State Audit: Rēzekne has millions of unreported liabilities

The financially distressed city of Rezekne, whose mayor Aleksandrs Bartaševics has been dismissed due to budget problems, has millions of euros of unreported financial liabilities, State auditor Edgars Korčagins told Latvian Television's morning newscast on December 22.

Korčagins said that the audit revealed previously unreported liabilities as well as significant discrepancies with the law's requirements on how the budget is made and controlled.

The auditor acknowledged that in a situation where the Council does not have an orderly process for how the budget is formed, “we can clearly talk about the responsibility of the management of the city council”, although there are more reasons for the situation in which Rēzekne found itself.

Korčagins noted that the assessment of the budget is the responsibility of sworn auditors attached to the City Council, and the State Audit Office will draw the attention of both the Association of Sworn Auditors and the Ministry of Finance to their failure to observe such obligations.

What is worrying at the moment, however, is that the city does not have a sworn auditor at this point because the previous auditor has terminated his contractual obligations, and the municipality has so far not found a new auditor, said Korčagins.

One of the recommendations of the State Audit Office to the City Council is to prevent decentralized accounting, which is currently scattered across nine different institutions.

Meanwhile,  Saeima State Administration and Local Government Committee Chairman Oļegs Burovs said in a conversation with Latvian Radio that the budget planning in Rēzekne was not successful, the commitments were large, the consequences of which are debts and a large budget deficit, “if one can say so – Rēzekne City is facing bankruptcy, if there is no assistance from the state”.

Rēzekne City Council is in a difficult financial situation – it lacks several million euros to cover its expenses this year. It prepared an action plan to improve the financial situation in the long term, but after evaluating it, the Ministry of Finance did not have confidence that the local government would be able to fulfill its obligations towards creditors.

Following this, Mayor Aleksandrs Bartaševičs was dismissed. In the responsible ministry's assessment, the Mayor of Rēzekne, being responsible for the organization and management of the local government budget implementation process, deliberately did not ensure the inclusion of all necessary funding in it. Later, several Rēzekne City Council meetings did not take place due to Bartaševičs' party members boycotting them, but at the end of November meetings continued.

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