BGN 1,5 billion incorrect reporting corrected during financial audits of municipalities, carried out by the National Audit Office in 2022

Representatives of the National Audit Office (NAO) participated in the commemorative 25th national meeting of financiers from municipalities in the Republic of Bulgaria, organized by the National Association of Municipalities in the Republic of Bulgaria /NAMRB/. The National Audit Office takes part in in these meetings, as municipalities represent the largest group of audited organizations in annual financial audits. Auditing municipalities allows the NAO to contribute to better reporting of public funds allocated for a large number of users and to better inform the citizens about their spending.

In the specialized panel, intended for accountants and finance directors from municipalities, the adviser to the office of the NAO vice-president Teodora Bakardzhieva-Lyutzkanova and the director of "Audit Activity Development" directorate at the NAO Toma Donchev presented data from the report on the outcomes of financial audits carried out in 2022.

The value added of financial audits is visible, since during the audit process in 2022, incorrect reporting in the financial statements of municipalities for 2021 in the amount of over BGN 1.5 billion was corrected. Thus, 66 negative conclusions for financial statements of municipalities were prevented.

The BNAO experts also presented the most common reporting weaknesses identified during financial audits in order to avoid their repetition. The challenges in the implementation of the project of the Ministry of Finance for the introduction of an Integrated Financial Information System for Municipalities were also discussed.

The second panel with the participation of the BNAO representatives was titled: "Do control activities achieve the expected quality ". It was reported that internal control, internal audit, external audit and the Public Financial Inspection Agency (PFIA) are part of a common control system that should act in concert. Examples were given of the good cooperation between NAO and PFIA, such as the joint initiative to increase the collection of encashment acts issued to municipal officials and mayors by PFIA.

The message to municipal accountants was further extended: through the Annual Activity Report of the NAO, which contains the most common weaknesses identified in compliance audits carried out in municipalities. The financiers are given the opportunity to analyze the risk management process and introduce proper control procedures.