STATE AUDIT OFFICE
– Press Release –

Skopje, 25 November 2025

Municipality of Lipkovo has not ensured proper collection of own-source revenues (taxes, fees, and charges) nor delivery of water to some settlements supplied by a water system valued at 265 million denars

The municipality has an increasing number of irregularities in keeping business records, managing own-source revenues (taxes, fees, and charges), and delivering water to part of the settlements supplied by the water system worth 265 million denars. Additionally, street construction is ongoing without proper planning documents and without the necessary permits

The State Audit Office conducted a financial and compliance audit of the Municipality of Lipkovo for 2024. The audit uncovered shortcomings, irregularities, and non-compliance issues that, due to their significance, resulted in an adverse opinion on the accuracy and fairness of the 2024 financial statements and on compliance with legal regulations, guidelines, and policies for the core budget accounts (630) and (637). An adverse opinion was also expressed on the fairness and accuracy of the 2024 budget revenue account for subsidies (930).

The municipality failed to ensure consistent compliance with the Law on Accounting for Budgets and Budget Beneficiaries regarding proper record-keeping. The obligation to prepare individual financial statements for each account was not met; instead, a consolidated financial statement was prepared, and business books were not closed at year-end.

The audit also found discrepancies in the balance sheet, inadequate records and management of fixed assets, and a lack of a capital assets register. Asset and liability inventory was not conducted in line with the legal and regulatory requirements.

A discrepancy was identified between tax and accounting records, as well as unrecorded receivables totaling 12.500.000 denars from sales tax, inheritance and gift tax, urban land development compensation, legalization fees for illegally built structures, and rent from premises.

For some receivables from previous years, particularly where collection was uncertain, no value adjustments were made. For property tax receivables of 73.186.000 denars, no enforcement measures were taken after notices, and no interest was calculated or collected for overdue, unpaid property tax.

Graph: Property tax receivables as of 31 December (2014-2024)

The municipality has not established a real estate registry nor revalued property value. Consequently, 922 taxpayers (18%) pay less than 200 denars in property tax, and no liabilities have been issued for properties acquired (additional or new) in recent years.

The municipality has also not complied with the Law on Determining the Legal Status of Illegally Built Structures, including unjustified fee exemptions, failure to issue termination conclusions, and failure to submit requests to the competent ministry for approvals of auxiliary agricultural structures.

Urban space in front of business premises in public areas is used without approval for installing urban equipment and hospitality activities outside the premises. No communal fees are collected, and no inspections have been conducted on the installed urban equipment.

The municipality has not adopted a decision regulating public cleanliness and maintenance fees, resulting in no revenue from this source. Waste collection, transport, and sanitation are managed by the Public Enterprise PISHA, established in 2023, without a formal agreement or transfer of water system management rights. In three of the eleven settlements, the water supply network has not been constructed, and connections to end users have not been made, indicating the municipality’s failure to ensure the water supply system functionality, despite investments of 265.745.000 denars from the state budget.

Photo: Water treatment plant and reservoir

The implementation of program activities for installing concrete paving tiles on roads, sidewalks, and public areas (costing 10.450.000 denars in 2024) is carried out jointly with the local community and a group of citizens, with the municipality providing materials and the local groups performing manual work. These streets lack planning documentation, design projects, and construction permits as required by the Law on Construction.

In 2024, the municipality paid 1.441.000 denars to individuals under service contracts for routine work tasks and allocated 2.112.000 denars to civil associations, foundations, sports clubs, and NGOs without clear criteria for project selection or funding allocation.

During the construction of the Cultural Centre in Matejče, 1.761.000 denars were paid based on interim certificates (August and September) for work that was not performed, specifically for procurement, transport, and installation of theater seats that were installed in December 2024.

Photo: Excerpt from Monthly report / August                  Photo: Cultural Centre in Matejče

Recommendations have been issued to address the identified issues and urge relevant institutions and responsible persons to take necessary actions.