The Court of Auditors has issued a negative opinion on the annual financial report of the Municipality of Dryanovo for 2024 following an audit. The municipality’s financial report does not provide an accurate and complete picture of the municipality’s financial condition and the results of its activities in 2024, according to the audit report.
The reason for this is a number of discrepancies, described in detail in the section “Basis for expressing an adverse opinion.” The auditors also point out that the report does not meet the requirements of the legal framework for financial reporting in the public sector, laid down in the Public Finance Act.
The audit covers the financial balance sheet as of December 31, 2024, the income and expenditure statements, the cash execution of the budget, the funds from the European Union and the accounts for foreign funds, as well as the accompanying explanations and accounting policy.
A number of unlawful and incorrect accounting operations
The Court of Auditors found serious violations in the reporting of funds and assets in the Municipality of Dryanovo for 2024.
Nearly BGN 3 million has been paid in advance to companies for construction and installation works on 11 infrastructure sites and one building, without any actual work having been started or documented under these contracts by the end of 2024.
Although this money represents an advance payment for future performance, the municipality has reported it as investments already made (“unfinished construction”), which is incorrect and misleading from an accounting point of view. In this way, the municipality inflates its assets by presenting unused advances as funds actually invested in construction, even though construction has not begun.
The costs of building a photovoltaic power plant on the roof of the municipal administration building, worth over BGN 804,000, were incorrectly reported as part of the value of the building, rather than as a separate facility, which is also in violation of accounting standards, according to which such installations must be recorded as separate assets.
Incorrectly reported repairs and investments
Expenses for major repairs of infrastructure facilities in the villages of Chukovo and Dryanovo – a street in the village of Chukovo, water supply network in the same village, and retaining wall on the left bank of the Dryanovska River, totaling BGN 789,000, were reported in incorrect accounting items, which led to a distortion of the data on municipal assets and capital expenditures.
Similar errors were found in a project for the major repair of outdoor artificial street lighting in the municipality of Dryanovo, with a total value of over BGN 680,000. Part of the funds – about BGN 96,000 – were reported as completed activities, but “no documents certifying the performance of the assigned activities were presented for these funds,” the audit report states.
Incorrectly reported state transfers
Funds from the Regional Inspectorate of Environment and Water – Veliko Tarnovo in the amount of BGN 114,000, which are reimbursed deductions for waste disposal and landfilling, and BGN 203,000 from the Social Assistance Agency were also incorrectly reported, which led to a distortion of revenues and transfers in the municipality’s accounts.
According to the Court of Auditors, all these deviations violate the requirements of the Accounting Act and the guidelines of the Ministry of Finance and significantly affect the reliability of the financial report of the Municipality of Dryanovo for 2024.
Non-existent transactions with donor funds
The auditors also found that in 2024, non-existent financial transactions worth BGN 26,520 related to donor funds were recorded in the accounts of the Municipality of Dryanovo. No documents or evidence were presented to prove that these transactions had actually taken place.
According to the Court of Auditors, this is an unjustified double counting of expenses already reported in the previous year (2023), which led to an artificial increase in the value of municipal assets.
Incorrectly reported park improvement project
The Court of Auditors found that expenses for a technical project for the improvement and construction of a park in Dryanovo worth BGN 26,000 were incorrectly reported as an already acquired infrastructure facility, even though construction had not even begun by the end of 2024.
The incorrect reporting was also identified in the 2023 audit, but had not been corrected by the end of 2024, according to the audit report.
Pure accounting errors
is how Krasimir Dimitrov, director of the Local Taxes and Fees, Budget and Finance Directorate at the Municipality of Dryanovo, described the discrepancies found during the regular meeting of the Municipal Council in the town at the end of September this year.
“There are no violations of financial discipline or other circumstances,” Dimitrov said, even though the Court of Auditors did not certify the municipality’s report for 2024.
