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02/10/2015   National Audit Office: manucipalities lack a comprehensive approach to systemic issues

The National Audit Office completed audit of 60 manucipalities. The National Audit Office‘s auditors found systematic problems in the fields of planning and allocating manucipal budget, borrowing, organizing free meals for pupils, ensuring civil safety, road and street maintenance, municipal domestic transactions and financial reporting.

Auditors found that the principles of planning and allocating manucipal budget revenues should be reviewed and the law regulating the methodology should be developed. Although since 2015  the possibility of increasing municipal budget revenues due to economic growth has been legalized and amendments were developed for some part of methodology provisions, however the manucipal economic and financial as well as activity indicators are not evaluated and have no impact on the increase or reduction of manucipal budget revenues.

Municipal debt management was also improved. According to the data of municipal statistical reports their debt in the end of 2014 amounted to 2 008 million LTL (581.5 million Euros), but these data do not reflect the correct information, because the mentioned reports did not show the financial lease obligations of 44.4 million LTL. Additional borrowing limits determined for the municipalities can limit the implementation of necessary Investment projects, which are important to local communities.

Municipalities still face difficulties in preparing the consolidated financial reports, and external users can not use the information that is not correct; existing data are not used by the municipalities in their decision making concerning allocation of resources and their use in public services provision.

The public audit in manucipalities revealed that the quality control of free meals for children is insufficient, and that 4.5 million LTL (1.3 million Euros) of revenues for free meals were used in violation of the Public Procurement Law.

Manucipalities are strugguling to implement objectives raised for the civil protection: in case of emergency situation only 51.5 % residents would be warned with the measures available. Manucipalities are not sufficiently prepared to manage the imminent or occuring extreme situations, protect the residents in case of danger.

Municipalities also lack a complex approach to the local road development, investment planning and project selection, and the part of the funds for Investments to the local roads are allocated without preparing Investment projects. Accounting of the funds derived from the sale of the state land are also handled improperly, therefore it is not always clear whether the municipalities used the funds in accordance with the priorities established by legislation.

The National Audit Office had remarks also about domestic transactions. Municipal decisions to purchase services from the companies they control without a competition have an impact on competitiveness and the rational use of the public finances and in some of the manucipalities it has become a means to defer payment to controled companies for a later date.

The Parliamentary Audit Comittee, Rural Affairs Committee, Office of the Government were informed about the problems found in the manucipalities and recommendations for addressing the systemic problems were submitted to the Ministries of Finance, Internal Affairs and Transport.


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Last updated on 30 November 2015

National Audit Office of Lithuania

Pamėnkalnio St 27, LT-01113 Vilnius, Phone: + 370 5 266 6793, + 370 5 266 6752, Email: