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15/07/2020   More than half of the State real estate held in trust by municipalities was used not for the allocated functions or was not used at all

More than half of the State real estate (RE) held in trust by municipalities was not used or was used for different functions than it was allocated for. One-third of municipalities that hold in trust the State RE do not have precise information on it. This is revealed by the audit Management of State Real Estate Transferred in Trust to Municipalities performed by the National Audit Office of Lithuania (NAOL).

Municipalities manage, use, and dispose of State-owned property in trust that has been transferred to them for exercising State functions (delegated by the State to municipalities) and State-owned property that is assigned but not yet transferred to their ownership following the Law on the Transfer of State-Owned Property to Municipalities.

“The audit revealed that, in the analysed cases, municipalities had not properly assessed the necessity of the property, while the Government, when transferring the property to municipalities, had also not verified that the property was necessary for exercising State functions (delegated by the State to municipalities). The absence of monitoring and control system of the use of State RE creates preconditions for using it for other activities or for not using it at all,” says Alma Bulkevičienė, Principal Auditor of the Governance Audit Department at the NAOL.

During the first half of 2019, 49 out of 56 audited municipalities managed in trust 426 State RE objects. This constitutes approximately 3% of the entire State RE. Generally, these are non-residential buildings: manufacturing, storage and auxiliary maintenance buildings, as well as buildings for firefighting purposes and garages.

Until the beginning of the audit 14 municipalities did not know about approximately 39% out of 155 State RE objects held in trust by them, which according to the law had been assigned but not yet transferred to their ownership, did not included the RE objects in their accounting nor take their inventory. 10.9 thousand square metres (out of 50.6 thousand square metres) of State RE were used by municipalities for other functions than they were allocated to, while 9 thousand square metres were used as living quarters, garages, and car service quarters by natural and legal persons not performing any functions of municipalities.  

According to the auditors, in 10 municipalities, 7 thousand square metres of the State RE held in trust are abandoned and decayed. Not all municipalities took action to write-down and liquidate the decrepit or decayed property or return the unnecessary State RE to the State; therefore, efficient State RE usage fulfilling the public needs has not been assured and the State-owned property is continuing to decay and pose a risk to the society.

By implementing recommendations made by the NAOL, the State RE will be transferred to municipalities only after assessing its necessity for conducting the functions delegated by the State, while the monitoring of the use of the transferred property will be performed. Information on the State RE held by municipalities will be more accurate in the public RE registers and accounts of municipalities thus creating preconditions for RE managers to make reasonable decisions concerning RE management. In order to assure that the State RE held in trust by municipalities is managed and used efficiently, the NAOL together with the Government and municipalities agreed on indicators according to which the implementation of the recommendations and audit impact will be assessed.

This audit is one part of the joint project concerning municipal RE conducted by the NAOL and Lithuanian municipal control and audit services. Municipal control and audit services analyse if municipality-owned RE is managed in a targeted and complex manner, how efficiently it is used, as well as if the disposal of the property ensures a maximum benefit and its suitable control. The results of the already completed audits of individual municipalities can be found here (in Lithuanian). The NAOL will summarise the results and publish an overview of the municipality-owned real estate in the autumn.

Responsible for the information Communication Division
Last updated on 5 August 2020

National Audit Office of Lithuania

Pamėnkalnio St 27, LT-01113 Vilnius, Phone: + 370 5 266 6793, + 370 5 266 6752, Email: nao@vkontrole.lt.