The NASACT Team's Initiation and Purpose
Over the last several years NASACT has supported programs to help emerging democracies in Central and Eastern Europe. For example, NASACT sent teams to the Ukraine, Latvia, Estonia, Slovakia and the Czech Republic. In this process, NASACT developed a relationship with the United States Treasury Office of Technical Assistance (OTA) and the Soros Foundation in helping to structure government processes in those countries.
In September 1997, OTA asked NASACT to help improve government budgeting, accounting and auditing in the Federation of Bosnia-Hercegovina. NASACT was requested to do a review of the current status and make recommendations for improvement. NASACT sent a three-person team into the country in October and November 1997. The team was composed of the author; John Radford, administrator of the Oregon State Controller's Division; and Albert Hrabak, NASACT project manager for International Programs. The request came from OTA but the United States Agency for International Development (USAID) paid the travel expenses. The team went as volunteers and their expenses were reimbursed but they received no other compensation.
The Team's Scope and Methods
The country has four levels of government. The national level consists of the Federation of Bosnia-Hercegovina and the Republic of Srpska. Within the federation are 10 cantons, which are similar to the county levels of government in the U.S., and within the 10 cantons are a total of about 100 municipalities. The United Nations has had difficulty getting many war criminals out of the Republic of Srpska and thus the aid from USAID and other international groups to Srpska has been limited. As a result, the NASACT review was directed mostly toward the Federation of Bosnia-Hercegovina, which is about half of the country.
The total budget of Bosnia-Hercegovina is $250 million, and the budget for the cantons totals $400 million. As a comparison, the budget for the State of Iowa is $4.5 billion.
The NASACT review was conducted first by examining documents and reports of the government and outside entities such as World Bank, International Monetary Fund and USAID dated after December 1995 when the Dayton peace accords took effect, and second by interviewing the finance and accounting managers and technical staff in the Ministry of Finance in Sarajevo, the Sarajevo canton and in two cantons outside of Sarajevo-Zunica and Mostar.
Effects of Communism and Civil War
Many European countries have been moving swiftly from totalitarianism and communism to democracy and free enterprise. But its brutal civil war has presented Bosnia-Hercegovina with many problems not found in those countries. The populace is naturally more concerned with basic survival and rebuilding some of its infrastructure than it is with accounting and auditing. However, the International Monetary Fund and the World Bank will only provide funds if there is more assurance of proper government accounting as well as financial controls and accountability.'
Sarajevo had a pre-war population of 450,000. During the siege from 1991 to 1995, the population declined to about 250,000; presently it is about 350,000. Many trained accountants and other financial professionals were either killed or fled the country.
The Dayton peace accords signed in November 1995 provided for some organizational structure for Bosnia-Hercegovina. The accords also provided for oversight in the structuring of the democracy, the election process and treasury functions. OTA, with funding from USAID, is the key entity helping to establish the accounting and financial reporting structure for Bosnia-Hercegovina, and has taken the lead in the international community and United Nations. Few U.N. agencies are working on the country's financial matters, and OTA is the lead agency. Some funding has also come from the World Bank and other international organizations. …