STATE AUDIT OFFICE
- Press Release -
Skopje 02.12.2025
Municipality of Saraj with unrecorded property, infrastructure facilities without technical approval, and an unlawful procedure for awarding a 25-year lease of the Sports and Recreation Facility and swimming pool
The Municipality of Saraj faces weaknesses in budgeting, accounting, and property valuation; inappropriate subsidization of public enterprises; an unlawfully conducted procedure for awarding a 25-year lease of the Sports and Recreation Facility and swimming pool in Saraj; and irregularities in public procurement. These procurement irregularities include deviations from the defined procurement scope, work carried out beyond technical specifications, and expenditures exceeding financial thresholds.
The State Audit Office conducted an audit of the financial statements along with a compliance audit of the Municipality of Saraj for 2024.
The audit identified shortcomings, irregularities, and non-compliance issues, which resulted in an adverse opinion on the fairness and accuracy of the 2024 financial statements and on the compliance of the core budget accounts 630 and 637 with applicable legal regulations.
The Municipality has not prepared or submitted a draft plan for development programs to the Council. The adopted budget does not include programs for public sanitation, street lighting, maintenance of green spaces, subsidization of public enterprises, protection and rescue services, and gender equality.
An annual report on the use of reserve funds has not been prepared. Additionally, the financial statements do not include a statement, signed by the legal representative, confirming the accuracy and truthfulness of the data presented in the annual accounts, along with the required explanations.
Due to unsubmitted payment requests based on treasury calculations (assignment agreements), revenues and expenditures were understated by 16,992,000 denars, or 276,293 euros.
Receivables from the utility fee for the use of space and the placement of display windows for the display of goods in front of business premises, fees for the legalization of illegally constructed buildings, and charges for the development of construction land have not been recorded.
Regarding property tax and the utility fee for businesses, receivables were understated by 24,765,000 denars (402,683 euros). No aging analysis or assessment of collectability was performed, and the inventory of assets and liabilities was not conducted, nor was the accounting reconciled with actual records.
Due to the lack of documentation for the completed technical approval, the infrastructure facilities (primary and secondary sewer networks, wastewater drainage and treatment systems, water supply systems, and the construction and reconstruction of local streets and roads), with a value of 128,992,000 denars (2,097,431 euros), are being used but have not been officially commissioned. They are recorded as ongoing investments, and depreciation has not been calculated.
Reservoir in the village of Kopanica Buried pipeline in the village of Rašče
Part of the Municipality’s real estate has not been valued or recorded in the accounting records, and capital investments for 2024, amounting to 144,910,000 denars (2,356,260 euros), have not been recorded as construction in progress.
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In the procedures for determining the legal status of illegally constructed buildings, legally prescribed deadlines have not been observed, and no report on the use of funds for this purpose has been prepared or submitted to the competent ministry.
Subsidies totaling 30,000,000 denars (487,805 euros) were paid to the public enterprises PUE ‘Saraj’ and PE ‘Akcios’ without the adoption of a subsidy program and without submitted invoices and supporting documentation for the activities carried out under the annual operational plan.
The Municipality paid 5,745,000 denars (93,415 euros) for engaging individuals under service contracts for regular administrative work continuously over a period of more than two years, and 1,080,000 denars (17,560 euros) for legal services based on a monthly lump-sum contract, which does not comply with the standard fee schedule. Moreover, payments amounting to 4,412,000 denars (71,740 euros) were made to young talented students, citizen associations, foundations, sports clubs, individuals, and institutions performing activities of public interest, without conducting an evaluation or having criteria regulations for the allocation of funds.
Swimming pool Saraj
The Sports and Recreation Facility and swimming pool in Saraj have been leased for a period of 25 years without following the legally prescribed procedure for long-term leases. Any contract for the use or lease of real estate exceeding 10 years is considered a procedure for permanent disposal or long-term lease. To be legally valid, such a lease must follow a special procedure, including obtaining the necessary approvals and additional authorizations.
Weaknesses were also identified in public procurement, relating to inadequately defined contract scope, expansion of contract scope, technical specifications, and exceeding financial thresholds.
Regarding the contract ‘Construction, Reconstruction, and Paving of Local Streets,’ valued at 25,488,000 denars including VAT, the contract scope, ‘construction and reconstruction of local streets,’ was inadequately specified. In practice, the work carried out consisted of maintenance and paving of service streets (alleys) in rural settlements without an established street system. Furthermore, a contract amendment introduced a new item, ‘laying of paving slabs,’ which was not included in the original technical specifications.
Street in the village of Bukovikj Street in the village of Lubin
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Activities for the project ‘Winter Maintenance of Local Roads,’ valued at 4,720,000 denars including VAT, were carried out prior to the contract being signed. The requirements and specifications for the service were not defined, and no person was assigned to supervise the machinery, which is necessary to ensure that payments are made based on verified reports of the work performed.
The Municipality carried out procurements exceeding the financial threshold, with a total value of 27,214 euros, which represents an overrun of 15,214 euros above the legal limit.
Recommendations have been made to address the identified issues and urge relevant institutions and responsible persons to take necessary actions.
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]