THE AUDIT REPORT ON DONATION FUNDS OF THE KINGDOM OF DENMARK

Transcription

1 SAI No: /20 Podgorica, MONTENEGRO STATE AUDIT INSTITUTION THE AUDIT REPORT ON DONATION FUNDS OF THE KINGDOM OF DENMARK Organic Agriculture Development Programme - OADP for the period from January 1st 2012 until May 31st 2013 (Final report) Podgorica, July 2013

2 State Audit Institution (hereinafter referred to as: Institution), pursuant to Article 4 of the Law on State Audit Institution and Decision of the competent Collegium for the audit No from January 15th 2013 and in accordance with the letter of the Office of the Denmark Government in Montenegro No from October 30th 2012, has performed the audit of donation funds of the Kingdom of Denmark for financing the Project Organic Agriculture Development Programme in Montenegro for the period from January 1st to May 31st The audit has been performed in accordance with the Rules of Procedure of the State Audit Institution and International Auditing Standards for the Public Sector (ISSAI and EUROSAI). Based on determined factual state and deliberation on the opinion of the Ministry of agriculture and rural development (No from July 12th 2013) on the preliminary audit report of the SAI (No /16 from July 1st 2013), the competent Collegium consisted of PhD Milan Dabović, head of the Collegium member of the Senate and PhD Branislav Radulović, member of the Collegium - member of the Senate, at its session held on July 23rd 2013 has adopted the FINAL AUDIT REPORT ON DONATION FUNDS OF THE KINGDOM OF DENMARK (PROJECT - "ORGANIC AGRICULTURE DEVELOPMENT PROGRAMME IN MONTENEGRO") for the period January 1st 2012 to May 31st 2013 and has passed the following: OPINION Based on determined factual state, it has been determined that in the period from January 1st 2012 to May 31st 2013, related to the Component 2 Component of competitiveness and Results 2.1. Establishment of Investment Grants for Organic Production, there have been no important material irregularities which would indicate significant violation of procedures, except in the part of delays of deadlines prescribed by the Instruction Manual for the Grant Scheme. Based on afore-mentioned irregularities, the competent Collegium of the Institution has given the QUALIFED OPINION on the audit in question. 1. The audit has determined that the four month deadline wasn t met after approval of the grant funds for realisation of the own participation - personal share in six cases or 37, 5% of applications chosen by the sample. Deadline for realisation of approved funds has been postponed on the base of approvals given by the Commission of Evaluation. The Grant scheme does not predict the possibility to postpone the deadlines or give approvals for postponing the deadlines. 2. The audit has determined that a part of the budget/ investments, after receiving contributions from the grant, has not been completed within the four month time limit in seven cases or 43,75% of the chosen sample. The Grant scheme does not predict the possibility of postponing the deadlines. 3. The audit has determined that one applicant from the chosen sample does not have the documentations on the base of which it can be determined the 2

3 investment state after receiving the funds from the grant, i.e. the level of investment realisation where the time limit for investment completion expired. Based on the Report given by the Ministry of Agriculture and Rural Development on realisation of the funds of the Project - Organic Agriculture Development Programme DANIDA for 2010, 2011 and 2012, according to the funds sources and users with established status from May 27th 2013, it has been determined as follows: Out of the 53 investments in total supported by the programme (paid out funds from donation and from the budget), six investments were not completed on May 27th 2013 and those include four investments paid out in 2011 and two investments paid out in The Grant scheme predicts that, after receiving the contribution from the grant, the rest part of the budget / investments has to be completed in four month deadline. The State Audit Institution received the minutes from the Management Board from May 13th 2013 (OADP- the eighth- the last meeting of the Management Board), by e- mail on June 20th We remind that the minutes were not verified and that it contained the three week deadline for remarks with a statement that if they were not delivered, the minutes would be considered adopted. Regarding delivered minutes, the State Audit Institution has paid attention to the comments regarding three projects in which the grant funds were not spent in accordance with application. Related to the above mentioned, we note: In the reports for 2010 and 2011, the State Audit Institution has stated that there were certain irregularities related to prolongation of the deadlines for realisation of the applicants own funds, as well as realisation of the funds approved by the Grant scheme (see the Audit report on donation funds of the Kingdom of Denmark for 2011, title- Commission for Evaluation, page 9). The State Audit Institution informed the Management Board on the issue of deadlines exceeding about the use of approved funds from the grant and at the same time, we could not convince, through minutes of the Management Board, that certain attention was paid to this issue until the last meeting of the Management Board on May 13th On the session held on May 13th 2013, the Management Board has reconsidered the problems about grant applications that were not used according to the Grant scheme so that closing of the project was brought into question by the Government of Denmark. Respecting the circumstances that the State Audit Institution had drawn attention on deadlines prolongation regarding the use of funds and that the members of the Management Board had been acquiainted with these issues in accordance with the Article 2 of the Memorandum of Understanding on implementation of Organic Agriculture Development Programme (OADP) between the Government of the Kingdom of Denmark and the Government of Montenegro, we propose that the Management Board holds another session dedicated to this issue and proposes a concrete conclusion in accordance with 3

4 positive legislature of Montenegro, Memorandum of Understanding between the Government of the Kingdom of Denmark and the Government of Montenegro on implementation of Organic Agriculture Development Programme (OADP) and Grant Scheme Manual. HEAD OF COLLEGIUM III PhD Milan Dabović Member of the Senate 4

5 TABLE OF CONTENTS PART I GENERAL PART INTRODUCTION Legal basis of the audit Type and aim of audit Subject to audit and scope of audit Organic Agriculture Development Programme in Montenegro...7 PART II - DETERMINED FACTUAL STATE Budget Planning and Execution Project Management Management Board Advisory Service Commission for Evaluation Ministry of Agriculture and Rural Development Organic Agriculture Department Financial Service of MARD Ministry of Finance Applications

6 PART I: GENERAL PART 1. INTRODUCTION Office of the Kingdom of Denmark in Montenegro, authorised for financing the Organic Agriculture Development Programme OADP in Montenegro, has sent a letter to the State Audit Institution No: from October 30th 2012 requiring from the Institution to perform an audit of donation funds for organic agriculture development in Montenegro in conclusion with the date of March 31st However, in accordance with the note of the Embassy of Denmark No 06/3-1270/2 from May 18th 2012 in which they inform the Ministry of Agriculture and Rural Development that the Danish part fully agrees with the proposal for prolongation of the Bilateral agreement on Organic Agriculture Development Programme until May 2013, the time period covered by the audit is from January 1st 2012 until May 31st Legal basis for the audit Legal basis for performing the audit on donation funds of the Kingdom of Denmark, approved for financing the Project Organic Agriculture Development Programme in Montenegro is contained in: the Law on State Audit Institution 1, the Annual Plan of Audits for 2013, adopted by the Senate of the State Audit Institution 2, and Decision on Performing the Audit of Donation Funds for the Organic Agriculture Development Programme (OADP) according to the Project of the Kingdom of Denmark 3. The audit procedure has been performed in accordance with the Rules of Procedure of the State Audit Institution 4, and the International Auditing Standards for the Public Sector (ISSAI/EUROSAI). The audit procedure has above all followed the standards that require audit planning and performing of audit in a way which shall provide a reasonable reassurance for expressing an opinion. 3. Type and aim of audit The Institution has performed regularity audit (compliance audit) of payments executed for the time period from January 1st 2012 until May 31st 2013 from the special open bank account for donation funds as well as from the account of the State Treasury in Montenegro. The Leader of the project is the Ministry of Agriculture and Rural Development (hereinafter referred to as: The Ministry). 1 'Official Gazzette of the Republic of Montenegro'', No 28/04, 27/06, 78/06,17/07, 73/10 and 40/11 2 SAI: No from December 24th SAI from January 15th 'Official Gazzette of the Republic of Montenegro'', No 50/07 6

7 The aim of the audit is to express an independent opinion on whether the financial state is accurate and objective and whether the activities were performed in accordance with the programme documentation and the Grant Manual 5. The State Audit Institution has performed the control of the funds received from the Ministry of Finance of Denmark, transfer of funds from the special bank account to the State Treasury and payment of funds from Danish and the state budget. Such an aim of the audit requires verification of the funds received from the Ministry of Foreign Affairs of the Kingdom of Denmark on the bank account of Montenegrin Commercial Bank AD Podgorica, Account No , which have been paid to users through the State Treasury, as well as verification of expenses paid from the state budget, i.e. paid by the Ministry in the time period from January 1st 2012 until May 31st Subject to audit and the scope of audit The subject to audit includes financial transactions of funds received from the Danish Government and transactions of the State Treasury of Montenegro, in accordance with the Organic Agriculture Development Programme and the Manual for Grant Scheme from December The scope of audit covers all expenditures / payments executed from the funds of the grant in the year of 2012 and Organic Agriculture Development Programme in Montenegro The Government of Denmark has allocated 15 million of DKK for the organic agriculture development in Montenegro for the period January December 2011 within its Neighbourhood Programme. Danish aid is realized through a development programme called Organic Agriculture Development Programme (OADP). The Programme aims to support the development of organic agriculture and consumption of organic products at the local market through the sector of tourism as well as the export of organic products. Budget of the Project amounts to ,00 out of which the amount of ,00 has been allocated by the Government of Denmark, while the Ministry of Agriculture and Rural Development has participated with ,00. The activities on the realization of the Organic Agriculture Development Programme started on June 2nd, The project Office was established, national consultant and Programme assistant were employed and the members of the Management Board were appointed. The Programme has been managed by Permanent Senior Expert for organic agriculture, appointed by the Ministry of Foreign Affairs of Denmark, and the Project Office is located at the Institute of Biotechnology. Permanent Senior Advisor is responsible for Programme management and its implementation. 5 Organic Agriculture Development Programme in Montenegro: External Audit-Project task 7

8 Management Board and the Ministry of Agriculture and Rural Development of Montenegro are responsible for the realization of the Programme. Memorandum of Understanding has been signed between the Government of the Kingdom of Denmark and the Government of Montenegro on the implementation of the Organic Agriculture Development Programme (OADP), which prescribes the conditions for all programme activities as well as for international staff and their families, i.e. those who do not have Montenegrin citizenship. Notes important for performing the audit, among others, and which are prescribed by the Memorandum of Understanding are the following: Interests accrued on the programme funds have to be paid out to Denmark. Montenegro must guarantee that the grant of Denmark is not used for payment of any import duties, allowances, national or other public duties on import of any part of the equipment, material, tools, services, vehicles and spare parts purchased for activities agreed within the scope of the OADP. All equipment, material, tools, services, vehicles and spare parts financed by the grant of Denmark will be value-added tax free by Montenegro for the activities agreed within the scope of the OADP. An Instruction Manual for the Grant Scheme was drafted, and made available to all who meet the criteria and who oblige to be certified organic producers. The investment arrangements are focused on crop production, processing and distribution, especially on the value chain of fruits and vegetables. The scheme is not intended for the purchase of inputs such as seeds and fertilizers, or for marketing promotion. The accounting records are kept on a cash basis and accounting documents are presented in euro currency. The procurement of assets and equipment made by the user, and which should be complied with the guidelines for procurement from the Instruction Manual for Grants, is not the subject to our audit. The audit has been planned and prepared in order to detect possible irregularities and examine the adequacy of the implementation of the rules of conduct determined by the Programme. Considering the above mentioned, CHECKLIST has been made for checking the compliance of procedures for obtaining a grant with the Grant Manual. 8

9 PART II: DETERMINED FACTUAL STATE Organic Agriculture Development Programme in Montenegro includes two separate procedures of financial management. The first procedure refers to the funds for the grants under component 2- Component of competitiveness (results 2.1- Establishing a program of investment grants for organic production and 2.2- Establishing a program of grants for the Biotechnology Institute 6 ), which is realized through the appropriate national system in Montenegro. The second procedure refers to financing other Programme activities and it is implemented through the appropriate account, managed by the Senior Expert. Account of the Programme, managed by the Senior Expert, was opened as a nonresidential account on June 23rd 2009 at Montenegrin Commercial Bank, No and intended for financing the results from the component 1- Component of institutional development and results and the component 2 - Component of competitiveness (2.3.- Placement and promotion of organic products). Transactions recorded at the above mentioned account were not the subject of checking in the audit procedure performed by the State Audit Institution. The fiscal year of the programme follows the fiscal year of the Budget in Montenegro, i.e. January - December. Budget of Programme Grants and planning cycle follow the cycle of planning the Budget of Montenegro. In the programme documents, time period for the support to the Programme has been planned from June 2009 until June The Ministry of Agriculture and Rural Development has sent a letter No. 320/ /11 from January 16th 2012 to the Ministry of Foreign Affairs and European Integrations requiring prolongation of duration of the Project Organic Agriculture Development Programme, which needs to be passed to the Ministry of Foreign Affairs of the Kingdom of Denmark. The Ministry of Foreign Affairs and European Integrations - General Directorate for Bilateral Affairs, in the letter No from May 18th 2012, has delivered the note of the Embassy of Denmark in which they inform that the Danish part agrees with proposal for prolongation of Bilateral programme on Organic Agriculture Development Programme until the end of May The programme started with grant support, investments in the organic production, processing and distribution in April 2010 and it was opened for applications until March Within the afore-mentioned time period, 53 investments were supported, which total value amounts to ,59, out of which donation funds of the Government of Denmark amounts to ,42 or 75% and paid out funds from the state budget in amount of ,17, or 25% as it can be seen from the following chart: 6 Component 2/ Result 2.2. Forming of programme grants for Biotechnology Institute-was not the subject to audit 9

10 Year Number of users Donation of the Government National funds User own participation Total Of Denmark (Budget) , , , , , , , , , , , ,67 Total , , , ,79 User own participation of grant funds amounted to ,20 or 50% of approved investment. Based on the Report given by the Ministry of Agriculture and Rural Development on realisation of the funds of the Project - Organic Agriculture Development Programme DANIDA for 2010, 2011 and 2012, according to the funds sources and users with established status from May 27th 2013, it has been determined as follows: Out of the 53 investments in total supported by the programme (paid out funds from donation and from the budget), six investments were not completed on May 27th 2013 and those include four investments paid out in 2011 and two investments paid out in The Grant scheme predicts that, after receiving the contribution from the grant, the rest part of the budget / investments has to be completed in four month deadline. The State Audit Institution received the minutes from the Management Board from May 13th 2013 (OADP- the eighth- the last meeting of the Management Board), by e- mail on June 20th We remind that the minutes were not verified and that it contained the three week deadline for remarks with a statement that if they were not delivered, the minutes would be considered adopted. Regarding delivered minutes, the State Audit Institution has paid attention to the comments regarding three projects in which the grant funds were not spent in accordance with application. Related to the above mentioned, we note: In the reports for 2010 and 2011, the State Audit Institution has stated that there were certain irregularities related to prolongation of the deadlines for realisation of the applicants own funds, as well as realisation of the funds approved by the Grant scheme (see the Audit report on donation funds of the Kingdom of Denmark for 2011, title- Commission for Evaluation, page 9). The State Audit Institution informed the Management Board on the issue of deadlines exceeding about the use of approved funds from the grant and at the same time, we could not convince, through minutes of the Management Board, that certain attention was paid to this issue until the last meeting of the Management Board on May 13th On the session held on May 13th 2013, the Management Board has reconsidered the problems about grant applications that were not used according to the Grant scheme so that closing of the project was brought into question by the Government of Denmark. 10

11 Respecting the circumstances that the State Audit Institution had drawn attention on deadlines prolongation regarding the use of funds and that the members of the Management Board had been acquiainted with these issues in accordance with the Article 2 of the Memorandum of Understanding on implementation of Organic Agriculture Development Programme (OADP) between the Government of the Kingdom of Denmark and the Government of Montenegro, we propose that the Management Board holds another session dedicated to this issue and proposes a concrete conclusion in accordance with positive legislature of Montenegro, Memorandum of Understanding between the Government of the Kingdom of Denmark and the Government of Montenegro on implementation of Organic Agriculture Development Programme (OADP) and Grant Scheme Manual. 1. Budget Planning and Execution In accordance with the Instruction on the Work of the State Treasury 7, and based on the Request of the Ministry of Agriculture and Rural Development of Montenegro (in that period it was the Ministry of Agriculture, forestry and water management), No. 320/ /7 from February 10th, 2010, the Ministry of Finance opened a bank account number: , at Montenegrin Commercial Bank a.d. Podgorica, entitled Organic Agriculture Development Programme (OADP). The funds at the account are handled by the Ministry, while the Ministry of Finance is responsible for the transfer of funds to the end user. Planned funds from donations of the Government of the Kingdom of Denmark, intended for realisation of the Organic Agriculture Development Programme, were included in the state budget for 2012 within the framework of Agrobudget, in amount of ,00 in the budget lines for expenditures Expenditures for contracted services. In the budget line for expenditures 4171 Subventions for production and service providing, the Ministry has planned expenditures based on its own participation at realisation of the Organic Agriculture Development Programme in amount of ,00, so that total planned funds for these purposes were ,00. After getting an insight into the commercial account at the bank, it has been determined that cash balance demand deposits on January 1st 2012 were ,12. Debit turnover of the account, i.e. flow of the funds were ,00. Credit turnover of the account, i.e. outflow of the funds was ,95, so that cash balance - demand deposits on May 16th 2013 was 1.404,17 as it can be seen in the following chart: No description debit turnover credit turnover 1 State of funds on January 1st ,12 2 Flow of funds (January 1st 2012 until May 16th 2013) ,00 3 Executed payments of funds (grant) ,17 4 Executed Payment of bank commission 619,78 5 State of funds on May 16th ,17 Total , ,12 7 ( 'Official Gazzette of the Republic of Montenegro'' No 80/08; 02/09; 45/10, 15/11 i 17/12) 11

12 Flow of the funds at the bank account, based on donations from the Government of Denmark, were realised: In amount of ,00 on January 13th 2012 In amount of ,00 on May 23rd 2012 In amount of ,00 on October 10th 2012 There were no flow or outflow of funds at the commercial account of the bank in Payments of funds from the account to the end user were executed on a request for payment delivered by the Ministry, which is ,17 in total, as the expenditures on behalf commission for bank service are expressed in amount of 619, Project Management The audit has included the work of the Management Board as a managing body of the Programme, as well as the work of the Advisory Service, the Commission for Evaluation and the Department for Organic Agriculture. The audit has also included financial service at the Ministry, where budget planning and payment processing are performed by the Ministry of Finance, as well as accounting records Management Board of the Program - comprises of the representatives of the partners responsible for Organic Agriculture Development Programme, according to the programme documentation. Based on the letter of the Ministry of Agriculture and Rural Development No. 320/ /5 from November 23rd 2012, appointment of new President of the Management Board was verified at the VII session of the Management Board. The Management Board was carrying out its tasks and decisions were made by consensus, which is in accordance with the programme document and other legal acts related to the Programme Advisory Service - Through the interview method and review of the Application Register (according to chosen sample) in audit procedure, it has been determined that the Advisory Service performed its tasks in accordance with the Grant Scheme, as follows: informed the target group about the possibilities for receiving donations, pre-conditions for application and evaluated the justification of investment requests (comment on the application form). The Advisory Service carried out continuous communication with all parties during the project cycle in accordance with the Grant Scheme (when the funds of personal financing were invested, but before executed payments of contributions from the grants and when the project was completed) Commission for Evaluation - carried out processing of applications in terms of accepting or rejecting the requests for grant funds in accordance with the Grant Scheme, with aim to make decision on awarding the grant. Reviewing the Register of Applications, according to chosen sample, it has been determined that there was an irregularity in the work of the Commission for Evaluation 12

13 regarding not meeting the deadline for realisation of own participation (four months after grant approval). Deadline for realisation of own participation personal share of funds, was postponed to 37,5 % of applications among chosen sample, based on approval given by the Commission for Evaluation. The Grant scheme does not predict the possibility to postpone the deadlines or give approvals for postponing the deadlines Ministry of Agriculture and Rural Development Since 2005, there has been an Unit for organic agriculture and legislative infrastructure for organic agriculture within the organizational structure of the Ministry of Agriculture and Rural Development Organic Agriculture Department is an implementing body within the Ministry of Agriculture and Rural Development which coordinates the work of all parties in Organic Agriculture Development Programme, in accordance with the programme documentation. Reviewing the Register of Applications, kept by the Organic Agriculture Department, it has been determined that on May 23 rd 2013, one application included in the sample, was not completed, i.e. there is no document based on which it can be determined that the investment was completed according to determined procedure in accordance with the Grant Scheme. The Grant Scheme predicts that, after receiving contributions from grant, the rest part of the budget/ investments has to be completed within four month deadline. There is a Report on realization of the second part of investment No 320/ /13 from April 29 th 2012 within the Register of Applications and it stated that the exact amount of designed spent funds can not be determined due to incomplete documentation Financial Service of the Ministry of Agriculture and Rural Development performed financial operations on the basis of orders received from the Department for Organic Agriculture. Having reviewed the Register of Applications, it has been determined that the Financial service, in one case from the chosen sample, did not submit a request for payment from the state budget funds to the Ministry of Finance as well as a request for payment from donation funds, which is not in accordance with the Grant Scheme. It has been determined by the control that the Ministry timely updated specimen signatures in cases when it came to the changes of responsible persons for authorization and approval of requests for payments and acted according to recommendation of the Institution given in the Audit Report for On the basis of specimen signature card, given to insight to the state auditors, financial funds approved by the budget were disposed by the following individuals: From April 20th 2011 to July 2nd 2012 Tarzan Milošević Authorising officer 13

14 Perović Vukica Authorising officer Lakić Đurđica Officer for verification In the time period from July 2nd 2012 Tarzan Milošević Authorising officer Perović Vukica - Authorising officer Lakić Đurđica Officer for verification Radoš Šućur approves Rosanda Vojinović - verifies The following chart contains the overview according to sources of realised funds on the project Organic Agriculture Development Programme in Montenegro from January 1st 2012 and in the year of 2013 (until the end of the project): Donation funds of Funds from the Budget Users own participation Total the Government of of Denmark Montenegro , , , ,67 In the afore-mentioned chart, realized funds from donation of the Government of Denmark were expressed in amount of ,17, while as the outflow on the currency account at the commercial bank on the basis of funds (grant) payments was expressed in amount of ,17. The difference in the amount of 3.000,00 refers to the funds that were mostly withdrawn by the Ministry of Finance in 2011 and paid out in 2012, which is explained in detail in the Audit Report on donation funds of the Kingdom of Denmark for Donation funds, planned in 2012, are included in the annual budget on the position Expenditure for contracted services in amount of ,00 and paid from the same position in amount of ,17. The funds from the state budget, intended for co-financing of the Organic Agriculture Development Programme, were planned for the position Subventions for production and providing service in amount of ,00 and paid out from the same account in amount of ,74, which is in accordance with planned funds. We remind that recommendation of the Institution from the Report for 2010 and 2011 was respected, regarding planning of expenditure and execution of budget according to economic classification The Ministry of Finance In accordance with the Grant Scheme, the Ministry of Finance properly carried out transfer of the funds from the currency account opened at Montenegrin Commercial Bank a.d. Podgorica, No: , which has been opened for monitoring donation funds of the Kingdom of Denmark, to the Capital account of the Treasury and to the end user. No irregularities have been determined by the audit. 14

15 2.6. Applications As previously stated, the audit has paid special attention to the following: Examine compliance of procedures for obtaining a grant with the Grant Manual, i.e. examine if procedures and criteria prescribed by the Instruction Manual for the Grant Scheme from December 2009 were followed and met regarding the approval of the grants to the users, Verification of the documentations for payments. In reported period (2012 and 2013), there were 37 applicants for receiving funds on the Organic Agriculture Development Programme in Montenegro. The Commission for Evaluation approved 21 applications and rejected 16 applications which did not meet the prescribed conditions. Out of approved 21 applications, 3 individuals gave up from the funds. In the time period that was the subject to the audit, the funds for 25 approved applications were paid out, 18 of which were approved in 2012 and 7 in the previous time period. By the method of random sample, the audit controlled sixteen applications that were paid out to the users in It was determined that controlled applications were approved in accordance with the procedure predicted by the Grant Scheme and other documents made with the aim of realization of the Project Organic Agriculture Development Programme in Montenegro. It has been also determined that the grant funds users, who were paid out the funds according to approved applications, respected the prescribed procedure. We consider that we should specify some minor irregularities referring to the following: 1. The audit has determined that the four month deadline was not met after approval of the grant funds for realisation of own participation - personal share in six cases or 37,5% applications chosen by the sample. Deadline for realisation of approved funds has been prolonged on the basis of approvals given by the Commission for Evaluation. The Grant Scheme does not predict the possibility to prolong the deadlines or give approvals for prolongation of the deadlines. 2. The audit has determined that a part of the budget /investments, after receiving contributions from the grant, was not completed within a four month period in seven cases or 43,75% of the chosen sample. The Grant scheme does not predict the possibility to prolong the deadlines. 3. After having reviewed the Register of Applications, it has been determined that in one case from the chosen sample, the Financial Service submitted a request to the Ministry of Finance for payment from the state budget funds, as well as the request for payment from donation funds in the deadline longer than the deadline predicted by the Grant Scheme (two week deadline). 15

16 4. The audit has determined that for one applicant from the chosen sample there was no documentation on the base of which state of investments after receiving funds from the grant can be determined, i.e. the level of investment realisation where the deadline for investment completion expired. In the Report given by the Ministry of Agriculture and Rural Development, on realisation of the funds of the Organic Agriculture Development Programme DANIDA for 2010, 2011 and 2012, according to fund sources and users with established status from May 27th 2013, status of this applicant is INCOMPLETED, i.e. the Application was not completed by the procedure in accordance to the Grant Scheme. * * * The audit process was fully supported by the Programme Office and employees in the Ministry of Agriculture and Rural Development who provided the major part of required data and adequate conditions for the work of the audit team. We are thankful for fair and professional cooperation, which enabled preparation of the Preliminary Report. HEAD OF COLLEGIUM III PhD Milan Dabović Member of the Senate 16