Special Report No 20 // 2016#Strengthening administrative capacity in Montenegro: progress but better results needed in many key areas #(pursuant to Article 287(4), second subparagraph, TFEU)
Date: 2016-07-12
Institutions: European Court of Auditors
Subjects: Montenegro, accession criteria, accession negotiations, administrative reform, economic reform, economic transition, financial control, pre-accession aid, project evaluation

EN 

2016 

NO 20

Special Report  Strengthening 

administrative capacity 
in Montenegro: progress 
but better results needed 
in many key areas 

EUROPEAN
COURT
OF AUDITORS

 
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Luxembourg: Publications Office of the European Union, 2016

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EN 

2016 

NO 20

Special Report

Strengthening 
administrative capacity 
in Montenegro: progress 
but better results needed 
in many key areas

(pursuant to Article 287(4), second subparagraph, TFEU)

Audit team

02

The ECA’s special reports set out the results of its performance and compliance audits of specific budgetary areas or 
management topics. The ECA selects and designs these audit tasks to be of maximum impact by considering the risks 
to performance or compliance, the level of income or spending involved, forthcoming developments and political and 
public interest.

This performance audit was produced by Chamber III — headed by ECA Member Karel Pinxten — which specialises in 
external actions spending areas. The audit was led by ECA Member Hans Gustaf Wessberg, supported by the Head of his 
private office, Peter Eklund; Emmanuel-Douglas Hellinakis, Attaché; Torielle Perreur-Lloyd, Head of Task; Stéphanie Girard, 
Ainhoa Pérez Infante, Aurelia Petliza, auditors.

From left to right: A. Pérez Infante, E.-D. Hellinakis, T. Perreur-Lloyd, H. G. Wessberg, A. Petliza,  
P. Eklund, S. Girard.

Contents

03

Paragraph

Abbreviations and acronyms

I-X 

Executive summary

1-10 

1-3 

Introduction

Montenegro’s road towards EU integration

4-10 

EU pre-accession assistance

11-15 

Audit scope and approach

16-40  Observations

16-20 

Part I — The audited projects addressed administrative capacity needs and in most cases were 
well coordinated with other IPA projects and donor interventions

17 

Projects addressed capacity-building needs

18–20 

Coordination between projects and with other interventions was mostly good

21-28 

Part II — Inappropriate use of outputs reduced the effectiveness of some of the audited projects

22-24 

Projects generally delivered outputs but they were not always used by the beneficiaries or followed up 
by the Montenegrin authorities

25-28 

There was insufficient information to show progress over time in strengthening administrative capacity

29-40 

Part III — The Commission used its non-financial means to support the reform process well, 
but major issues remain unresolved

31-33 

SAA mechanisms for political dialogue operate well

34-37 

38-40 

There was lack of clarity regarding the use of tools to encourage reform provided by the accession 
negotiation process

The potential for using decentralised management to strengthen administrative capacity has not yet been 
fully exploited

 
Contents 

04

41-47 

Conclusions and recommendations

Annex I  —  Key dates in EU–Montenegro relations

Annex II  —  Projects audited

Reply of the Commission

 
 
 
05

Abbreviations 
and acronyms

ACA: Anti-Corruption Agency

CPCol: Commission for Prevention of Conflict of Interests

CSOs: Civil-Society Organisations

DACI: Directorate for Anti-Corruption Initiative

ECAA: European Common Aviation Area

EPA: Environmental Protection Agency

IGC: Inter-Governmental Conference

IPA: Instrument for Pre-accession Assistance

IRM: Integrity Risk Manager

PAR: Public Administration Reform

ReSPA: Regional School of Public Administration

SA: Stabilisation and Association

SAA: Stabilisation and Association Agreement

SAI: State Audit Institution

Executive  
summary

06

I
Since declaring its independence in 2006, Montenegro has progressed along the road towards European integra-
tion. In 2010 it became a candidate country for membership of the EU and in June 2012 the Council adopted a nego-
tiating framework, following which accession negotiations began. By the end of 2015, 22 out of 35 negotiating 
chapters had been opened, and two of these were provisionally closed.

II
The Commission has helped Montenegro to build up institutions and to enhance administrative capacity with 
the objective of supporting its transition to a democratic and economically developed country. EU pre-accession 
assistance is both financial under the Instrument for Pre-accession Assistance (IPA) and non-financial through the 
mechanisms of political dialogue.

III
During the 2007-2013 period the EU allocated 235.7 million euro in financial assistance to Montenegro to help the 
country prepare for accession. 76 % of this amount was contracted by the end of 2015. For the 2014-2020 period, IPA 
indicative financial allocations for the country amount to 270.5 million euro. The country also has access to pro -
grammes and projects financed under multi-beneficiary programmes covering the whole of the Western Balkans 
region and Turkey.

IV
We audited 19 projects in three main sectors of IPA I assistance (2007-2013): public administration reform (13 pro-
jects), transport (three projects) and environment (three projects). Fifteen of these projects were funded through 
Montenegro’s allocation and the other four from the regional allocation. In addition we looked at the mechanisms 
for political dialogue set up under the Stabilisation and Association Agreement and the accession negotiating 
process.

V
The objective of the audit was to assess whether EU pre-accession financial and non-financial assistance during 
2007-2013 contributed effectively to strengthening administrative capacity in Montenegro. We conclude that, 
despite the slow progress noted in several key areas, EU pre-accession assistance has helped to strengthen admin-
istrative capacity in Montenegro. However, for 12 out of the 19 IPA-funded projects which we audited the effect-
iveness of the support was reduced by the fact that some of the capacity-building outputs were not fully used or 
followed up by the Montenegrin authorities. The majority of the projects we audited did not set out a clear require-
ment for the national authorities to follow up and capitalise on IPA investments.

VI
The audited projects generally delivered planned outputs which addressed important capacity needs, for example, 
by successfully supporting legislative changes and the establishment of institutions and by providing training. Pro-
jects were in most cases coordinated well and took into account the work carried out by other donors. However, we 
found examples of overlap or where the sharing of information between IPA projects run only in Montenegro and 
regional (multi-beneficiary) projects covering several pre-accession countries could be improved.

Executive summary 

07

VII
We also found that although the Commission monitors the country’s progress in strengthening administrative 
capacity, the assessment was qualitative and different parts of the public administration were examined. This made 
it difficult to compare improvement over time. The Commission initiated the publication of new data in 2015, but it 
was too early for us to assess this.

VIII
The mechanisms for political dialogue worked well but, in important areas of public administration reform, the 
envir onment and the fight against corruption, results are only being achieved slowly. We observed that limited 
progress in key areas was often due to weak commitment to reform by the national authorities despite EU pre-
accession assistance. The Commission possesses tools to encourage reform including the ‘overall balance’ clause. It 
is not always clear whether or how this tool will be referred to or used if new laws and institutions supported by the 
EU do not deliver results in key areas such as the fight against corruption.

IX
The Commission decentralised the management of 12 % of IPA I funds to the Montenegrin authorities. We observed 
that the decentralised mode of management of EU funds provides a potentially useful tool for strengthening 
administrative capacity through transfer of knowledge which was not fully exploited under IPA I.

X
We make a number of recommendations in support of strengthening administrative capacity.

Introduction

08

Montenegro’s road towards EU integration

01 
Montenegro is a small, mountainous country in the Western Balkans1. It has 
a coast on the Adriatic Sea to the south-west and is bordered by Croatia to 
the west, Bosnia and Herzegovina to the north-west, Serbia to the north-east, 
Kosovo*2 to the east and Albania to the south-east. Its capital and largest city is 
Podgorica. The population of 625 266 inhabitants is comprised of the following 
ethnic groups: Montenegrin 44.98 %, Serbian 28.73 %, Bosniak 8.65 %, Albanian 
4.91 % and other 12.72 %3.

02 
Montenegro has made progress on its path towards EU accession since it de-
clared its independence in 2006. In 2007 the country signed a Stabilisation and 
Association Agreement (SAA) with the EU4 and in 2010 the Council granted 
Montenegro the status of candidate country for EU membership. In June 2012 the 
Council adopted a negotiating framework and accession negotiations began. In 
the same year the first negotiating chapter was opened5. By the end of 2015, 22 
out of 35 chapters6 had been opened, and two of these were provisionally closed. 
See Annex I for the timeline for Montenegro’s EU integration.

03 
Despite allegations of electoral fraud and a parliamentary boycott by some op-
position parties, Montenegro has remained stable in the years following the start 
of the accession negotiations. Although it is confronted by a similar pressing 
need for reform as in the rest of the Western Balkan region, for example in public 
administration and to tackle corruption, Montenegro is currently considered to 
be the most advanced in its accession process.

1  At the time of the audit the 

following six countries made 
up the Western Balkans: 
Albania, Bosnia and 
Herzegovina, the former 
Yugoslav Republic of 
Macedonia, Kosovo*, 
Montenegro and Serbia.

* 

2 

3 

4 

5 

This designation is without 
prejudice to positions on 
status, and is in line with 
UNSCR 1244 and the ICJ 
Opinion on the Kosovo 
Declaration of Independence.

Ibid.

2011 census. See ‘Montenegro 
in figures’ by the Montenegro 
Statistical Office, 2013.

The SAA came into force 
in 2010.

This was Chapter 25, which 
covered science and research. 
It was also provisionally closed 
in the same year.

6 

Each chapter relates to 
a policy area of EU legislation.

09

7 

8 

9 

IPA I was established by 
Council Regulation (EC) 
No 1085/2006 of 17 July 2006 
establishing an Instrument for 
Pre-accession Assistance (IPA) 
(OJ L 210, 31.7.2006, p. 82) and 
Commission Regulation (EC) 
No 718/2007 of 12 June 2007 
implementing Council 
Regulation (EC) No 1085/2006 
establishing an Instrument for 
Pre-accession Assistance (IPA) 
(OJ L 170, 29.6.2007, p. 1).

The total IPA I allocation for 
the 2007-2013 period was 
10 billion euro.

The Copenhagen criteria set 
by the European Council in 
June 1993 consist of:

(a) political criteria: stability of 
institutions guaranteeing 
democracy, the rule of law, 
human rights and respect for 
and protection of minorities;

(b) economic criteria: the 
existence of a functioning 
market economy as well as the 
capacity to cope with 
competitive pressure and 
market forces in the EU;

(c) the ability to assume the 
obligations of membership, 
including adherence to the 
aims of political, economic 
and monetary union.

Introduction 

EU pre-accession assistance

04 
Since 2007 Montenegro has received EU financial assistance under the Instru-
ment for Pre-accession Assistance7. The allocation of 235.7 million euro under 
IPA I covering the 2007-2013 period8 can be presented across the different sectors 
of support as follows:

1 IPA assistance to Montenegro 2007-2013 (million euro)
e
l
b
a
T

Total allocation per sector

Percentage

Sector

Public Administration Reform

45.6

19 %

Environment and Climate change

Cross-Border Cooperation

Transport

Justice and Home Affairs

Ad hoc measures

Agriculture and Rural Development

Social development

TOTAL 2007-2013

Source: European Commission.

35.3

30.3

30.0

25.5

25.0

22.5

21.5

235.7

15 %

13 %

13 %

11 %

11 %

9 %

9 %

100 %

05 
The objective of EU funding under IPA I has been to support the transition of 
Montenegro into a democratic and economically stable country on the road 
towards European integration. The Commission has used funding under IPA I to 
help Montenegro build up institutions and enhance administrative capacity, as 
well as to promote economic and social development in its endeavours to meet 
the Copenhagen criteria9. By the end of 2015, 76 % of IPA I funds had been con-
tracted and 87 % of this had been paid out.

 
 
 
 
10

10  Budget support involves 

direct financial transfers to the 
national treasury of the 
partner country — conditional 
on eligible criteria (well-
defined strategy, stable 
macroeconomic framework, 
good public financial 
management or a credible 
programme to improve it and 
transparency and oversight of 
the budget) and on policy 
dialogue, performance 
assessment and capacity 
building.

Introduction 

06 
IPA II follows on from IPA I and sets out a new framework for pre-accession assist-
ance for the 2014-2020 period with an indicative allocation of 270.5 million euro. 
IPA II projects target structural reform in sectors covering the key areas set out in 
the EU’s enlargement strategy, such as democracy and governance, rule of law, 
sustainable growth and competitiveness.

07 
The EU also provides pre-accession assistance at a regional level in the form of 
multi-beneficiary (multi-country) projects and programmes covering the whole 
of the Western Balkans and Turkey. The regional allocation for IPA I was 1.357 bil-
lion euro and for IPA II, 2.959 billion euro.

08 
EU pre-accession assistance builds on strategic documents, such as the SAA, the 
annual Enlargement Strategy and the annual progress reports adopted by the 
Commission for the country. These were reflected in Multiannual Indicative Plan-
ning Documents until 2013 and are now included in Indicative Strategy Papers. 
Annual or multiannual programmes are adopted by the Commission following 
consultation with the beneficiary countries and other stakeholders.

09 
The Commission has mainly implemented EU projects in Montenegro directly 
under a centralised management mode. At the end of IPA I, it decentralised 
management of Human Resources Development and Regional Development 
programmes to the national authorities, but remains accountable for these funds 
and carries out checks of the transactions. Under IPA II, the Commission is con-
tinuing to use a mix of centralised and decentralised management modes, now 
called ‘direct and indirect management’, complemented by other implementa-
tion modalities, such as sector budget support10.

10 
The Commission assesses Montenegro’s progress for the preceding 12-month 
period through the Enlargement Package and the annual progress reports. Until 
2014 the annual Strategy Paper, included in the Enlargement Package, set out re-
cent achievements and the main challenges for the 12 months that would follow, 
including specific conclusions and recommendations. In 2015, the Strategy Paper 
included a longer-term overview of challenges, covering the rest of the mandate 
of the present Commission.

Audit scope  
and approach

11

11 
The audit objective was to assess whether EU pre-accession assistance during 
2007-2013 contributed effectively to strengthening administrative capacity in 
Montenegro. The scope extended to both financial assistance (projects funded 
by IPA) and non-financial assistance (mechanisms for political dialogue between 
the EU and Montenegro).

12 
The audit addressed the following three main questions.

(a)  Did the audited projects address the need to strengthen administrative ca-

pacity appropriately?

To answer this question we looked at whether the audited projects were 
designed to address administrative capacity needs identified as important by 
the Commission and the national authorities and whether the projects were 
coordinated well with other IPA projects and with the interventions of other 
donors.

(b)  Did the audited projects achieve results in terms of strengthening adminis-

trative capacity?

To answer this question we looked at whether the audited projects delivered 
expected outputs related to capacity-building and whether these outputs 
were used and followed up by the national authorities. Where outputs were 
not used or followed up we examined the main reasons for this. We also 
looked at the Commission’s assessment of the effectiveness of the EU sup-
port in improving administrative capacity.

(c)  Did the Commission use non-financial assistance effectively to improve ad-

ministrative capacity?

To answer this question we looked at how the Commission had used the 
mechanisms for political dialogue set up under the SAA and accession nego-
tiations. We also examined how the Commission used leverage available to it 
to obtain the active commitment of the national authorities to reform. Finally, 
we examined whether the Commission used the potential for transferring 
capacity by encouraging the spread of good practice developed under the 
decentralised mode of managing IPA funds.

 
 
 
Audit scope and approach  

12

13 
We focused on three sectors important for Montenegro’s integration with the 
EU: public administration reform (PAR), transport and the environment. These 
accounted for 47 % of the total country allocation for Montenegro under IPA I11 as 
shown in Table 1. We also looked at projects addressing capacity building in the 
public administration funded out of IPA’s regional (multi-beneficiary) allocation, 
also providing assistance to other countries eligible for assistance under IPA12. 
Since all of these areas of support are also assisted under IPA II (2014-2020), the 
Commission can take into account the observations and recommendations of 
this report when implementing IPA II and when preparing the mid-term review of 
IPA II planned for 2017.

11  We looked at IPA I because 
projects were not yet being 
implemented under IPA II by 
the time of the audit.

12  Countries eligible under IPA 
include the Western Balkans 
and Turkey. These 
programmes and projects are 
also referred to as ‘regional’ or 
‘multi-country’. The total 
allocation under IPA I for 
multi-beneficiary programmes 
and projects was 
1 137 million euro.

14 
We looked at a sample of 19 projects. In the sector of PAR we selected 13 projects 
focusing on procurement, the fight against corruption, internal control, external 
audit, local self-government and the Regional School for Public Administration 
(ReSPA). In the transport sector we selected 3 projects, targeting civil aviation, 
the Railways Directorate and road construction. In the environment sector, we 
selected three projects focusing on management by central government, com-
munal services and waste management. Fifteen projects in the sample were 
financed from Montenegro’s country allocation and the remaining four from the 
regional allocation. See Annex II for details of the projects selected.

15 
The audit included analysis of documents and interviews with representatives of 
the Commission and the national authorities. We also consulted other stakehold-
ers, such as Civil-Society Organisations (CSOs) and donor organisations. We used 
evidence provided in project and programme documents, evaluations and as-
sessments of IPA I and of the country, the Commission’s annual progress reports 
and resolutions of the budgetary authority.

Observations

13

Part I — The audited projects addressed 
administrative capacity needs and in most cases were 
coordinated well with other IPA projects and donor 
interventions

16 
To contribute effectively to strengthening the administrative capacity of the 
public administration of Montenegro, IPA projects should address the main ca-
pacity needs identified by the Commission and Montenegro. We expected to see 
good coordination between IPA projects and with the support provided by other 
donors, for example to avoid overlaps. New IPA projects should be built on the 
results achieved by earlier EU-funded actions.

Projects addressed capacity-building needs

17 
We examined the Commission’s Multiannual Indicative Financial Framework and 
the Multiannual Indicative Planning Document where the main EU support areas 
and objectives are defined, the Financing Agreements of the selected projects 
where their specific objectives are described and national strategy documents. 
All of these pointed to the need to strengthen administrative capacity. We as-
sessed whether the audited projects aimed to address one or more of the capa-
city needs referred to in these documents. We observed that all 19 projects were 
designed to meet administrative capacity needs identified. Table 2 provides an 
overview of the capacity-building objectives of the projects audited.

Observations 

14

2 How the audited projects were designed to address gaps in administrative capacity
e
l
b
a
T

Capacity-building objectives

Projects

Area

Procurement

1, 2, 3

Public Procurement Authority

 ο deliver training and organise a certification programme

 ο improving legislation and the capacity of contracting authorities through strengthening the capacities of the 

Corruption

Internal control

External control

4, 5

6, 7

8, 9

 ο building up capacity in institutions concerned with preventing corruption
 ο building local-level capacity to fight corruption, including CSOs

 ο introducing public internal financial control
 ο preparing for planned future management of EU funds by the national authorities

 ο improving the capacity of the State Audit Institution (SAI) to plan its work and develop its audit methodology
 ο developing audit quality control

Local self-government

10, 11

 ο developing training programmes and providing mentoring
 ο drawing up strategic plans for municipalities

ReSPA

12, 13

 ο support for capacity building in the public administrations of the Western Balkans region

Transport

14, 15, 16

 ο developing capacity to improve legislation on roads, railways and civil aviation, to set up public private 

partnerships and concession funding for transport infrastructure

 ο strengthening capacity to manage International Financing Instrument investments
 ο developing technical and managerial skills at local level

Environment

17, 18, 19

 ο drawing up strategies for developing, harmonising and implementing legislation
 ο developing capacity to implement projects at all levels

Source: Prepared by ECA using European Commission data.

 
Observations 

15

Coordination between projects and with other interventions 
was mostly good

18 
We examined whether projects were coordinated well with other actions funded 
by the EU and other donors in the country. We found that generally projects were 
coordinated well with other IPA projects, for example by building on the work 
of previous IPA projects in the same area. Although the number of other donors 
has diminished considerably in Montenegro since the start of IPA I in 200713, we 
found that IPA projects took account of work done by these donors (see exam-
ples in Box 1).

13  Many donors reduced their 

support, or withdrew it, in the 
context of the availability of 
EU pre-accession assistance 
under IPA and the start of the 
EU accession negotiating 
process.

1 Examples of good coordination
x
o
B

Projects 6 and 7 helped (1) to establish management and control systems specifically for the planned future 
decentralisation of management of EU funds by Montenegro and (2) to introduce public internal financial 
control more widely to the whole of the public administration.

To achieve the first objective, project 6 built on a project financed by the EU before IPA I began. During im-
plementation of project 6, the Commission asked the contractor to modify the outputs to reflect work being 
carried out concurrently by the Commission’s services to check the compliance of the structures set up by the 
national authorities to prepare for decentralised management. Project 7 then provided further support and 
training to prepare Montenegrin staff to operate the decentralised management structures.

To achieve the second objective, the two projects focused firstly on central public administration, then on the 
local level. In particular, project 6 aimed to introduce internal control in central government ministries, includ-
ing establishing internal audit units with comprehensive audit plans and networking between them. Project 7 
began a few months after project 6 ended and focused on weak management practices identified during the 
first project.

Projects 8 and 9 aimed to strengthen Montenegro’s State Audit Institution (SAI). Building on a project funded 
previously by German donors, project 8 provided plans, guidelines and workshops for auditors. For example, 
it built capacity in the area of performance audit, which was a new type of audit work for the SAI. During 
implementation the IPA project was coordinated with work on strengthening performance audit capacities 
being carried out by German and Swedish donors. Project 9 was a twinning project led by the Lithuanian SAI. 
Despite a gap of 2 years between the two projects, it was well coordinated with the support provided under 
project 8 and developed quality control in the Montenegrin SAI through increasing technical capacity and 
preparing guidelines.

 
Observations 

16

19 
We found, however, that the coordination between IPA projects run only in Mon-
tenegro and multi-beneficiary projects covering several pre-accession countries 
was not always good (see examples in Box 2).

2 Examples of weak coordination between IPA projects
x
o
B

Projects 1, 2 and 3 — We audited all IPA I projects14 supporting public procurement in Montenegro. The first 
project provided support only in Montenegro, whereas the other two were multi-beneficiary projects avail-
able to other pre-accession countries. While project 1 successfully established a public procurement system 
in the country, we found that the capacity-building outputs of the three projects were not coordinated well. 
The projects developed capacity to improve legislation on public procurement by helping to draft new laws. 
They also strengthened the performance of contracting authorities by delivering training and a certification 
programme for public procurement officials. The multi-beneficiary projects (2 and 3) were implemented after 
project 1 but they did not build effectively on the courses already provided by project 1 with additional, more 
specific training. Instead, in some cases, the content of the courses was very close or even exactly the same: 
all three projects provided training on basic public procurement procedures, both projects 1 and 2 addressed 
implementation of the Utilities Directive15 and both projects 2 and 3 addressed the Remedies system16. In ad-
dition, the participants at the courses were often the same individuals, for example the training-for-trainers 
courses run under projects 1 and 3.

Projects 12 and 13 — The Regional School of Public Administration (ReSPA) was created to help strengthen 
administrative capacity and boost regional cooperation in the public administrations of the Western Balkans. 
While the six participants, including Montenegro, contribute 150 000 euros each annually, most of the cost of 
ReSPA is funded by IPA multi-beneficiary projects. We found that ReSPA’s training activities were not coord-
inated sufficiently well with other training delivered under IPA projects in Montenegro. For example, ReSPA 
training was mostly aimed at junior staff whose needs were largely met by other capacity-building initiatives. 
There was also insufficient information available to public officials about the training available. As a result 
Montenegro made little use of ReSPA’s training offer.

14  This does not include Technical Assistance and Information Exchange contracts.

15  Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities 

operating in the water, energy, transport and postal services sectors (OJ L 134, 30.4.2004, p. 1).

16  The EU Remedies Directives are Council Directive 89/665/EEC of 21 December 1989 (OJ L 395, 30.12.1989, p. 33), Council Directive 92/13/EEC of 
25 February 1992 (OJ L 76, 23.3.1992, p. 14) and Directive 2007/66/EC of the European Parliament and of the Council of 11 December 2007 
(OJ L 335, 20.12.2007, p. 31). Remedies are legal actions available to economic operators participating in contract award procedures, which 
allow them to contest the award decision.

 
Observations 

17

20 
Since 2014, the Commission has recognised the need for better coordination 
between national and regional (multi-beneficiary) instruments and has revised 
its procedures. For example, the Commission has encouraged ReSPA to consult 
with national IPA coordinators and adjust its output accordingly. Furthermore, 
the Commission set up in 2015 the Centre of Thematic Expertise on PAR in the 
Directorate-General for Neighbourhood and Enlargement Negotiations to man-
age a number of multi-beneficiary (regional) programmes in the PAR area, includ-
ing ReSPA contracts. One of the objectives of this centre is to ensure coordination 
between IPA regional and national assistance. It was however too early for us to 
verify whether these new developments yielded the required improvements in 
the coordination between national and regional IPA assistance.

Part II — Inappropriate use of outputs reduced the 
effectiveness of some of the audited projects

21 
To contribute effectively to strengthening the administrative capacity of the pub-
lic administration of Montenegro, IPA projects should deliver expected capacity-
building outputs. Once delivered, these outputs should be used by the bodies 
targeted by the projects (the beneficiaries) and then followed up by the national 
authorities so that the results of the projects are sustainable and their full impact 
is achieved. In order to show what has been achieved with EU funds, we expect 
the Commission to report clearly on progress achieved, including the extent to 
which administrative capacity is improving in the country.

Projects generally delivered outputs but these were not 
always used by the beneficiaries or followed up by the 
Montenegrin authorities

22 
For the projects audited, we examined interim and final reports, Commission 
monitoring and evaluation reports and the minutes of monitoring commit-
tee meetings, and we interviewed beneficiaries. We found that in general the 
projects delivered outputs as planned. Some of these were related to capacity- 
building objectives and some were designed to achieve other objectives, such as 
road construction. We focused on outputs related to capacity building. In 12 out 
of the 19 projects audited, we found that one or more of the capacity-building 
outputs were not used fully by beneficiaries or the national authorities did not 
carry out the necessary follow-up action to sustain the results achieved.

Observations 

18

23 
Where the beneficiary did not use outputs, the overall effectiveness of the projects 
concerned in strengthening administrative capacity was reduced because the po-
tential improvements they offered did not always materialise. Often the reason for 
not using the outputs was related to budgetary or human-resource constraints.

See Box 3 for examples of outputs not fully used by the beneficiaries.

3 Examples of outputs not fully used by the beneficiaries
x
o
B

Project 4 was designed to focus on the prevention of corruption, targeting the two main bodies working in 
this area at the time: the Directorate for Anti-Corruption Initiative (DACI) and the Commission for Prevention 
of Conflict of Interests (CPCoI). Two of the planned outputs were not fully used by the beneficiaries.

 ο The CPCoI did not use the automated data-exchange system on asset declarations prepared by the project. 
Although it did not have adequate resources to keep it up to date, the CPCoI preferred to continue using 
the manual register.

 ο The project prepared an Integrity Risk Manager (IRM) IT tool for DACI to supervise integrity plans prepared 
to help mitigate risks of corruption identified in the public administration. Although 72 institutions out of 
102 in the country had developed integrity plans, only four of these had used the IRM tool by the time of 
the audit. This situation was partly because of insufficient staffing and partly because Montenegro did not 
procure the necessary funding to continue developing and introducing the tool. (Montenegro relied on 
a possible 400 000 euros from other donors according to the Action Plan for chapter 23. When this did not 
materialise it did not provide the necessary funds from its own resources).

While project 4 was being implemented, the national authorities decided to merge the CPCoI and the DACI 
into a new Anti-Corruption Agency (ACA). By the date of our audit there was no evidence that any of the  
IT solutions developed by the IPA project for the DACI and the CPCoI would be used in the ACA.

Project 14 drafted technical specifications for contracting out the preparation of a database for managing 
road infrastructure in Montenegro. The national authorities had not used the database by the time of the 
audit, 4 years after it was prepared. The same IPA project helped to build capacity in the Montenegrin public 
administration to implement infrastructure projects. However, in some cases the expected capacity-building 
benefits were lost due to high staff turnover. By the time of the audit, six out of the eight people trained in the 
Railways Infrastructure Company had already left their jobs, in most cases because they were on temporary 
contracts.

Project 19 helped to strengthen capacity in waste management at local level. The outputs initially planned 
were modified during the implementation of the project. However, we observed during our audit that even 
these revised outputs were not all being used, partly because of lack of staff and financial resources. For 
example, the recycling yard financed by the project and completed in 2013 was still not being operated, partly 
due to lack of staff to run it. In addition, equipment purchased as part of the project had not been maintained 
because of budgetary constraints in the municipality. Other items purchased by the project were not being 
used at all, for example recycling bins.

 
Observations 

19

24 
Where the national authorities did not follow up the outputs of projects, this 
often reduced the intended impacts. In some cases the national authorities did 
not adopt the necessary legislation, which meant the outputs were not fully ef-
fective. In other cases the institutions created were not granted independence, or 
bodies which should have enforced legislation adopted were not empowered to 
do so. Sometimes the national authorities did not provide the necessary addi-
tional human or financial resources to follow up outputs of IPA projects.  
See Box 4 for examples of outputs not followed up by the national authorities.

4 Examples of outputs not followed up by the national authorities
x
o
B

Project 5 aimed to strengthen the role of local administrations and CSOs addressing corruption at local level 
and to improve citizens’ awareness of the importance of effective anti-corruption measures. The project 
achieved its planned capacity-building outputs (studies, panel discussions, policy recommendations). Howev-
er, the Ministry of the Interior, mainly responsible for reporting on the implementation of local anti-corruption 
plans, decided not to participate in the consultation process initiated by the project to set up a multisectoral 
advisory anticorruption council. This weakened the council, which then did not meet after the end of the 
project.

Project 14 contributed successfully towards harmonising the law on air transport to prepare for the first 
phase of the European Common Aviation Area (ECAA) agreement. However, the national authorities had not 
adopted many of the by-laws drafted as part of the project to help bring the country into line with the re-
quirements of the ECAA agreement by the date of the audit, 3.5 years after they had been prepared17.

Project 15 delivered a business plan in 2013 to improve the efficiency of the Railways Directorate. However, 
the national authorities had not implemented the business plan by the time of the audit because of financial 
constraints which led to delays in the recruitment of necessary additional staff (seven vacancies out of 17 
posts in the directorate). In addition, the national authorities had not granted the directorate financial inde-
pendence from the Ministry of Transport, which was necessary for the directorate to operate as intended.

Project 17 devoted 180 000 euro to strengthening capacity in the Environmental Protection Agency (EPA) to 
collect, validate and disseminate environmental data. To do this, the project spent a year developing an En-
vironmental data collection, validation and dissemination system and related training courses. Although this 
work was completed in 2012, by the time of the audit the system developed was not yet in place and there 
was no significant improvement in capacity in the agency, or in the quality of its reports. The national author-
ities had not followed up the project output by allocating sufficient staff and financial resources.

Project 18 assisted the national authorities to prepare 29 pieces of secondary legislation in the area of Com-
munal Services and Waste Management. Although drafts for the legislation had been prepared by the end of 
the project in August 2013, by the time of the audit only half of them had been adopted and published by the 
national authorities, reducing the impact of the IPA project.

17  Project ended in November 2011 and the audit was carried out in May 2015.

 
Observations 

20

There was insufficient information to show progress over 
time in strengthening administrative capacity

25 
We examined the information available to measure improvement in adminis-
trative capacity in Montenegro over the period audited. We looked at the ‘En-
largement Package’ of documents adopted every year by the Commission. This 
includes the Enlargement Strategy Paper, which sets out the way forward for 
future years and takes stock of progress made by each candidate and potential 
candidate country. It also includes annual progress reports, in which progress 
made each year by individual countries is described in more detail. In addition, 
we looked at progress reported in monitoring committees and in sectoral com-
mittees set up under the SAA and the first PAR baseline measurement exercise 
carried out in 2015.

26 
We found that although the Commission’s annual progress reports present 
overall progress in meeting the Copenhagen criteria and assess the state of play 
for individual negotiating chapters, they do not include assessments of progress 
in strengthening capacity over a longer time frame. They were also not designed 
to draw on the results of individual projects. Based on our reading of the reports, 
we tried to construct a picture of progress in strengthening administrative capa-
city for key areas of reform over the years 2011-2014 (see Table 3).

27 
Our aggregation of the Commission’s annual progress reports indicates slow 
progress in strengthening capacity. However, we found that the different reports 
did not always assess the same parts of the public administration, and that the 
qualitative nature of the assessment meant that the criteria for assessing the ad-
ministrative capacity as ‘weak’ or ‘increased’ were not clearly defined. This made 
it difficult to compare improvement over time.

Observations 

21

3 Overview of administrative capacity assessments in Commission annual progress 
e
l
b
a
T

reports (2011-2014) for the areas audited

Policy areas

2011

2012

2013

2014

Chapter1

5

Public Procurement

Public Procurement Directorate, Public Procurement Administration

Commission for the Control of Public Procurement Procedures

Inspection services

Concessions

14

Transport policy

Accident investigation body

22

Regional policy and coordination 
of structural instruments

Institutional Framework

Financial management, control and audit

23

Judiciary and  
Fundamental rights

27

Environment and  
Climate change

Anti-corruption policy

Commission for Prevention of Conflict of Interest

Anti-corruption coordination

Horizontal issues

Air quality

Waste management

Administrative capacity is still weak or limited and needs substantial or urgent improvement.

Administrative capacity has increased but still needs further improvement.

Administrative capacity has increased: no need for further improvement.

1  The reports follow the negotiating chapters even when they have not yet been opened.

Source: ECA using European Commission progress reports.

 
22

18  Progress reports are called 
‘country reports’ from 2015 
onwards.

19  The new presentation is 
applied for all candidate 
countries and potential 
canditates and covers the 
areas of functioning of the 
judiciary, corruption, 
organised crime, freedom of 
expression, economic criteria, 
PAR, public procurement, 
statistics and financial control.

20  See Annex 2 to the EU 
Enlargement Strategy 
(COM(2015) 611 final of 
10 November 2015).

21  The first review was 

performed in 2015 examined 
capacity, structural, legal, 
procedural and other issues. 
It used the Principles of Public 
Administration agreed in all 
enlargement countries and 
resulted in a detailed country 
report analysing how 
Montenegro is performing in 
the PAR area, and it suggesting 
detailed and sequenced 
recommendations for 
reform (http://www.
sigmaweb.org/publications/
public-governance-baseline-
measurement-reports.htm).

Observations 

28 
Recognising the importance of good data for continuous measurement of pro-
gress on reform, the Commission used a new reporting methodology for the an-
nual assessment in the 2015 progress reports18 in nine areas on a pilot basis19. For 
these areas, the report provided more detailed information than previously on 
the state of play in addition to the progress achieved in the previous 12 months. 
Assessment scales were better harmonised and reports made more comparable, 
both between countries and over time. This will help in future to put the progress 
being made into context and also provide an indication of what should be the 
focus for the coming year20. By the time of the audit, the Commission had not yet 
expanded these exercises to other areas such as the transport and environment 
sectors. The Commission also initiated baseline measurement reviews of the 
public administration in 2015, which will allow for quantitative and comparative 
reporting of progress21.

Part III — The Commission used its non-financial 
means to support the reform process well, but major 
issues remain unresolved

29 
To contribute effectively to strengthening administrative capacity in Montene-
gro, the Commission should make effective use of its non-financial means to 
support the reform process. Mechanisms for political and policy dialogue should 
be set up and operate well and we expect the Commission to make explicit and 
consistent use of leverage available to it as part of this dialogue to obtain the 
active commitment of the national authorities to reform. Where there is potential 
for transferring knowledge, for example by learning from the management and 
implementation of IPA projects, the Commission should take advantage of this.

30 
We examined the main structures for political dialogue between the Commis-
sion and Montenegro created under the Stabilisation and Association Agreement 
(SAA) and the accession negotiating process, including the new approach to 
negotiations applied in Montenegro. We looked at tools for encouraging reform, 
including the ‘overall balance’ clause. We examined whether the Commission had 
used these tools effectively to stimulate improvements in administrative capac-
ity. We also looked at the extent to which the Commission uses the potential for 
encouraging good practice using the decentralised management of IPA funds.

23

22  Chapter 5 (Public 

Procurement) and Chapter 32 
(Financial Control) 
(2015 Montenegro Progress 
Report).

23 

Ibid p. 6.

Observations 

SAA mechanisms for political dialogue operate well

31 
Following Montenegro’s independence in 2006, political dialogue was estab-
lished at ministerial level between the Government of Montenegro and the EU 
institutions. The SAA signed in 2007 then laid the basis for political dialogue at 
different levels: the Stabilisation and Association (SA) Council, the SA Committee, 
seven SA subcommittees and, from 2014, the Special Group on PAR. The Com-
mission and the Montenegrin authorities have met regularly since 2007 through 
these mechanisms to discuss, inter alia, the need for progress on reform and in-
sufficiencies in administrative capacity in the country. Alignment with the acquis 
and the means to achieve this are the main focus of the sectoral subcommittees. 
The output of the subcommittees is discussed annually in the SA Council and in 
the SA Committee meetings.

32 
The Commission has used the mechanisms of political dialogue with the Mon-
tenegrin authorities well, for example to encourage legislative changes in many 
areas and to support the creation of institutions necessary to take forward the 
reform process. This dialogue has highlighted important areas in which results 
have not been achieved, or are only being achieved slowly. For example, in its 
2015 Progress Report, the Commission pointed out that: ‘better internal audit-
ing within contracting authorities remains crucial for improving monitoring and 
verifying contract implementation’ and ‘Internal audit capacity continues to be 
an issue of concern’22. The same report concluded that ‘Montenegro is at an early 
stage of preparation on, inter alia, environment and climate change. Aligning 
with the acquis and strengthening the administrative capacity remain a substan-
tial challenge for Montenegro’23. The Commission’s analysis is confirmed by the 
observations arising from our audit, reported in paragraphs 16 to 24.

Observations 

33 
There has been strong forward momentum towards EU integration in Montene-
gro since independence, illustrated by steady progress in the accession process 
and a current high level of support for EU membership in the population24. This 
has provided the Commission with considerable potential leverage for strength-
ening administrative capacity. However we observed that the national authorities 
were sometimes not actively committed to the reform process and did not always 
use or follow up actions supported under IPA I to ensure the delivery of results 
(see paragraphs 23 and 24). We found that the majority of the audited projects 
did not set out a clear requirement for the national authorities to capitalise on 
the IPA investment. The importance of sustainability and the impact of results is 
reflected in the IPA II Framework Agreement with Montenegro25.

There was lack of clarity regarding the use of tools 
to encourage reform provided by the accession 
negotiation process

34 
The accession process, and more specifically the accession negotiations which 
opened between the EU and Montenegro in 2012, provided the EU with new 
tools for supporting legal, administrative and economic reform. An example of 
this is the opportunity provided in the dialogue surrounding the 35 negotiating 
chapters which cover all parts of the acquis. The setting of opening, closing and, 
where appropriate, interim benchmarks (the latter only for the rule of law chap-
ters) provides tools to encourage the country in its alignment process.

35 
As part of the negotiating framework agreed in 2012 the EU introduced a ‘new 
approach’ in which the two chapters concerned with the rule of law26 were identi-
fied as being at the core of the enlargement process. These two chapters were 
opened early on in the accession process to give Montenegro enough time to 
establish the necessary legislation, institutions and track records of implementa-
tion before the closure of negotiations. Under the new approach, progress in ne-
gotiating on ‘technical’ chapters such as transport and environment would only 
be possible if the country continued to make progress in the area of the rule of 
law. The tool created to help encourage progress in this way is called the ‘overall 
balance clause’27. Montenegro is the first negotiating country for which the ‘new 
approach’ has been introduced.

24

24 

In March 2016 74 % of 
Montenegrins said they 
would vote to join 
the EU in a referendum  
(http://www.cdm.me/english/
more-than-73-of-citizens-
would-vote-for-joining-the-
eu-in-a-referendum).

25  Framework agreement 

between Montenegro and the 
European Commission on the 
arrangements for 
implementation of EU 
financial assistance to 
Montenegro under IPA II. The 
reporting requirements of the 
national authorities (Article 58) 
and the role of the IPA 
monitoring committees 
(Articles 52-54) include the 
obligation ‘to enhance the 
overall efficiency, 
effectiveness, impact and 
sustainability’. Furthermore, 
article 55 sets out specific 
evaluation obligations for 
IPA II assistance, including 
in view of achieving its 
long-term objectives 
and impact.

26  Chapters 23 (Judiciary and 
fundamental rights) and 24 
(Justice and home affairs).

27  Ministerial meeting opening 
the Intergovernmental 
Conference on the Accession 
of Montenegro to the 
European Union (Brussels, 
29 June 2012). AD 23/12: 
‘should progress under these 
chapters significantly lag 
behind progress in the 
negotiations overall, and after 
having exhausted all other 
available measures, the 
Commission will on its own 
initiative or on the request of 
one third of the Member 
States propose to withhold its 
recommendations to open 
and/or close other negotiating 
chapters, and adapt the 
associated preparatory work, 
as appropriate, until this 
imbalance is addressed’, p. 11.

Observations 

36 
The first time the Commission referred to the overall balance clause was in the 
2014 Progress Report28 and in the 2014-2015 Enlargement Strategy Paper29, where 
it pointed out: ‘The Commission recalls the existence of the “overall balance” 
clause of the negotiating framework. Progress in meeting the interim bench-
marks on the rule of law chapters and the relevant identified shortcomings 
above, demonstrated by tangible results, will impact upon the pace of accession 
negotiations overall, including the agendas of future IGCs30’. The Montenegrin 
authorities reacted to the reference to the clause and addressed some of the 
shortcomings identified by the Commission by adopting new legislation. The 
Commission and the EU Member States considered the action taken sufficient to 
continue opening new negotiating chapters.

37 
The experience of recalling the overall balance clause in 2014 has shown that 
this tool can be used to good effect. However, in 2015, despite investment by the 
Commission in the area and undertakings made by the national authorities, there 
were few tangible results in terms of implementing anti-corruption legislation. 
Referring to generally slow progress in the fight against corruption, the Commis-
sion pointed out in its 2015 Progress Report that ‘institutions should demonstrate 
a more proactive attitude in fulfilling their mandate. Montenegro’s track record 
on effective investigation, prosecution and final convictions in corruption cases, 
in particular regarding high-level corruption, remains limited’31. Although pro-
gress towards reform remained limited in this key area, no reference was made 
to the overall balance clause. The Council and the Commission have not set out 
clearly the circumstances in which the clause is likely to be recalled or applied. 
For example, it is not clear whether the clause would be recalled in 2016 if the 
new anti-corruption legislation and institutions such as the ACA (see example 
in Box 3) do not function as planned and deliver tangible results.

25

28  2014 Progress Report, p. 1.

29  2014-2015 Enlargement 

Strategy Paper, p. 19 and p. 21.

30 

Intergovernmental 
conferences.

31  2015 Progress Report. The 

same report pointed out that: 
‘Results on investigation, 
prosecution and convictions 
in corruption cases are limited 
to low and medium-level 
corruption. A high rate of 
investigations into reported 
corruption-related offences 
never results in indictments. 
So far there have been no final 
convictions for high-level 
corruption.’ and ‘Financial 
investigations are not yet 
systematically used in cases of 
corruption. In no corruption 
case has the confiscation of 
assets been ordered’, and 
‘on law enforcement, the 
institutional and operational 
capacity of prosecutors, 
judges and police to fight 
corruption is insufficient’, p. 14.

26

32  See paragraphs 54 and 55 of 
European Court of Auditors 
Special Report 11/2016, 
‘Strengthening administrative 
capacity in the former 
Yugoslav Republic of 
Macedonia: limited progress 
in a difficult context’  
(http://eca.europa.eu).

Observations 

The potential for using decentralised management to 
strengthen administrative capacity has not yet been 
fully exploited

38 
In Montenegro, the Commission contracted and implemented most of IPA I cen-
trally. The Financial and IPA regulations provide for management of pre-accession 
funds to be conferred to enlargement candidate countries to prepare them for 
their future management of the EU’s structural and agricultural funds. In accord-
ance with the regulations, during 2012-2013, Montenegro asked the Commission 
to decentralise management of IPA I funds and created the required operating 
structures to this end. After checking that requirements for decentralised man-
agement had been met, the Commission granted the country responsibility for 
managing 12 % of the total IPA I allocations in the country. This was made up 
of 22.7 million euro covering transport and environment projects and 5.6 mil-
lion euro covering employment and social inclusion projects. Montenegro’s 
request for decentralised management of IPA II allocations relates to a greater 
proportion of funds.

39 
Apart from increasing ownership of EU-funded projects, this management mode 
can deliver valuable capacity building in the operating structures. This is be-
cause, in the early years of decentralised management, the Commission carries 
out detailed and thorough checks of the work of the operating structures at all 
stages of contracting and implementing each project. Spreading good practice 
on project management accumulated in the IPA structures to the rest of the Mon-
tenegrin public administration operating in the same area can provide a poten-
tially effective means of strengthening administrative capacity.

40 
However, strengthening administrative capacity was not included as an object-
ive when the regulations governing decentralised management were adopted. 
This meant that the Commission has not encouraged the national authorities to 
consider how good practice could be actively developed in the structures set up 
for decentralised management and then used to build capacity in the rest of the 
public administration. We also considered that there is a risk, as we observed in 
another pre-accession country32, that IPA operating structures become organisa-
tions parallel to the rest of the public administration.

Conclusions and 
recommendations

27

41 
The objective of the audit was to assess whether EU pre-accession financial and 
non-financial assistance during 2007 to 2013 contributed effectively to strength-
ening administrative capacity in Montenegro. We conclude that despite the slow 
progress noted in several key areas, EU pre-accession assistance has helped to 
strengthen administrative capacity in Montenegro. However, for 12 out of the 
19 IPA-funded projects which we audited the effectiveness of the support was 
reduced by the fact that some of the capacity-building outputs delivered were 
not fully used or followed up by the Montenegrin authorities. We make five rec-
ommendations in paragraphs 42 to 47 of which the Commission can take account 
when implementing IPA II. The Commission could also consider these recommen-
dations in the context of the 2017 mid-term review of IPA II.

42 
We found that the audited projects addressed important capacity-building 
needs, for example by successfully supporting legislative changes and the 
establishment of institutions and by providing training. The audited projects 
were in most cases coordinated well and took into account work carried out by 
other donors. However, we found examples of overlap or where the sharing of 
information between IPA projects run only in Montenegro and regional (multi-
beneficiary) projects covering several pre-accession countries could be improved 
(see paragraphs 17 to 20).

Recommendation 1 — Better coordinate actions 
strengthening capacity

The Commission should ensure that capacity-building actions funded at both 
national and regional levels address priority needs, take full account of other 
completed, ongoing and planned support and are appropriately communicated 
to potential participants. Under IPA II, the Commission should closely monitor 
the relevance of capacity-building actions and improve coordination between 
national and regional actions.

Conclusions and recommendations 

28

43 
The audited projects generally delivered the expected capacity-building outputs. 
However, in some cases these outputs were not fully used by the beneficiaries 
or followed up by the national authorities to ensure the sustainability of results. 
The overall effectiveness of the audited projects in strengthening administrative 
capacity was thus reduced because the potential improvements they offered did 
not always materialise. Reasons for not using or following up the IPA projects 
appropriately included the national authorities not ensuring adequate staff avail-
ability, not adopting the necessary legislation to allow the output to be used or 
not granting the necessary independence to institutions created  
(see paragraphs 21 to 24).

44 
Overall, we observed that limited progress towards strengthening administrative 
capacity in key areas was often due to weak commitment to reform by the na-
tional authorities. The majority of the projects we audited did not set out a clear 
requirement for the national authorities to follow up and capitalise on IPA invest-
ments (see paragraphs 31 to 33).

Recommendation 2 — Improve commitment to use outputs 
and follow-up results

When programming EU pre-accession assistance under IPA II, the Commission 
should require the national authorities to actively commit to using the outputs 
of IPA projects and following up results so that they are sustainable. During 
implementation of projects funded by IPA II the Commission should monitor 
closely the action being taken by the national authorities to meet commitments 
made in this respect to allow time to apply corrective measures before projects 
are closed. The Commission should take account of whether commitments have 
been met when deciding in which areas to invest future pre-accession assistance.

Conclusions and recommendations 

29

45 
We found that, although the Commission monitors progress in strengthening 
administrative capacity, there was insufficient comparable information on the 
progress achieved by the country over time (see paragraphs 25 to 28).

Recommendation 3 — Develop better tools for measuring 
progress towards improved administrative capacity

The Commission should:

(i)  build on the pilot presentation of data in the 2015 Progress Report for the 

2016 report, and on the baseline measurement review of PAR carried out in 
2015;

(ii)  examine whether these initiatives could be extended to other relevant areas 

such as transport and environment.

46 
The mechanisms for political dialogue worked well although, in important areas 
of public administration reform, the fight against corruption and the environ-
ment, results are only being achieved slowly. The Commission possesses tools for 
reform, but it is sometimes not clear, for example in the case of the ‘overall bal-
ance’ clause, how they will be applied if new laws and institutions do not deliver 
results in key areas such as the fight against corruption (see paragraphs 34 to 37).

Recommendation 4 — Make full use of tools to support 
progress on reform

The Commission should encourage results on reform by:

(i)  making full use of all of the tools at its disposal as part of the accession nego-

tiating process to support progress on reform;

(ii)  being transparent about how the ‘overall balance clause’ is referred to or 

used.

Conclusions and recommendations 

30

47 
The Commission decentralised management of 12 % of IPA I funds to Mon-
tenegro. We observed that the decentralised mode of management of EU 
funds provides a potentially useful tool for strengthening administrative ca-
pacity through transfer of knowledge, which was not exploited under IPA I 
(see paragraphs 38 to 40).

Recommendation 5 — Use decentralised management to 
spread good administrative practice

Once examples of good practice have been established in the operating struc-
tures set up for decentralised management, the Commission should encourage 
the national authorities to emulate these practices in other parts of the admin-
istration, for example to encourage the delegation of decision-making to the 
appropriate level and to strengthen internal control systems.

This Report was adopted by Chamber III, headed by Mr Karel PINXTEN, 
Member of the Court of Auditors, in Luxembourg at its meeting of 12 July 2016.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA
President

 
 
 
Annexes

31

I
x
e
n
n
A

Key dates in EU–Montenegro relations

1999

2000

2003

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

26 May — Stabilisation and Association Process for countries of south-east Europe.

24 January — Council adopts negotiating directives for Stabilisation and Association Agreement.

21 June — EU–Western Balkans Summit celebrated in Thessaloniki, where the EU reiterates its support to the European perspective of 
the Western Balkan countries.

3 June — Montenegrin Parliament declares independence following the 21 May referendum.

22 January — Council adopts European Partnership for Montenegro.

15 October — Stabilisation and Association Agreement (SAA) signed in Luxembourg.

28 December — Interim Agreement on trade and trade-related issues signed.

1 January — Interim Agreement and Visa facilitation and Rreadmission agreement enter into force.

15 December — Montenegro applies for EU membership.

19 December — Visa-free travel to the Schengen area granted.

1 May — The SAA enters into force.

9 November — The Commission recommends granting candidate status to Montenegro.

17 December — The Council agrees to give Montenegro the status of candidate country.

12 October — The Commission recommends the opening of accession negotiations.

9 December — The Council launches accession process with Montenegro.

26 June — The European Council endorses the Commission’s assessment and opens accession negotiations.

29 June — Accession negotiations start and the Accession Conference adopts the Negotiating Framework.

18 December — Opening and provisional closure of first negotiating Chapter 25 — Science and Research

15 April — Opening and provisional closure of Chapter 26 — Education and culture.

27 June — Screening meetings are completed.

18 December — Opening of negotiations on Chapter 5 — Public procurement, Chapter 6 — Company law, Chapter 20 — Enterprise 
and industrial policy, Chapter 23 — Judiciary and fundamental rights and Chapter 24 — Justice, freedom and security.

31 March — Opening of Chapter 7 — Intellectual property law and Chapter 10 — Information society and media.

7 May — Screening process is completed (last screening report presented to the Council).

24 June — Opening of negotiations on Chapter 4 — Free movement of capitals, Chapter 31 — Foreign, security and defence policy and 
Chapter 32 — Financial control.

16 December — Opening of negotiations on Chapter 18 — Statistics, Chapter 28 — Consumer and health protection,  
Chapter 29 — Customs union and Chapter 33 — Financial and budgetary provisions.

30 March — Opening of negotiations on Chapter 16 — Taxation and Chapter 30 — External relations.

22 June — Opening of negotiations on Chapter 9 — Financial services and Chapter 21 — Trans-European networks.

21 December — Opening of negotiations on Chapter 14 — Transport policy and Chapter 15 — Energy.

Source: European Commission.

 
Annexes 

32

I
I
x
e
n
n
A

Projects audited

No

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

Project title

Procurement

Contract No

Contracted  
(euro)

Further development and strengthening of the Public Procurement System in Montenegro

Support for Improvement in Governance and Management (SIGMA)

Training in Public Procurement in the Western Balkans and Turkey

Corruption

Support to the implementation of the anti-corruption strategy and action plan

Corruption in local government — zero tolerance!

Internal control

Strengthening the Management and Control Systems for EU Financial Assistance in Montenegro

Strengthening the Management of EU funds and General Administrative Procedures

External audit

Strengthening State Audit Institution (SAI) of Montenegro

Audit Quality control in the SAI of Montenegro

Capacity-building initiative

Technical assistance to Local Self-Government reform

Capacity building and support to local self-government for implementation of municipal develop-
ment grants

Running of ReSPA and organisation of ReSPA activities

Running of ReSPA and organisation of ReSPA activities

ReSPA

Transport

Technical assistance to the Transport Sector

Technical assistance for Institutional Development of the Railways Directorate in Montenegro

Reconstruction of part of road Crkvicko Polje-Nikovici

Environment

Support to Environmental Management

Drafting legal documents in the Field of Communal Services and Waste Management

Improvement of waste management in Danilovgrad

205-748

253-091
296-874
319-423

248-580

297-271

306-428

252-719

327-819

234-548

338-180

229-836

282-481

256-128

331-241

233-959

289-223

256-594

258-795

290-255

256-597

1 080 017

10 000 000
2 458 035
9 834 337

3 962 000

643 419

211 454

2 000 000

1 261 500

837 384

236 138

638 950

1 065 900

2 400 000

3 500 000

1 160 668

139 684

789 807

912 465

155 055

983 193

Source: European Commission.

 
Reply of the  
Commission

Executive summary

33

VIII
The Commission points out that the political dialogue can only encourage reform, but the ownership of the reform 
process lies with the national authorities.

The Commission further stresses the importance in the reform process of prioritising quality over speed.

The Commission’s position is that the use of the balance clause is sufficiently defined in the negotiating framework.

The use of tools for managing the accession process, including the overall balance clause, is based on a broad 
assessment of the existing shortcomings and the extent to which the country is making progress as can be 
expected.

Observations

Box 2 — Examples of weak coordination between IPA projects
Projects 1, 2 and 3
The Commission points out that taking into account the small size of the Montenegrin administration and the early 
stage of setting up the public procurement system in Montenegro, some complementary overlap between the vari-
ous training courses was inevitable.

Projects 12 and 13
The Commission points out that during the latter part of the period audited, the Regional School of Public Adminis-
tration (ReSPA) managed to reorient from a training organisation into a regional hub contributing to policy dialogue 
through comparative studies and regional research, peer reviews, summer schools, in-country seminars, mobility 
schemes and study visits, thematic networks, etc. In this context, Montenegro has benefited from the interaction 
among government representatives in the different events organised by ReSPA, as well as from the comparative 
studies undertaken.

Since 2013, the organisation took a more strategic, high-level approach targeting only senior officials and 
decision-makers.

Box 3 — Examples of outputs not fully used by the beneficiaries
Project 4
The Commission notes that the Anti-Corruption Agency (ACA) was established on 1 January 2016. The agency is 
currently using the Integrity Risk Manager platform as a model for the development of a new-version IT system, as 
all the modules of ACA’s IT system, including the module for integrity plans, have to be developed under unified 
standards.

Reply of the Commission 

34

Project 19
The Commission points out that a number of bins are held in stock for potential replacement of bins in use, as a roll-
ing stock of unused bins is necessary.

Box 4 — Examples of outputs not followed up by the national authorities
Project 14 contributed successfully
The Commission stresses that it is important to note also that delays with the implementation of the European Com-
mon Aviation Area (ECAA) agreement are also due to the delayed ratification by some EU Member States (signed 
in 2006 and it has still not entered into force). Overall, Montenegro’s level of preparedness in this area has been 
assessed very positively by the Commission. The latest ECAA assessment visit in October 2015 concluded that Mon-
tenegro is fulfilling the requirements of phase I of the ECAA agreement.

28
The Commission points out that transport and environment will be covered by the new reporting methodology as 
of 2016.

37
The Commission’s position is that the use of the balance clause is sufficiently defined in the negotiating framework.

The use of the overall balance clause is based on a broad assessment of the existing shortcomings and to what 
extent the country is making progress as can be expected. In the case of the overall balance clause, the specific 
problems raised in 2014 had been addressed, following the Commission reminding the Montenegrin authorities of 
the existence of the clause.

Conclusions and recommendations

Recommendation 1 — Better coordinate actions strengthening capacity
The Commission accepts recommendation 1.

Recommendation 2 — Improve commitment to use outputs and follow-up results
The Commission accepts recommendation 2.

45
Progress on a year-by-year basis has always been reflected in the reports. Bringing together several subsequent 
reports allowed for comparisons over longer periods of time. With the introduction of the new reporting method-
ology in 2015 and the strengthened focus on readiness in addition to progress over the previous year, will make 
comparisons over longer periods of time even easier in the areas covered.

Reply of the Commission 

35

Recommendation 3 — Develop better tools for measuring progress towards  
improved administrative capacity
The Commission accepts recommendation 3.

The Commission will continue to expand its new reporting methodology to additional areas in 2016. This will allow 
for better comparability between countries and also over time in the areas covered. Transport and environment will 
be covered by the new methodology as of 2016.

The assessment given under the new methodology, while taking into account quantitative elements, primarily 
remains qualitative. This is necessary to provide a realistic picture of all the elements that are relevant to assess the 
situation in a specific area.

46
The Commission points out that the political dialogue can only encourage reform, but the ownership of the reform 
process lies with the national authorities.

The Commission further stresses the importance in the reform process of prioritising quality over speed.

The Commission’s position is that the use of the balance clause is sufficiently defined in the negotiating framework.

The use of tools for managing the accession process, including the overall balance clause, is based on a broad 
assessment of the existing shortcomings and the extent to which the country is making progress as can be 
expected.

Recommendation 4 — Make full use of tools to support progress on reform
The Commission partially accepts recommendation 4.

(i)  The Commission agrees with the Court that the use of all political tools at its disposal is essential to the accession 
process. The Commission considers that this is the case already, but the Commission is equally committed to the 
credibility of the process and favours quality of reform over speed. It is important to underline in this context that 
the speed of reforms in particular is under the control of the Montenegrin authorities.

(ii)  The Commission considers that it is transparent in its referral to or use of the balance clause.

The negotiating framework, which governs what is an intergovernmental process, sets out very clearly the con-
ditions (see below) under which the overall balance clause may be applied. It is important to underline that the 
Member States decide on the use of the balance clause, based on a proposal from the Commission. The negotiating 
framework also speaks about the balance clause being used after having exhausted all other available measures. 
Hence, the Commission cannot accept this part of the recommendation.

 
Reply of the Commission 

36

The relevant text of the negotiating framework states: ‘An overall balance in the progress of negotiations across 
chapters should be ensured. Given the link between the chapters “Judiciary and fundamental rights” and “Justice, 
freedom and security” and the values on which the Union is founded, as well as their importance for the imple-
mentation of the acquis across the board, should progress under these chapters significantly lag behind progress 
in the negotiations overall, and after having exhausted all other available measures, the Commission will on its 
own initiative or on the request of one third of the Member States propose to withhold its recommendations to 
open and/or close other negotiating chapters, and adapt the associated preparatory work, as appropriate, until 
this imbalance is addressed. The Council will decide by qualified majority on such a proposal and on the condi-
tions for lifting the measures taken. The Member States will act in the Intergovernmental Conference in accordance 
with the Council decision, without prejudice to the general requirement for unanimity in the Intergovernmental 
Conference.’

Recommendation 5 — Use decentralised management to spread  
good administrative practice 
The Commission accepts recommendation 5.

 
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Event

Adoption of the Audit Planning Memorandum/Start of audit

Official sending of draft report to Commission (or other auditee)

Adoption of the final report after the adversarial procedure

Commission’s (or other auditee’s) official replies received in all languages

Date

27.1.2015

23.5.2016

12.7.2016

28.7.2016

 
In this report the Court examines whether the Commission’s 
support to Montenegro has contributed effectively towards 
building up the administrative capacity of the country to 
prepare it for membership of the EU. The Court concludes 
that, despite the slow progress noted in several key areas, 
EU pre-accession assistance helped to strengthen 
administrative capacity during the period audited 
(2007-2013). While EU financial and non-financial support 
addressed important capacity-building needs, the Court 
notes cases where weak commitment to reform by the 
national authorities meant outputs were not used and 
planned impacts were not achieved. The Court 
recommends ways in which the Commission could focus 
on improving results.

EUROPEAN
COURT
OF AUDITORS