The monitoring and oversight of the municipal budget has three components. The first component is the municipal assembly, which, as a legislative body, shall oversee work of the executive in this case also the way budget is executed by the executive. The second component is oversight through internal audit and the third component through external audits made by the Office of the Auditor General.

20 March 2018

Financial reporting

The role of municipal assembly in overseeing the budget

One of the main mechanisms through which the Assembly oversees the budget is the financial reporting by the mayor. As well as through the Policy and Finance Committee, it reviews and gives recommendations to the Municipal Assembly.

Role of the Municipal Assembly in monitoring and overseeing of the municipal budget.

Financial reporting is the main monitoring mechanism of the municipal budget through which information is provided on the progress and fulfillment of revenue collection plans, fulfillment of planned obligations and ways of spending money according to the nature of expenditures and by defined budget categories. The municipality shall report all of its transactions through the Treasury Single Account, as it does not operate with its own bank account. Government of the Republic of Kosovo directs with and manages expenditures and revenues of all budget organizations through the Treasury Single Account. Once payment is made by the municipality, the treasury transfers the payments on behalf of the municipality to the beneficiaries.

Based on the obligations for temporary and annual reporting based on Articles 45.4, 46.1 and 46.2 of the Law on Public Financial Management and Accountability, the mayor should submit these quarterly reports to the Municipal Assembly:

Income and Expenditure Report, inter alia, explains actual income and expenditures. It is also discussed about the deficit limit, including the causes of deviations and the way of financing them if there is a deficit, it is reported on the actual revenues compared to the budget projections, the actual expenditures compared to each budget category of expenditures, the actual number of employees compared to projected numbers in the budget as well as other aspects of income and expenditures.

Data on investments and liabilities, among other things, include public money investments that have been carried out during the fiscal year, full accounting of the resources held by the budget organizations by the end of the fiscal year, overdue expenses, incidental expenses and a risk assessment of these expenditures, etc.

Data on capital investments, there is created a summary of the status of all capital investments

Report on the Auditor's findings explaining actions taken and actions proposed by the Office of the Auditor General's findings in the annual audit report of the financial statements.

Contents of quarterly financial reports

Members of the municipal assembly should have in mind that they should:

  • Request regular updates on the process of preparing and executing the municipal budget as well as the budgets of different projects from capital investments;
  • Request detailed financial reports as compared to general financial reports that do not contain the information needed for fair judgment;
  • Ensure that financial statements are detailed and include the planned budget for each project, the amount for which the project is contracted, and the amount for which the project was completed.
  • To ensure transparence in municipal budget monitoring, the value of works carried out by the contractor (amount at the end of project completion) should include separately the difference in the final value as a result of changes to project requirements after the award of the contract.

Internal Audit. The role of internal audit is to provide independent assurances that an organization's risk management, governance and internal controls are operating effectively. According to Law no. 02/L-74 on Internal Audit, each budget organization should establish an internal audit unit and ensure that its activities, records and management and control systems are subject to an comprehensive internal audit at least once a year.

Internal audit assists public sector entities by:

  • Assessing their compliance with laws, regulations, internal rules and contracts, to be responsive to the public;
  • Identifing, evaluating and managing their risks;
  • Assessing the reliability and comprehensiveness of financial information and other information;
  • Assessing the efficiency, effectiveness and cost-effectiveness of operations;
  • Minimizing fraud potentials, abuse and abuse of funds;
  • Making recommendations for improving the actions.


Office of the Auditor General. The third component of the municipal budget oversight is carried out by the Office of the Auditor General. The Office of the Auditor General consists of the Auditor General and the Audit Office staff. The Auditor General has full discretion in exercising his or her functions and powers. While the internal audit carries out internal audits within the municipality and is accountable to the executive of the municipality, the Auditor General is mandated to audit all budget organizations and other entities in Kosovo which more than 50% are publicly owned or receive financial means from Kosovo Consolidated Budget, provide dividends or other non-taxable income to it. The Auditor General is accountable to the Assembly of the Republic of Kosovo. No later than 31 August of each year, the Auditor General reports to the Assembly of the Republic of Kosovo on the audits it performed for each audited entity. Audit reports are made available to the public, and therefore this represents a very good opportunity for citizens to hold their municipality accountable.


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