AUDIT OF PUBLIC ENTERPRISES IN SERBIA: A COMPARATIVE ANALYSIS OF EXTERNAL AUDIT REPORTS

Abstract

The aim of this paper is to examine the role of external auditing in the public sector of the Republic of Serbia by providing a detailed insight into the audit reports of private audit firms—external audit reports—available on the website of the Serbian Business Registers Agency (APR), focusing on selected public enterprises from various sectors and regions. The purpose of the study is to identify the most frequently observed irregularities in financial reporting and operations (in cases where the audit opinion is qualified or with reservation) over the past three years, as well as to assess the level of consistency and alignment in the manner in which audit findings are presented. External auditing is a key mechanism for improving financial discipline, efficient public resource management, and strengthening public trust in government institutions, especially in the context of increased public spending and growing demands for institutional accountability. Methodologically, the paper relies on qualitative and descriptive analysis of official external audit reports of public enterprises from the Republic of Serbia, without the application of statistical tests or hypotheses, aiming to informatively present and compare specific findings and practices. The sample consists of ten public enterprises operating in various sectors (energy, transportation, utility services, etc.), with a tabular overview of the types of audit opinions and areas where irregularities were identified. The results show that among the observed public enterprises, unqualified (positive) audit opinions dominate, but qualified opinions and those with reservation are also frequent, pointing to systemic weaknesses in internal controls, asset records, public procurement practices, and adherence to budgetary discipline. A particular challenge is the repetition of issues that lead to reservations or qualifications in audit opinions from year to year, indicating a low level of implementation of corrective measures, which—being voluntary in the case of external audits—reduces the effectiveness of the entire audit process and weakens its role as an institutional oversight tool. The conclusion of the paper emphasizes the clear need for strengthening institutional capacities and accountability mechanisms in order to better address audit findings in practice. It also calls for additional education and professionalization of public sector staff. Furthermore, the paper recommends improving the oversight of corrective action implementation through the development of annual follow-up reports. All data used in the study were obtained from the publicly available database of the Serbian Business Registers Agency (APR), ensuring transparency and verifiability of the findings presented. The insights provided in this paper may be useful to public policy makers, audit institutions, and researchers working on issues of auditing, public finance, and good governance, particularly in the context of public sector reform and anti-corruption efforts