The State Audit Institution (DRI) has provided a positive assessment of the annual financial report of the Coal Mine, but issued a negative evaluation regarding compliance with operational regulations for the previous year.
While the financial audit received a favorable review, the DRI highlighted the necessity for the audited entity to utilize the average tax rate when calculating deferred tax liabilities, instead of the maximum prescribed rate, as indicated by their review of last year’s financial report.
“The compliance audit revealed significant deviations and non-compliance with laws governing management and internal controls in the public sector, mining operations, labor regulations, and public procurement,” stated the DRI.
Notable issues included discrepancies in adherence to regulations regarding the funding for rehabilitation and reclamation of areas involved in mining, as well as non-compliance with employee compensation rules, salary regulations, office and archival procedures, and inventory management.
In the compliance audit, it was found that only €472,230, or 13.91% of earmarked funds, were allocated for the reclamation of surface areas at the Coal Mine. The company’s projected investment for this purpose is estimated at €395,050 for the period from 2020 onward.
“The obligations outlined in the Law on Management and Internal Controls in the Public Sector were not met, particularly concerning the preparation of a Management and Control Improvement Plan, the annual report on management activities, and the establishment of procedures for reporting and addressing irregularities,” the report noted.
Furthermore, the filling of vacancies in 2022 and the previous year occurred through the transfer of personnel based on agreements with other employers, which does not align with the Labor Law’s requirement for public job postings.
“Shift work and overtime practices did not comply with Labor Law provisions, nor were amendments to agreed working conditions enacted. The cost and performance accounting system, as part of the dual-entry system, was not implemented as per the regulatory framework,” the DRI indicated.
The valuation of land purchased from Agrokooperativa Doganje in bankruptcy was also found to be inadequately performed, failing to meet the required standards.
Additionally, the improper issuance and justification of travel orders contradicted regulations on employee cost reimbursements, with inadequate cash management controls and approval processes for official trips noted.
In light of these findings, the relevant Collegium has recommended that the Ministry of Mining, Oil, and Gas undertake a calculation of funds designated for rehabilitation and reclamation of mining areas, in accordance with the Mining Law, and to monitor the use of those funds closely.
The audit report on the Coal Mine’s annual financial performance will be presented to the Board of Directors, Elektroprivreda (EPCG) as the company’s founding body, the Ministry of Mining, Oil and Gas, the Committee for Economy, Finance, and Budget of the Assembly, and the Supreme State Prosecutor’s Office, per a signed Cooperation Protocol.
The Coal Mine is obligated to submit a Plan of Activities to the DRI for implementing the recommendations by October 21, and a follow-up report on the progress by March 21 of the following year.
