STATE AUDIT OFFICE
-Press Release -
Skopje, 05.08.2025
Public enterprise continuously operates with a blocked account, records a constant increase in liabilities, and reports a negative financial result
The public enterprise has been operating continuously with a blocked account, exhibiting consistent growth in liabilities and reporting a negative financial result.
The Public Enterprise “Ohridski Komunalec” – Ohrid has been continuously operating with a blocked account for over 18 years, carrying out its core activities with minimal cash funds. Auditors identified serious irregularities in financial and operational activities, including a significant increase in liabilities, improper use of petroleum derivatives, mismanagement of funds collected from public cleanliness fees, and a negative financial result.
The State Audit Office carried out an audit of the financial statements together with a compliance audit of the Public Enterprise for communal services “Ohridski Komunalec” – Ohrid for 2023.
Since 2006, up to the date of this audit report, PE “Ohridski Komunalec” – Ohrid has been performing its activities with a transaction account blocked due to issued enforcement orders for unpaid liabilities. The enterprise operates within monthly limits (minimum cash amounts above which enforcement cannot be carried out) set by decisions of the Basic Court of Ohrid.
The last decision, adopted at the end of 2023 and still in force, set the monthly limit for the functioning of the public enterprise at 16.900.000 MKD.
Auditors found that the enterprise has shown a trend of increasing liabilities over the years, which by the end of 2023 were 28% higher than the previous year and 249.61% (or 2.496 times) higher compared to 2019. At the end of 2023, “Ohridski Komunalec” – Ohrid owed 104.215.000 MKD to 427 legal entities.
Auditors pointed out that the continuous undertaking of new liabilities, which the enterprise cannot pay regularly and chronologically, contributes to an increase in liabilities from enforcement orders and interest, further worsening financial instability and illiquidity.
PE’s financial results over the years
State auditors determined that since 2021, the enterprise has continuously reported negative financial results, i.e., operating losses. For 2023, the loss amounted to 11.997.000 MKD (for 2024, 36.745.000 MKD). With the reported loss for 2024, the accumulated profit and legal reserves will not be sufficient to cover the loss, leaving the carried-forward loss to be covered from future profits. This could negatively affect the enterprise’s current and future operations, development, and the ability to efficiently, sustainably, and qualitatively perform activities and provide services to citizens and legal entities.
Auditors emphasized that for a long period, no verification has been conducted of the meters used to receive and issue diesel fuel from the underground tank owned by the enterprise, posing a risk of inaccurate fuel measurement during intake and distribution. Irregularities were found in the use of official and private vehicles and construction machinery, as well as in documenting and monitoring the intake, issuance, and consumption of fuel. In 90% of vehicles, monthly fuel consumption reports lacked recorded mileage and average fuel consumption; forms were incompletely filled out and unsigned by the storekeeper and driver. From the analysis of accounting records, storekeepers’ delivery notes, fleet department records for received diesel fuel per vehicle, and warehouse monthly records for issued diesel fuel per vehicle, auditors identified discrepancies in diesel consumption and quantities across all records.
In 2023, accounting records showed 1.854.000 MKD (or 29.000 liters) more diesel fuel expenses than those recorded in the monthly consumption reports prepared by the storekeeper.
Non-operational vehicles into which fuel is poured, and spare parts and tires are installed
From the analysis of delivery notes, auditors found that approximately 27.000 liters of diesel fuel were issued for non-operational vehicles and 10.000 liters for unregistered vehicles in the material and accounting records, without supporting documentation. Additionally, 1.371.000 MKD for 22.000 liters of diesel were recorded based on delivery notes not listed in either the warehouse-issued or fleet-received fuel records. These notes were not verified by the storekeepers or fleet department managers responsible for signing them.
This manner of receiving, managing, and issuing fuel stocks, as well as recognizing expenses without adequate supporting documentation, indicates misuse and irrational use of public funds.
Auditors found that identical spare parts were repeatedly requested for the same vehicle within short periods. Repair and maintenance services were not supported by adequate documentation; no requisition orders for spare parts or work orders for vehicle servicing were prepared. The lack of work orders specifying the type and quantity of spare parts used, work duration, and number of workers makes it impossible to determine whether the work involved additional capital investments (increasing the asset’s purchase value) or current maintenance costs. Therefore, it is not possible to confirm the justification and cost-effectiveness of consumed spare parts or to monitor the purposeful and rational use of resources.
Total receivables from domestic customers amounted to 137.931.000 MKD, for rendered communal services—collection, transport, and disposal of waste from individuals and legal entities, public cleanliness maintenance in Ohrid municipality and suburbs, maintenance of public greenery, leasing of business premises and undeveloped land, and other services for which the enterprise is registered.
It was found that accounting records for receivables were lower by 147.891.000 MKD compared to the operational billing system records for issued invoices to individuals and small legal entities for communal services. This discrepancy also affected the alignment of receivable amounts in the accounting records with those in the General and Legal Affairs Department by 129.047.000 MKD.
The audit established that there is no system for calculating and charging interest on late payments from large legal entities, affecting the completeness of recorded receivables and revenues, and violating the Law on Obligations, which stipulates that a debtor in delay must pay default interest in addition to the principal. This omission results in lost additional income and understated tax obligations to the state.
From the aging analysis of receivables, auditors determined that 57% of receivables were overdue, with management explaining reasons why legal measures for collection were not taken within the legal deadlines. This affects the accurate and objective presentation of receivables in financial statements, the financial result, and the reliability of the information presented.
The report stated that from October 2009 to the end of 2022, due to improper recording of public cleanliness fees, the enterprise unjustifiably reported 253.776.000 MKD higher revenues instead of liabilities to the Municipality of Ohrid. Under the Law on Public Cleanliness, fees collected belong to the municipal budget and must be used to finance the Public Cleanliness Program.
For this period, the enterprise collected 212.174.000 MKD but did not transfer these funds to the municipality’s budget account. Services for public cleanliness were properly invoiced to the Municipality of Ohrid, and VAT was correctly calculated.
Auditors also found that management failed to reconcile the registered capital value in accounting records with the Central Registry data, leaving a discrepancy of 7.646.000 MKD unexplained and undocumented.
Irregularities were also found in waste collection, transport, and disposal operations at “Bukovo” and “Maucher” landfills, as follows:
- Waste service prices not calculated per the methodology criteria,
- Appointed waste manager not meeting legal qualification requirements,
- Lack of records on waste identification, transport, and handling,
- No contracts with 97% of commercial waste generators in Ohrid municipality, leaving rights and obligations unregulated.
The audit also found incomplete annual inventory counts of assets and liabilities, a lack of inventory adjustment, and no adopted accounting policies for financial statement preparation and presentation.
With the insight into the personnel files, the concluded employment contracts and the submitted documentation for the calculation and payment of salaries and salary allowances for employees, the audit determined that there is an established practice for employees to use temporary forced leave, which implies temporary absence from work with compensation in the amount of 70% of the salary they would receive if they were working. However, employees who are necessary for the timely and continuous performance of the activity and beyond the period foreseen in the Program also go on forced leave. For each introduction of overtime, night work and work on Sundays, the local state labor inspector has not been previously notified in writing, in accordance with legal requirements.
Employees received salary advances based on handwritten requests, at the director’s discretion. Financing employees’ personal needs through interest-free loans is not within the enterprise’s registered activity and violates the director’s authority.
Irregularities in recording tangible assets and depreciation, and mismatches with material records, affected the accuracy of the balance sheet as of 31 December 2023, as well as the income statement for 2023. Irregularities were also found in stock management of materials, spare parts, small inventory, and tires, affecting reported stock levels and expenses.
The audit concluded with many other irregularities and inconsistencies that led to an adverse opinion on the fairness and objectivity of the 2023 financial statements and compliance with laws, guidelines, and policies in place. Recommendations were issued for corrective actions by responsible persons and bodies to improve the situation.
Press contact:
Albiona Mustafa Muhaxiri +389 72 228 203 [email protected]
Mijalce Durgutov +389 70 358 486 [email protected]
Martin Duvnjak +389 75 268 517 [email protected]