The Office for the Audit of Institutions in the Federation of Bosnia and Herzegovina (FBiH) has published a report on the financial audit of the Public Enterprise of Roads in the FBiH.
The Office drew attention to the issue of long-term receivables from the FBiH Government, which are stated in the amount of 15,000,000 BAM and refer to funds transferred from the regular transaction accounts of the Company to the deposit account of the FBiH Budget in 2012.
“As we have stated in previous years, no documentation was presented that could confirm the status of these funds, i.e. that the Company’s funds were given as a loan to the FBiH Budget. The EBRD loan funds were used for the Sarajevo bypass project, which was recorded in off-balance sheet records Company, because the Company is only the implementer of the Government of FBiH project, and not the end user of the loan funds. Until the end of the audit in question, the Parliament of FBiH did not make a decision on the allocation of funds in order to reimburse the Company, and they are still recorded in the receivables,” the Office announced.
The section on the compliance audit report states:
“In the position ‘intangible assets in preparation’, the amount of 12,413,470 BAM was shown for the investment ‘Crnaja Tunnel’, which ended in 2022, but was not activated for bookkeeping. Also, within the same position, the amount of 6,576,079 was shown BAM for investments that were started in an earlier period, the realization of which is significantly delayed or it is about projects that have been completed and not activated for bookkeeping. This is not in accordance with Article 15 of the Law on Accounting and Auditing in FBiH”, it is stated.
In relation to intangible assets, the Office established that it was stated in the amount of 2,592,058 BAM, and consists of investments in assets, intangible assets under preparation and intangible assets. Investments in other people’s property are reported in the amount of 2,492,574,624 BAM and refer to investments in road infrastructure. The road infrastructure is, in accordance with the FBiH Law on Roads, given to the Company for management and maintenance.
“According to the Company’s accounting policies, road infrastructure is recognized as an intangible asset in the form of rights with an unlimited lifetime. The valuation of this asset is carried out according to the revaluation model, with an assessment and value adjustment being carried out every three years. The last assessment of the value of tangible and intangible assets was carried out for 2021.
“Intangible assets are non-monetary assets without identifiable physical characteristics. Assets are identifiable if they can be separated or if they arise from contractual or other legal rights. Examples of intangible assets include software, licenses, trademarks, patents, films, copyright rights and import quotas. Road infrastructure cannot be reported as an intangible asset because it does not meet the criteria of IAS 38 – Intangible assets. Road infrastructure should be recorded in accordance with the requirements of IAS 16 – Real estate, plant and equipment, plant and equipment are tangible items that the entity owns for use in the production or delivery of goods or services, for rental to others or for administrative purposes and which are expected to be used for more than one accounting period.
They point out that, according to the requirements of IAS 38 – Intangible assets, for the purposes of revaluation, the valuation of intangible assets at fair value implies the existence of an active market, which for road infrastructure does not exist in BiH, which, they say, calls into question whether the estimated value is really the fair value at which the asset can be sold. Also, they drew attention to the fact that the Company does not have established auxiliary records of fixed assets for road infrastructure in accordance with Article 16, paragraph 7 of the Law on Accounting.
“Due to all of the above, we cannot confirm the method of recording the effects of the fair value assessment of intangible assets – road infrastructure on December 31st, 2023 in the amount of 30,275,506 BAM as an increase in other basic capital,” it is stated.
Also, it is said that the Company did not conduct public procurement procedures for regular maintenance of highways in a timely manner, nor did it adequately assess the value of maintenance costs, which led to the conclusion of contracts for additional works without conducting public procurement procedures in the amount of 1,975,246 BAM.
“The above is not in accordance with the Law on Public Procurement and by the Law on Public Enterprises in the FBiH”, concluded the Office.
Also, they say that three employees were hired for a fixed-term employment relationship, without conducting a public announcement procedure, based on the Regulation on the procedure for employment in the public sector in the FBiH for a fixed-term period of up to six months, Klix.ba writes.
E.Dz.
