence of internal regulations, coordination with Technical and Administrative Service of the institutions of the Federation of BiH (hereinafter: the Service), planning, recording and monitoring of budget funds.

Court has addressed financial-accounting tasks to the Service, and it appointed – designated a person that coordinated tasks with the Service and was performing accounting control of financial documents that were basis for recording of changes in the bookkeeping records. But the Court did not consistently and regularly monitored and recorded budget funds, which, as a consequence, had exceeding of certain expenditure items.

Audit is of an opinion that the Court should consider the possibility of charging one person to monitor in continuity, execution of budget, and that would be responsible for financial- accounting tasks and duties.

3.2. Budget control system

In 2000, Court was financed from budget, budget reserves and the funds from donations. Donated funds have been allocated for the support and Court functioning purposes.

3.2.1. Income from budget

Income planned by budget was 1.150.000,00 KM. Income in an amount of 1.111.431,00 KM was transferred to the Court’s account by December 31, 2000, which was shown in the financial statements. Allocation of 38.826,00 KM that has been transferred in January 2001 was not shown in financial statements for year 2000, even though it belongs to, or relates to funds from year 2000 budget.

3.2.2. Expenditures

Expenditures planned by budget were 1.150.000,00 KM, and they were actually made in an amount of 1.283.180,00 KM, which means 133.180,00 KM or 11,58 % more that was planned by budget.

Difference of the expenditures in relation to budget was covered from budget reserve funds in an amount of 117.000,00 KM and current support funds in an amount of 23.588,00 KM. Leftover in an amount of 7.408,00 KM was covered due to surplus of income from the previous period.  

Court did not consistently respected adopted budget for year 2000, which defines categories and the amounts of individual expenditure items, so that the certain items were exceeded, i.e. reimbursements for the employees in an amount 58.160,00 KM or 89,74 %.

Redistribution of funds from one item to another within the budget has happened because the financial plan of the Court was not accorded with budget. Funds that the Court has planned for its sessions, round tables and conferences were not approved within the budget.

Audit Office finds that the Court should accord its financial plan with budget, and establish regular monitoring and control of use of budget funds, no matter the fact that it is independent and financially individual institution.

3.3. Financial reports

Court has mad a financial report – statement in a form of annual statement for year 2000, and delivered it to the Ministry of Treasury.

In the financial statements for year 2000 income has not been shown that was transferred in January 2001, but belong to year 2000. This relates to part of the income that was allocated from budget in an amount of 38.826,00 KM. Based on this Court has underestimated income in an amount of 38.826,00 KM in the income statement, and at the same time it has underestimated short-term liabilities for the same amount in the balance sheet.

Based on this Court has shown, in its financial statements income to be lower than expenditures for 30.416,00 KM, instead of showing the surplus of income over the expenditures in an amount of 8.410,00 KM.

Court is obligated, according to the accounting regulations and principles, to correct the bookkeeping records in a year 2001, and to show the corrections in its financial statements, in order for the statements for year 2001 to be fair and true.

3.4. Accounting

Audit has established that the court did not record budget funds allocated for December 2000 in an amount of 38.826,00 KM, which is against the accounting regulations and principles.

Court is obligated to keep its ledgers in a way the accounting regulations and principles prescribe it, meaning the principle of modified accrual basis of accounting, which says that the income and proceeds are being recognized in an accounting period in which they are measurable and available.

3.5. Donations

Court’s financial statements do not show funds – assets from donations. They have been recorded separately from the balance sheet, in additional bookkeeping records.

Donations of the governments of France and Sweden have been allocated to the OHR account and they were used for support and improvement of Court’s functioning. Spending, recording and monitoring of funds from these donations was controlled by OHR, and the OHR submits the report to donor countries. Court has no documentation related to the mentioned donations, nor it records or monitors this documentation.

Upon a request from the Court, OHR coordinator in charge of the implementation of has shown to the Court a report for the part of donated funds used in 2000, in an amount of 25.872,00 KM. Report has been signed and approved by the Court also.

Funds from the donation that the Government of Spain has approved as a support for the functioning of the Court have been allocated to the Court’s sub-account, in an amount of 84.386,67 KM.

Court had recorded use of these funds and monitored and recorded them separately in the additional ledgers, based on credible documents. Also, Court has made and submitted to audit a report on used funds from donation.

Audit Office thinks that according to the Law on Execution of Budget, all the funds allocated, no matter their origin or source have to be recorded in the ledgers and shown in financial statements.

Donation funds should be planned or foreseen by the budget, no matter the way they are being used. This way, basic accounting principles, especially principles of budget unity, entirety and transparency would be respected.

3.6. Correspondence with the client

Constitutional court of Bosnia and Herzegovina has informed us; by its letter number 215/01 that it has no objections to a Report on audit, and that it has already taken certain activities according to our recommendations.

Attachment 1

Balance sheet on December 31, 2000 [1]

Attachment 2

Income statement for a period from April 17 to December 31, 2000. [2]

[1] Table gives an overview of original data that the Court had officially presented in its financial statements for year 2000. 

[2] Table gives an overview of original data that the Court had officially presented in its financial statements for year 2000.