Serbia’s State Audit Institution: Ministry of Education Management of School Modernization Program and Local Self-Governments’ Collection of Own-source Revenues in Need of Attention

Serbia’s State Audit Institution: Ministry of Education Management of School Modernization Program and Local Self-Governments’ Collection of Own-source Revenues in Need of Attention

January 21, 2021

On January 19, the State Audit Institution released the results of two of its 2020 performance audits revealing the need for the Government to increase its attention to address deficiencies in management of the School Modernization Program and insufficient collection of own-source revenues in Local self-governments in Serbia.

SAI’s recent performance audit of the School Modernization Program concluded that the Ministry of Education and the (Project Management Unit) inefficient management of the School Modernization Program resulted in multiple extensions of deadlines, as well as for some schools to be excluded from the modernization program. The School Modernization Program was designed to provide construction, expansion, reconstruction and/or equipping of schools throughout Serbia. The Ministry of Education has managed the Program since its inception in 2010, while the PMU became involved in project management activities in 2014. Equipping and construction activities on 213 school buildings were to be completed by the end of 2014. The deadlines were extended three times, most recently until the end of 2021. On average, three years passed from conclusion of the contracted execution of work until the technical approval of work was completed for each school facility, which was significantly longer than expected. Lack of efficient engagement of all participants resulted in the implementation of the School Modernization Program to be significantly slower than planned. As a result, around 18% of the selected school facilities were not able to participate in the program. Due to the urgency of the modernization need in the schools and the slow implementation of the progam, most of these schools sought other sources of funding. A small portion of the schools was rejected as they were unprepared to participate or insufficient funds were available.

On Efficiency of Own-Source Revenue Collection in Local Self-Governments, SAI reported that LSGs have failed to ensure systemic updating of taxpayers’ records and to undertake measures to collect, appropriately control and monitor tax collection, resulting in large amounts of uncollected own-source revenues. The collection of these revenues is further jeopardized by the increased risk of potential collections being written off, as the legal deadline for their collection expires. SAI concluded that problems in collecting own-source revenues has undermined the LSGs’ financial capacities and has impacted the scope and pace of execution of planned expenditures and outflows, and the quality of public services. In addition, the problems result in LSGs’ need for additional transfers from the Budget of the Republic of Serbia. On average, own-source revenues account for 30-40% of total LSG funds, which local governments are solely responsible to identify, collect and control. Uncollected receivables from own-source revenues as of December 31, 2019 amounted to more than 135 billion dinars. From 2017-2019, 74% of LSGs recorded a rise in uncollected receivables from own-source revenues by a total of 9,6 billion dinars, while in the same period 12 billion dinars of receivable amounts were written off by LSGs.

Mr. Pejović also used this press conference to reveal the recurring deficiencies and irregularities in public procurement caused by poor execution of public procurement regulations. As a result, SAI identified public procurement to be a high priority, high risk area for performance and compliance audits. He reminded the audience that irregularities occur due to incomplete technical documentation or accepting inadequate bids. SAI advocates for broader understanding and full application of public procurement regulations.

USAID Government Accountability Initiative supports strengthening SAI’s capacity to conduct risk-based selection of performance audits aligned with SAI’s 2019-2023 Strategic Plan.

In addition to media representatives and CSOs participating in the press conference via Zoom platform, more than 50 representatives of CSOs, the media, and other external stakeholders participated in the conference broadcast via UNS Press Center of the Journalists’ Association of Serbia You Tube Channel.

SAI holds press conferences every Tuesday between January 12 and February 9, at noon, online at UNS Press Centre, by order published on SAI webpage  http://www.dri.rs/mediji/Konferencije-za-novinare—Predstavljanje-izvestaja-o-reviziji-svrsishodnosti-poslovanja.n-534.107.html

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