Fifth training session on the control of public finances: Interpreting financial statements

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Last weekend saw BIRN Serbia organise its fifth successive training session for journalists, covering monitoring and control of public finances, at Arandjelovac’s Hotel Izvor. This training is part of the multi-year “Eye on public finance” programme, which BIRN Serbia is implementing in conjunction with expert organisation Pro Concept and the support of the British Embassy in Belgrade.

The first day saw journalists who participated in the training given the opportunity to gain insight into a case study covering the financial statements of Milo Djuraskovic, which were presented to participants during a four-hour presentation by Miroslava Milenovic, a court expert in forensic accounting.

Miroslava informed journalists about the way to examine financial statements that are public documents, in order to efficiently and quickly draw conclusions and access information that they need to uncover the numerous irregularities of the financial implementation of projects and irregularities in the operations of certain companies, in this case the Nibens group.

“In Serbia at present financial crime and tax evasion are dominant, but also corruption within financial crime. The recent “Nibens” scandal is one of the best indicators of how money is pumped through rigged tenders and irregular procurement,” said Milenovic.

She explained to journalists how to interpret the structure of financial statements and how to spot key indicators of money laundering, as well as how they should seek the causes of such corruption in the period prior to the privatisation of public enterprises in Serbia before the year 2000.

BIRN Serbia representative Slobodan Georgiev spoke to the gathered journalists about what can be learnt from the financial statements of the Nibens Group and public company ’Putevi Srbije’ (Roads of Serbia) and how that information can be used to research an article.

“Data that serves journalists to investigate something like, for instance, the ’road – asphalt’ mafia, is publicly available, but it must not only be read carefully, but also read in the right way. These are things that one learns and everyone who deals with investigative journalism must know how to identify this date and the ways that such data can be used.”

Ruzica Stojmenovic, an expert of the Business Registers Agency, presented the agency’s database and explained the models used to control the quality of revisions and to read the notes for revision reports that explain how a report was made and what information it is possible to use when writing a news item.

She explained how to interpret inflows and outflows of business activity, investment and financial activities and actions that serve to show the inflow and outflow of funds from a company, but also how to recognise the importance of “cash-flow”.

“Cash flow is the sum of net results, calculated depreciation and long-term reserves. This means that the net is the result of new value created after all expenses have been covered. These are costs that do not include cash outflows and that is the company’s cash. This money ensures the security of a company. “

Stojmenovic explained to training participants the types of financial statements, the deadlines for their submission, who compiles them and who are the individuals responsible for maintaining these documents.

Explaining to journalists how they can access data on entrepreneurs and companies that are not required to submit reports to the Business Registers Agency, she said that one useful address could be the Tax Office and the Statistical Office.

“At the agency we talk about those whose reports we have, while the Statistical Office combines the data from the Tax Administration and the Agency for Business Registers, so they have a more-or-less clearer picture than us and if you cannot find some of the reports at our agency you can search for them at these addresses,” said Stojmenovic, who utilised part of the training session to clarify the financial terms used in reports.

Following discussions with agencies’ representatives, training participants were able to pose questions to representatives of the Public Procurement Office, including director Predrag Jovanovic and his assistants Danijela Bokan and Daliborka Sreckov.

Danijela Bokan presented the new portal of the Public Procurement Office, explaining the model used to create it and search methods for concluded public procurement contracts and annual reports on public procurement.

“Every client shall submit a report for the previous quarter and the deadline is the tenth day of the next month. Everything that has been implemented and all contracts that have been concluded must be submitted. This is important in order to know when you can get what information,” said Bokan, introducing the system for the submission of public procurement reports.

She noted that around 3,500 clients regularly submit their reports, while 12,000 clients do not do so, despite being legally obliged to deliver their reports. According to her estimate, there are 120,000 clients in Serbia.

As she hgihlighted, reports are published on the portal of the Public Procurement Office with a delay of one annual quarter, as the Office is unable to more quickly process all data.

President of the Public Procurement Office, Predrag Jovanovic, spoke about the agency’s plans for the coming period and explained that an initiative had been submitted calling for the Office to submit reports on implemented activities and procurement plans for the year ahead, as well as clearly defining what are public procurements and what are not during the preparation of the annual procurement plan.

He noted that interest exists to abolish the Public Procurement Office and that the ultimate result of this would be the centralisation of public procurement, which he believes would not be the best solution.

Following presentations, representatives of the Public Procurement Office answered questions posed by journalists, who expressed their own satisfaction with the training when summarising their impressions of the knowledge gained.