National Audit Office reveals large-scale financial violations in Shumen Municipality: discrepancies worth millions of levs

The National Audit Office presented its final audit report on the financial statements of Shumen Municipality for 2025, which reveals a series of material violations, accounting errors, and weaknesses in the control system. Due to the identified discrepancies, the auditors are issuing a "qualified opinion," indicating that while the report is reliable at its core, it contains significant irregularities.

Issues with Properties and Ownership

One of the most severe violations relates to the valuation of municipal assets. Auditors found that 284 land properties with a total value of over 6 million BGN were reported at tax valuation instead of fair market value, as required by standards. Upon checking specific transactions, a drastic gap was discovered: 13 sold properties were valued at just 51,295 BGN, while their actual market value exceeds 561,500 BGN.

In addition to incorrect valuations, the municipality holds 37 properties recorded as owned without the necessary legal documents for their acquisition.

Chaos in Expenses and Infrastructure Projects

The report also highlights large-scale corrections of misreported expenses, totaling nearly 10 million BGN. These include projects for:

• The construction of an indoor swimming pool;
• The reconstruction of the Nadarevo – Osmar and Drumevo – Konyovets roads;
• Modernization of street lighting;
• Repairs to facilities such as the "Knyaz Boris I" school and the sports hall in the village of Drumevo.

Additional discrepancies were found in reporting the municipality's share in "Industrial Park Shumen" AD (over 1.2 million BGN), as well as in expenses for social services.

Lack of Control

The National Audit Office also notes institutional weakness – Shumen Municipality has not established the mandatory audit committee, which undermines financial discipline. According to the auditors, the lack of a consistent asset valuation model creates a high risk of inaccuracies and affects the reliability of the municipality's entire financial reporting.