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CONFIDENTIAL

INDEPENDENT AUDIT REPORT ON RECONCILIATION OF THE GOVERNMENT ACCOUNTS

Ref.no. IA-IMF 4/2011

CONFIDENTIAL

I. INTRODUCTION Based on the Attachment II Technical Memorandum of Understandig Republic of Kosovo Definitions and Data Reporting Requirements Under the 2010-11 SBA Arrangement with the IMF , point 5 of paragraph I. it is performed the independent audit on reconciliation of the government accounts.

II. SCOPE

The audit on reconciliation of the government account include the second quarter 2011, from 1 April 2011 until 30 Jun 2011, based on book date.It is a fourth independent audit report on reconciliation of the government accounts.

III. OBJECTIVES The audit on reconciliation of Government accounts is performed to give the reasonable assurance that the data reported to the IMF are accurate and correct.

IV.FIELDWORK

1. We have selected 13 dates for the audit as following: 4 Apr 2011; 12 Apr 2011; 18 Apr 2011; 29 Apr 2011; 03 May 2011; 10 May 2011; 16 May 2011; 23 May 2011; 31 May 2011; 06 Jun 2011; 13 Jun 2011; 20 Jun 2011; 30 Jun 2011.

CONFIDENTIAL

The reconciled treasury accounts were audited and double checked with the CBK accounting system regarding the time deposits (CBK) and the interest paid from the commercial banks, also it was verified and double checked through the commercial banks confirmation. The audit report includes 6 tables as following: Table 1.Matured time deposits at commercial bankstreasury booking , Table 2: Interest earned from Matured time deposits at commercial banks treasury booking Table 3: Transfers from commercial banks to CBK treasury account held with CBK Table 4: Reconciliation check report(principal +interest PTK dividend) Table 5: Reconciliation check report (time deposits, securities, current account and outstanding deposits in the commercial banks) Table 6:Reconciliation check report on end of day daily automatic transfers from sub to main account

The reconciled of the treasury data were checked and verified with the accounting system of the CBK. 2. Audited figure of the reconciled time deposits at the Commercial Banks are stated in the table 1,as following: Table1. Represent the principal of matured time deposits during October 2010, as the treasury system it is based on booking date. The first column presents the references for each transaction (principal) at commercial banks whereas the second column is principal amount, the third column is description and the following columns are book date and source of information.
Table 1: Matured time deposits at commercial bankstreasury booking Treasury Principal Description reference
6,000,000.00
1300021401007432

Book date

Source*

DIVIDEND of PTK-BPB 2010 25-05/11

25/05/2011

FB

TOTAL

6,000,000.00

* FB = Free Balance Treasury accounting system

CONFIDENTIAL

3. Audited interest paid to the Treasury by the Commercial Banks in name of the PTK dividends. The data stated in table 2: shows the interest earned from matured time deposit at commercial bank in the treasury reconciliation module of the treasury system. The first column is CBK reference, in the second column is stated interest amount than the description and the following columns are date and source of information.

Table 2: Interest earned from Matured time deposit at commercial banktreasury booking Treasury reference Interest Description Date Source*

1300021401008432

313,291.67 313,291.67

INT. from PTK DIVIDEND BPB-2010 25-05/11

25/05/2011

FB

TOTAL

* FB = Free Balance Treasury accounting system

4. Audited transfer from commercial banks to the treasury account held with CBK. We checked and verified the following data and found that the audited Treasury amount of principal + interest is reconciled with the CBK statements. The data presented in the Table 3 were checked and verified in the CBKs accounting system .As it is described in this table, the first column represents the CBK reference, whereas in the second column we represented principal amount + interest from the commercial banks for the PTK dividends that are entered in the CBK accounting system as Incoming payments treasury-respective commercial bank(BPB in this case) and the booking date. Also we checked the amounts of the principal + interest of commercial banks through the banks confirmation, as following in table 3.

Table 3: Transfer from commercial bank to the treasury account held with CBK Principal + Booking CBK reference Description Interest date
000PCIN111461246 6,313,291.67 Incoming payments Treasury-BPB 25/05/2011

Source*
CBK AS

TOTAL
* CBK AS = CBK Accounting System

6,313,291.67

CONFIDENTIAL

5. Reconciliation check report The table 4.represent the audited principal of the time deposit of the treasury at the commercial bank .We performed the audit and verified that the following data including the principal and the interest earned form the commercial bank are in full compliance and shown in the bank accounts of the Treasury. Referring to the sixth column of the table 4 indicating that the difference is 0.00 (zero).

Table 4: Reconciliation check report (principal +interest PTK dividend) Principal Interest Description Description amount amount Treasury FB Treasury FB
6,000,000.00 DIVIDEND of PTK-BPB 2010 25-05/11 INT. from PTK DIVIDEND BPB-2010 25-05/11 313,291.67

Principal + Interest CBK AS*


6,313,291.67

Difference

0.00

6,000,000.00

313,291,67

6,313,291.67

0.00

CONFIDENTIAL

Table 5: Reconciliation check report (time deposits, securities, current account and outstanding deposits in the commercial banks) Confirmation of the Treasury(MF). Balance at Treasury system
115,000,000.00 134,753,590.61 113,108,947.53

No
1

Date
04-Apr-11

Account type
Time deposits (CBK) Securities(CBK) Current Accounts(CBK)

Balance at CBK system


115,000,000.00 134,753,590.61 113,108,947.53

Time deposits (outstanding) in commercial banks Total 2 12-Apr-11 Time deposits (CBK) Securities(CBK) Current Accounts(CBK)

6,000,000.00 368,862,538.14 110,000,000.00 134,753,590.61 98,339,692.52

6,000,000.00 368,862,538.14 110,000,000.00 134,753,590.61 98,339,692.52

Time deposits (outstanding) in commercial banks Total 3 18-Apr-11 Time deposits (CBK) Securities(CBK) Current Accounts(CBK)

6,000,000.00 349,093,283.13 140,000,000.00 134,758,007.61 74,676,559.01

6,000,000.00 349,093,283.13 140,000,000.00 134,758,007.61 74,676,599.01

CONFIDENTIAL

Time deposits (outstanding) in commercial banks Total 4 29-Apr-11 Time deposits (CBK) Securities(CBK) Current Accounts(CBK)

6,000,000.00 355,434,606.62 100,000,000.00 184,617,834.83 60,361,446.86

6,000,000.00 355,434,606.62 100,000,000.00 184,617,834.82 60,361,446.86

Time deposits (outstanding) in commercial banks Total 5 03-May-11 Time deposits (CBK) Securities(CBK) Current Accounts(CBK)

6,000,000.00 350,979,281.69 100,000,000.00 184,617,834.83 63,861,376.14

6,000,000.00 350,979,281.69 100,000,000.00 184,617,834.83 63,861,376.14

Time deposits (outstanding) in commercial banks Total 6 10-May-11 Time deposits (CBK) Securities(CBK) Current Accounts(CBK)

6,000,000.00 354,479,210.97 100,000,000.00 184,617,834.83 72,744,422.25

6,000,000.00 354,479,210.97 100,000,000.00 184,617,834.83 72,744,422.25

CONFIDENTIAL

Time deposits (outstanding) in commercial banks Total 7 16-May-11 Time deposits (CBK) Securities(CBK) Current Accounts(CBK)

6,000,000.00 363,362,257.08 100,000,000.00 184,617,834.83 79,731,888.63

6,000,000.00 363,362,257.08 100,000,000.00 184,617,834.83 79,731,888.63

Time deposits (outstanding) in commercial banks Total 8 23-May-10 Time deposits (CBK) Securities(CBK) Current Accounts(CBK)

6,000,000.00 370,349,723.46 100,000,000.00 184,515,041.33 93,506,485.30

6,000,000.00 370,349,723.46 100,000,000.00 184,515,041.33 93,506,485.30

Time deposits (outstanding) in commercial banks Total 9 31-May-11 Time deposits (CBK) Securities(CBK) Current Accounts(CBK)

6,000,000.00 384,021,526.63 122,000,000.00 184,515,041.33 58,695,285.29

6,000,000.00 384,021,526.63 122,000,000.00 184,515,041.33 58,695,285.29

CONFIDENTIAL

Time deposits (outstanding) in commercial banks Total 10 06-Jun-11 Time deposits (CBK) Securities(CBK) Current Accounts(CBK)

0.00 365,210,326.62 112,000,000.00 184,515,041.33 45,568,272.16

0.00 365,210,326.62 112,000,000.00 184,515,041.33 45,568,272.16

Time deposits (outstanding) in commercial banks Total 11 13-Jun-11 Time deposits (CBK) Securities(CBK) Current Accounts(CBK)

0.00 342,083,313.49 112,000,000.00 184,552,176.77 56,941,093.83

0.00 342,083,313.49 112,000,000.00 184,552,176.77 56,941,093.83

Time deposits (outstanding) in commercial banks Total 12 20-Jun-11 Time deposits (CBK) Securities(CBK) Current Accounts(CBK)

0.00 353,493,270.60 117,000,000.00 184,552,176.77 59,820,874.15

0.00 353,493,270.60 117,000,000.00 184,552,176.77 59,820,874,15

CONFIDENTIAL

Time deposits (outstanding) in commercial banks Total 13 30-Jun-11 Time deposits (CBK) Securities(CBK) Current Accounts(CBK)

0.00 361,373,050.92 83,000,000.00 184,552,176.77 68,121,985.96

0.00 361,373,050.92 83,000,000.00 184,552,176.77 68,121,985.96

Time deposits (outstanding) in commercial banks Total

0.00 335,674,162.73

0.00

335,674,162.73

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CONFIDENTIAL

Table 6: Reconciliation check report on end of day daily automatic transfers from sub to main account

Date

Amount at CBK

Amount at Treasury

No. of transactions

04-Apr-11

4,959,040.23

4,959,040.23

52

12-Apr-11

6,671,591.23

6,671,591.23

52

18-Apr-11

12,937,009.37

12,937,009.37

51

29-Apr-11

4,387,843.95

4,387,843.95

51

03-May-11

6,061,531.84

6,061,531.84

49

10-May-11

7,872,913.27

7,872,913.27

52

16-May-11

7,179,126.75

7,179,126.75

52

23-May-11

12,192,209.58

12,192,209.58

54

31-May-11

4,246,132.37

4,246,132.37

55

06-Jun-11

6,598,260.23

6,598,260.23

53

13-Jun-11

5,859,052.91

5,850,052.91

52

20-Jun-11

4,933,204.32

4,933,204.32

51

30-Jun-11

3,106,048.73

3,106,048.73

55

87,003,964.78

87,003,964.78
679

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CONFIDENTIAL

V. FINDINGS All the above mentioned data are reconciled by the Treasury Department of MF and agree with the Treasury account balances held with CBK.

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