STATE AUDIT OFFICE
- Press Release -
Skopje, 25.12.2025
The Fund for Innovation and Technology Development has not established a centralized database (software) for monitoring financial support instruments
The 2024 audit determined that the Fund for Innovation and Technology Development (FITD) has not established a mechanism for systematic and comprehensive monitoring of the results achieved by supported projects after their completion. Also, it does not carry out in-depth business and financial analyses of such projects. As of the end of the reporting period, outstanding liabilities amounted to 13,863,000 euros
The Fund for Innovation and Technology Development was established in December 2013 with the aim of encouraging innovation by providing additional funding sources for innovation, in order to build a competitive knowledge-based economy.
The financial and compliance audit of the Fund for Innovation and Technological Development for 2024 by the State Audit Office revealed weaknesses and shortcomings, emphasizing the need to improve financial management, strengthen controls, and ensure full compliance with legal regulations.
Shortcomings, irregularities, and non-compliances were identified and due to their significance, an adverse opinion was expressed on the fairness and objectivity of the financial statements for 2024 and on compliance with legal regulations, guidelines, and established policies for the core budget account (603), as well as a qualified opinion on the fairness and objectivity of the financial statements for 2024 for the self-financing revenue budget account (787).
The audit identified weaknesses in the recording of FITD liabilities, as some liabilities were not recorded in a timely or complete manner in the accounting records. While liabilities to domestic suppliers were reported at 853,964,000 denars (approximately 13,863,000 euros) as of 31 December 2024, the review of submitted documentation and the analytical procedures performed revealed additional unrecorded liabilities arising from various sources, including service contracts, project evaluations, and remuneration for governing bodies, totaling 9,369,000 denars (approximately 152,094 euros).
An inventory was conducted only for liabilities to beneficiaries of financial support for which a quarterly or final monitoring report had been approved, rather than for all recorded liabilities to beneficiaries. Consequently, the balance of short-term liabilities to suppliers determined by the inventory commission differs from the balance of liabilities recorded in the accounting records as of 31 December 2024 by 488,343,000 denars.
These practices, combined with the absence of a practice for confirming balances with creditors at the end of the reporting period, are not in compliance with the Law on Accountancy of the Budget and the Budget Beneficiaries. They affect the fairness, objectivity, and completeness of the financial statements, as well as the accuracy of budget planning for the following period.
The audit found that the Annual Work Program of FITD for 2024, except for measures and activities under Pillar 1 – Financial Support to the Private Sector, does not include financial indicators for total funds or for funds by individual measures, instruments, and activities. Since projects under Pillar 1 are generally implemented over periods longer than one year, the Program does not provide a realistic view of the financial resources required in 2024, nor does it specify which portion of the funds is intended for the current year and which portion is allocated for settling liabilities carried over from previous years.
Additionally, the adopted Medium-Term Work Program for 2025–2027 does not include a schedule of calls, projections for payments to beneficiaries, nor financial indicators by instruments and by year. This lack of information affects operational transparency and prevents an assessment of whether the management of budget funds complies with the budgetary principles established in the Law on Budgets.
The annual financial statements and external audit reports have not been approved by the Board of Directors and the Government, and the Annual Report on the granted state aid has not been prepared or submitted to the Commission for the Protection of Competition.
Furthermore, FITD has not established a centralized database or software system for tracking the granted financial support, which would allow monitoring of the implementation of individual financial support instruments. In addition, no measures have been taken for systematic and comprehensive monitoring of the results achieved by supported projects after their completion, nor has an in-depth business or financial analysis been conducted.
In the implementation of public calls, it was found that some employees and individuals engaged under service contracts, as well as members of the Management Board, do not always sign declarations of conflict of interest. Furthermore, the Director of FITD has not made any declarations regarding conflicts of interest regarding the public calls that were subject to audit.
Regarding the Register of Experts for project evaluation, it was found that it is not maintained in accordance with the requirements of secondary legislation, and that no actions have been taken to assess and categorize registered experts into appropriate sections for selection on a rotation basis.
For the calls conducted in 2024, the auditors were not provided with information regarding the method used to select experts for project evaluation. In the absence of a properly established Register, the audit found that the selection of experts is not carried out in accordance with the requirements of the secondary legislation, thereby creating the risk of subjective decision-making in the selection process.
In the implementation of financial support agreements, a review of a selected sample of 55 projects identified non-compliance with deadlines for the submission of quarterly progress reports by beneficiaries, as well as delays in the implementation of activities. These delays are also linked to FITD’s failure to disburse funds to beneficiaries following the approval of quarterly reports.
Additionally, delays were identified in the approval of quarterly and final reports on implemented activities. Between December 2024 and June 2025, no monitoring was conducted due to delays in the public procurement procedure for project management (monitoring) services. These delays resulted in postponed payments to beneficiaries and a standstill in project implementation.
Based on data provided by FITD, it was determined that, as of 31 December 2024, FITD had outstanding liabilities for approved reports to beneficiaries totaling 349,378,000 denars. Additionally, the unpaid amount of retained funds from the total project budget as of the same date amounted to 14,070,000 denars. One of the reasons for the outstanding liabilities to beneficiaries is an amendment to the FITD budget, which resulted in a reduction of funds in the subsidies and transfers account by 310,000,000 denars, or 32%.
During 2024, FITD conducted three public calls in line with the approved Annual Work Program for the following instruments: co-financed grants for technological development to accelerate economic growth, co-financed grants for newly established companies (start-ups and spin-offs), and co-financed grants for the commercialization of innovations.
Pursuant to a Government Conclusion dated 28 June 2024, recommending the suspension of all ongoing or active calls, the Management Board of FITD adopted a decision to suspend all activities related to public calls. Until the auditors’ final meeting with the responsible person at FITD, no information had been provided regarding any recommendations or decisions by the Management Board or the Government concerning these public calls that could affect the further operations of FITD.
The audit identified the ownership and management structure of beneficiaries of financial support. Specifically, an analysis of the FITD-funded project portfolio revealed that the same individuals appear as managers and/or owners of multiple legal entities receiving funds from FITD, often within the same or overlapping time periods. These individuals apply for and receive funds for different projects through different companies, creating the potential for concurrent funding of projects under calls that do not restrict such practices.
Although there is no legal prohibition or explicit restriction preventing one individual from participating as a manager/owner in multiple applications, we note that good practices require an equitable distribution of opportunities, a reduction in the concentration of funds among related parties, and the assurance of effective implementation of each individual project. In addition, costs accepted for co-financing must be realistic, necessary, and directly related to the project, and must be based on market prices and arm’s-length transactions. A review of the relevant regulations found that only the instrument for the commercialization of innovations includes a regulatory clause prohibiting applications where the applicant already has an active project.
Within the current legal framework, there is no obligation for financing to be thematically or sectorally restricted, nor are there criteria for priority financing. An analysis of the FITD beneficiary portfolio showed that the largest share of projects receiving financial support is in the field of information technology (26.91%), followed by engineering technology (16.36%).
The total value of financial support in these two fields amounts 40,225,079 euros, representing 46.78% of the total funds allocated by FITD.
The audit identified irregularities in the recording of receivables from royalties (fees FITD receives from the implementation of innovation projects or technology transfer) and operating profit, as well as in the manner in which records of beneficiaries’ obligations after project completion are maintained and royalties are collected.
Under the “Commercialization of Innovations” instrument, despite the contractual obligation for beneficiaries to pay 5% of the annual revenue generated from the sale of products/services resulting from the project, FITD has no mechanism to verify the amount of project-related revenue. This is because such revenue is often not recorded separately by beneficiaries, nor is it paid into a dedicated account.
The audit reviewed documentation for a selected sample of ten completed projects supported by FITD to assess compliance with obligations for repayment of the financial support and the achievement of project objectives.
Based on the checks conducted, it was determined that only three projects generate revenue, while the remaining seven do not generate any revenue from their implemented activities. The total co-financing provided by FITD for the sampled projects amounts to 1,681,660 euros, of which 387,804 euros was allocated to revenue-generating projects and 1,293,856 euros to projects that do not generate revenue.
The audit recommends that FITD establish a mechanism to monitor the impact of granted funds and to collect revenues after project completion, in order to ensure efficient use of public funds and maximize the benefits derived from the projects.
For the identified shortcomings, the audit issued recommendations to address the shortcomings, and the competent authorities are obliged to take appropriate measures to ensure their full implementation.
With the adoption of the Law on Innovation Activity, Scientific and Technological Development, and Entrepreneurship on 29 July 2025, the Agency for Innovation, Scientific and Technological Development, and Entrepreneurship was established as the legal successor to the Agency for Entrepreneurship and the Fund for Innovation and Technology Development, thereby bringing the existence of the Fund for Innovation and Technology Development to an end.
Press contact:
Albiona Mustafa Muhaxhiri +389 72228 203 [email protected]
Mijalche Durgutov +389 70 358 486 [email protected]
Martin Duvnjak +389 75 268 517 [email protected]