The State Audit Office of Latvia has concluded in an audit that the Ogre Regional Government has not ensured transparent and responsible management of public funds.
IN BRIEF
- Deficiencies in the disposal of financial resources and property have been identified while at least 443,000 euros have been spent violating laws and regulations.
- Significant irregularities detected in the area of remuneration, administration of receivables, activities of social enterprises, granting of crisis allowances, financing of associations and activities of agencies.
- There is a lack of transparency, competition among suppliers and high-quality documentation in procurement. Signs of fraud risks have been identified.
- Development planning and monitoring are incomplete. The budget is not clearly linked to the targets of the development program.
- From 2022 to 2025, 79 out of 191 or 41% of development projects have not been implemented.
- The operation and management of municipal agencies is inefficient, for example, outdated agency regulations, no medium-term strategies have been developed, incomplete work plans for the current year, and economically unjustified prices for paid services.
Significant inconsistencies and irregularities have been identified in several aspects of the performance of the Regional Government such as an internal control system, financial management and supervision, strategic planning, implementation of development projects, management of institutions and organization of daily work. The audit has also identified signs of fraud risks in municipal procurement, allocation of funding to associations and foundations. The State Audit Office of Latvia has informed law enforcement and other supervisory authorities about them.
“Order in state administration is not an end in itself but a prerequisite for public trust and effective management of public funds and property. The irregularities identified in the audit in the Ogre Regional Government are not isolated cases, as they characterize systemic problems that manifest themselves in both financial decisions, project implementation and daily resource management. If these basic principles are not respected, both the responsible use of public funds and trust in the activities of the regional government are threatened,” emphasised Mr Oskars Erdmanis, Council Member of the State Audit Office of Latvia.
During the audit, the State Audit Office encountered difficulties repeatedly in receiving complete information and requested documents from the Ogre Regional Government. Some of the documents that the Regional Government used later to object to the audit conclusions were submitted only after the draft audit report was prepared during the complaint review process. The State Audit Office of Latvia draws attention to the fact that timely and complete information is an essential prerequisite for a high-quality auditing process and transparent public management.
The development program in a local or regional government is the main document that determines priorities, planned results and how public funds are allocated to specific goals. The process of development planning, project implementation and monitoring in the Ogre Regional Government is incomplete.
The investment decisions of the regional government are not always based on the needs of population and businesses. In the municipal surveys, infrastructure improvement and business development are indicated as priorities, but only 6% of activities and only 1% of projects are planned in the relevant areas. Although funding for road improvement has been increased by 45%, the fastest increase of almost 24 million euros, or four times is intended for cultural infrastructure. For example, it is planned to invest 23.3 million euros in the development of the Ogre Musical Theatre project in the coming years. At the same time, a significant part of the planned projects is not being implemented at all. From 2022 to September 2025, 79 out of 191 or 41% of projects in the areas of infrastructure and quality of life improvement for 34.7 million euros have not been implemented.
It is not possible to assess the implementation of the development program in the regional government impartially, as 84 out of 126 indicators have neither initial nor target values while 99% of projects in the Investment Plan and 95% of activities in the Action Plan are classified as equally important. Such an approach does not allow for setting priorities and controlling the achievement of results in full.
In addition, the municipal budget is not clearly linked to the goals of the development program, so it is not possible to track how specific expenditure help achieve the planned results. Although the regional government has established a procedure for monitoring the development program formally, it is not implemented in practice because the information submitted by institutions on the implementation of the program is not analysed and used to assess progress. As a result, the administrative burden increases without real added value for the public, there is no transparent information on the implementation of the development program.
Sufficient transparency, competition among suppliers and quality of documentation are not ensured in the procurement of this regional government.
The work of the Procurement Commission is of poor quality with incomplete and erroneous documentation, incorrectly specified tenderers, with whom the contract is to be concluded, and inaccurate calculations. This is also evidenced by the procurements for road transport maintenance and repair, in which the requirements are set without taking into account the actual needs. As a result, some of the municipal structures carried out their road transport maintenance and repairs for 162,000 euros or 54% with other enterprises, who did not win the procurement. This indicates both the inefficient use of municipal budget funds and violations of the provisions of the Public Procurement Law of Latvia.
In turn, short deadlines for the completion of work were set initially in some procurements, which were later extended several times while increasing the contract amounts. In one case, the procurement was announced the day before the first meeting of the Procurement Commission. In these procurements, interconnected companies, including those connected to municipal institutions and officials, were selected as winners.
When allocating funding to associations and foundations, the regional government does not determine specific achievable results and their indicators. Therefore, it is impossible to assess the impact of the funding on the development goals of the reginal government. Although about 1 million euros are allocated for this purpose every year, monitoring of the use of funding is insufficient.
For instance, the report provided for in the contract has not been received for the 195 thousand euros of funding allocated to Association “Ogres Basketbola klubs” (Ogre Basketball Club) in 2022. The regional government did not ensure sufficient control over the spending of the allocated funding, and it is not recoverable because the Association was wound up in February 2026. In addition, the regional government did act to recover the funds before the Association was terminated.
Cases of conflict of interest have also been identified. A Regional Councillor participated in the decision-making process both on the regional government joining Association “Ogres novada attīstībai” (For the Development of Ogre Region) and on the allocation of 5,417 euros in funding to it although the Councillor was the founder of this Association himself. Moreover, supervision of the use of the allocated funding has been entrusted to a municipal official, who is also a member of this Association. The Association did not submit a report on the use of the allocated funding within the specified deadline, and the regional government also did not act to receive this report or recover the funds. The funding was recovered in full only during the audit.
Significant irregularities have been identified in the use of financial resources and property management in municipal agencies whereas tasks and results are not defined clearly, there is a lack of transparency, and the cost of services has long exceeded the set service prices by 16% to 140%.
For example, the revenue of agencies “Ogres komunikācijas” (Ogre Communications) and “Rosme” from the provision of water management services does not cover the costs of providing these services, including the financing necessary for the full renovation of the infrastructure, the amount of which is up to 2.9 million euros or an average of 716,00 euros per year. It prevents them to rely on a high-quality service and its foreseeable costs in the long term.
The audit found that Agency “Zilie kalni” (Blue Hills) spent 34,115 euros for other purposes, which were intended for forest restoration, without the consent of the Regional Council. A single and justified approach to generating revenue and determining fees for the use of resources has not been implemented. Signs of a conflict of interest have also been found in land lease transactions. In one case, an enterprise of an agency employee leased 100 m² of land in the territory of Zilie kalni for 0.02 euros per year without an auction. In another case, an enterprise, whose official had a relationship with a municipal official, was leased 10,000 m² of land for 100 euros per year for 20 years without an auction. At the same time, economic activities not provided for in the contract were carried out in the territory.
Significant deficiencies were also found in the area of remuneration, administration of receivables, operation of the social enterprise and granting of allowances.
In the area of remuneration, both violations and an unequal approach were found because remuneration of 13,996 euros was calculated illegally for performing the duties of a position that had been eliminated while the awarding of bonuses and cash prizes lacked clear criteria and justification for the amount. For instance, only one employee out of 189 employees, whose evaluation results met the conditions for awarding bonuses, was awarded a bonus.
The regional government does not ensure sufficient monitoring and recovery of receivables, as debts are not controlled and not collected in a timely manner. Although the total amount of debts has decreased by 230 thousand euros from 2022 to 2025, bad debts still exceed 1 million euros.
The regional government allocated 24,000 euros for the lifting of motor ship “Līgo” by classifying this payment as a social allowance unreasonably and did not act to recover 22,000 euros of the funds actually spent from the owner.
The goal of Social Enterprise “Ogres Zelta liepa” (Ogre Golden Linden) is of public importance, but the use of at least 133,000 euros of the financial resources of regional government to ensure the operation of the enterprise has not been economical. The reason is not the status of a social enterprise, but the problems identified in management and financial discipline, including tax debt of 10,000 euros and inappropriate use of funding. That means that a significant portion of the 40,000 euros allocated for digital solutions and equipment was spent to cover daily expenses.
“Responsible governance means that responsibilities and decision-making competence are defined clearly throughout the process. Municipal institutions and officials must know who drafts and justifies the choice, who makes the decision, who ensures its implementation, who monitors the use of financial resources and property, and who evaluates the achievements. Such clarity is necessary both within a local or regional government itself and for the public so that the decision-making and implementation are transparent. These aspects of governance must be improved in the Ogre Regional Government,” stressed Mr Oskars Erdmanis, Council Member of the State Audit Office of Latvia.
Recommendations of the State Audit Office of Latvia #PēcRevīzijas
Three recommendations have been made to the Ogre Regional Government. Their implementation by 2031 will strengthen the quality and transparency of governance significantly. The regional government shall plan and monitor the Development Program more clearly, improve the organisation of municipal agencies and services, improve procurement control, and ensure equal and reasonable remuneration in municipal institutions.
Additional reading: audit summary report, infographics.
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 Organisation 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.