Parliamentary Strengthening Project in Bosnia and Herzegovina Updates
The Parliamentary Assembly of Bosnia and Herzegovina Imposes Budget Line Reductions on Underperforming State Institutions
After adopting a new methodology for the analysis and processing of annual financial audit reports, the Members of the Budget and Finance Committees of both Houses of the Parliamentary Assembly of Bosnia and Herzegovina (BiH PA) unanimously agreed to officially reprimand 11 State institutions and sanction them by imposing a 10 percent reduction in selected budget lines.
This application of parliamentary oversight prerogatives represents a very first and significant step forward on the road towards European integration and sends a clear message that Parliament is ready to continue strengthening fiscal discipline and take ownership of its oversight role.
The USAID Parliamentary Strengthening Project in Bosnia and Herzegovina (USAID PSP in BiH) Takes a New Methodology to the Next Level of Intervention
An eight-month technical assistance project carried out by the DFID-funded Strengthening Public Expenditure Management Project (SPEM3) strengthened the capacities of the Budget and Finance Committees of both Houses of the BiH Parliament by:
- Streamlining existing procedures to make them more efficient and effective;
- Establishing the practice of organizing public hearings in both Budget and Finance Committees of the BiH PA as a regular practice;
- Determining systemic measures to improve the control environment and prevent the repetition of a wide range of audit findings;
- Simplifying the Committees' procedures in order to finalize discussion on annual audits before the Committee begins discussion of the next State Budget;
- Considering corrective measures for those institutions which have neglected their obligation to implement previous audit recommendations, as determined by both Houses of the BiH PA.
After the DFID SPEM3 Project worked with the Budget and Finance Committees to develop and adopt new procedures and practices to strengthen their role in the budget cycle, the USAID Parliamentary Support Project in BiH (USAID PSP in BiH) moved this work forward by providing tailored assistance in implementing the new methodology. Specific assistance activities were based on demand from the members of the two Budget and Finance Committees of the BiH PA. USAID PSP staff, the technical staff of the two committees, the committee secretaries, and their assistants all shared the burden of implementing the new procedures.
The USAID PSP in BiH team facilitated the following key activities from May to December 2009:
- Creating five-year overviews of the performance of each State-level institution containing data on the level of implementation of audit recommendations, including a list of recommendations which had not been implemented. The USAID PSP in BiH assisted in the creation of these overviews in three official languages for 59 institutions by selecting data from audit reports during the period of 2004-2008.
- Assisting committee members by using the five-year overviews to help them to identify which recommendations State institutions had not been implementing. Furthermore, committee members were given assistance in recognizing whether an institution's records showed adequate progress. As a result, State institutions became aware that their "budget execution history" had become available to all Members of Parliament in a printed, consumer-friendly public format.
- Both Budget and Finance Committees succeeded in processing 59 annual audit reports before they began discussion on the new State budget proposal. This process included organizing public committee sessions (at which Committee Members held Q&A sessions with representatives of each invited State institution) and adopting summary conclusions on the annual audit with individual and systemic recommendations.
Results of the Work with Budget and Finance Committees
The USAID PSP in BiH assisted all Members of the two Budget and Finance Committees of the BiH PA to consider each audit report in the context of audit reports that were published over the previous five years. By comparing each audit report with the findings for other institutions, potential systemic errors were easily identified. As a general principle, each report which included an opinion with qualifications was selected for the review process and discussed during public committee sessions.
For the first time in Bosnia and Herzegovina, corrective measures were applied across-the-board regardless of party affiliation-to State institutions with repeated findings for the same budget lines over a period of several years. This "small democratic step forward" resulted in the realization of 1,130,000 KM in savings (app. 830.000 US Dollars). Although the amount is limited with regard to the overall budget of BiH, the savings set a positive example in terms of fiscal oversight by Parliament. The application of this new method for reviewing audit reports has opened the door to identifying the longstanding shortcomings of State institutions as well as systemic weaknesses, and has enabled BiH parliamentarians to send a clear message to other State institutions regarding the potential consequences of failing to consolidate and improve their financial operations.