While conducting audit procedures at the Rēzekne Technical School regarding settlements of accounts with service providers, the State Audit Office of Latvia has identified possible fraudulent activities, intentional falsification of payment documents with the aim of transferring funds to third parties. At least 54,000 euros might have been embezzled from the budget of the Technical School. Such actions were possible because the name or first name and surname of the recipient of the payment were not checked when making transfers for compliance with the specified account number (IBAN) allowing funds to be transferred to persons who were not entitled to them.
“Auditing becomes increasingly accurate and faster because we use data analytics tools and automated verification algorithms during our work currently, which allow us to notice suspicious transactions in a timely manner. It is exactly this approach that allowed us to discover potential violations at the Rēzekne Technical School, which was included in the financial audit sample on the accuracy of the consolidated annual financial statement of the Republic of Latvia for 2025. Since potential irregularities have already been identified, we have drafted an interim audit report without waiting for the conclusion of the audit. The Ministry of Education and Science, the State Police and the Prosecutor’s Office of Latvia have been informed of the potential fraud. Criminal proceedings have been initiated,” revealed Ms Ilze Bādere, Council Member of the State Audit Office of Latvia.
The audit discovered that payments were made from the accounts of the Rēzekne Technical School to three different accounts by indicating the same recipient. For example, payments for the services provided by the company in question were made not only to the company account specified in the contract, but also to three other accounts, the ownership of which is unknown to the State Audit Office of Latvia.
Several cases were also found when the same invoice was paid twice, once by transferring money to the accounts specified in the invoices and service contracts, and the second time to another account, the ownership of which is unknown to the State Audit Office of Latvia. For instance, the invoice of the company in question in the amount of 355 euros was first paid to the account specified in the contract, but the same payment was made again to another account after 10 days, the ownership of which is unknown to the State Audit Office of Latvia. In total, from 2019 to 2025, almost 54,000 euros were transferred to these three accounts.
Inconsistencies have also been recorded between the documents submitted by the Rēzekne Technical School and the data retrieved by the State Audit Office of Latvia from the State Treasury regarding the payments made. In the opinion of the State Audit Office, it indicates attempts to conceal the true information.
After the State Audit Office of Latvia requested information and explanations regarding the transactions made, corrections were made to the accounting system of the Rēzekne Technical School by changing the account numbers of the service providers.
Why were such payments possible?
The Rēzekne Technical School prepared and approved payment orders in which the account number (IBAN) did not match the name of recipient. When receiving such a payment, the account number (IBAN) was decisive in the recipient’s bank. Therefore, in a situation where these parameters did not match, the funds were received by the specified account holder.
On 9 October 2025, a European Union regulation has taken effect, which obliges payment service providers to check the compliance of the account number of recipient (IBAN) and the name of recipient before making a payment. This will reduce the risk of similar fraud cases significantly.
Additional reading: interim audit report.
About the State Audit Office of Latvia
The State Audit Office of the Republic of Latvia is an independent, collegial supreme audit institution. The purpose of its activity is to find out whether the actions with the financial means and property of a public entity are legal, correct, useful and in line with public interests, as well as to provide recommendations for the elimination of discovered irregularities. The State Audit Office conducts audits in accordance with International Standards of Supreme Audit Institutions of the International Organization of Supreme Audit Institutions INTOSAI (ISSAI), whose recognition in Latvia is determined by the Auditor General. Upon discovering deficiencies, the State Audit Office of Latvia provides recommendations for their elimination, but it informs law enforcement authorities about potential infringements of the law.
Additional information
Ms Gunta Krevica
Head of Communication Division
Ph. 23282332 | E-mail: Gunta.Krevica@lrvk.gov.lv