The State Audit Office of Latvia has conducted an assessment of how the function assigned to it, to decide on the recovery of losses caused by unlawful conduct, has worked over the past five years. Such an ex post evaluation (follow-up impact assessment) was prepared to determine whether the legal framework was working as intended and how it could be improved. The results of the evaluation were presented to the Saeima Public Expenditure and Audit Committee on 26 November 2025.
“This ex-post evaluation is not just a retrospective analysis because it offers specific proposals for improving the regulation and practice. Five years of application practice confirm that this regulation serves its initially set goal as a whole, that is, to facilitate accountability in state administration and improve the effectiveness of loss recovery. At the same time, the evaluation highlights several significant shortcomings that hinder the effective application of the regulation. The challenges are mainly related to the mutual inconsistency of legal norms, different interpretations in practice and incompletely developed criteria for assessing the responsibility of officials. Our goal is not only to recover illegally spent funds but to strengthen the culture of responsibility in state administration. The public expects rightly that state administration will act responsibly and effectively with the resources entrusted to it and that the legal framework will be a real instrument for recovering losses,” emphasised Auditor General Edgars Korčagins.
Since 1 August 2019, when amendments to the State Audit Office Law of Latvia took effect by granting the State Audit Office of Latvia the right to make decisions on the recovery of losses, 26 loss recovery proceedings have been initiated for losses caused as a result of 11 illegal actions identified in audits totalling to 501,599 euros.
Most of the cases are related to unjustified bonuses, additional payments, severance pay and inappropriately awarded payments.
Of the above-mentioned loss recovery proceedings, 20 have been completed in full and 1 is completed in part. Of these, losses totalling to 109,702.91 euros were recovered in full in nine proceedings and in part in 1 proceedings.* In its turn, the Council of the State Audit Office of Latvia decided not to recover losses in full in eight proceedings and in respect of part of the losses in the amount of 101,069 euros in one proceedings because it was established while assessing liability that they were not caused by gross negligence or malicious intent. In full in another proceeding and in respect of part of the losses in the amount of 22,793 euros in two proceedings, the Council of the State Audit Office of Latvia decided not to recover losses because new circumstances were identified.
Currently, 6 loss recovery proceedings are ongoing (five proceedings in full and one proceedings in part) for a total of 305,842 euros. In three of them, the Council of the State Audit Office of Latvia has decided to postpone the recovery of losses because criminal proceedings are underway, which were initiated after the information provided by the State Audit Office of Latvia about the illegal actions detected during the audit. In one case, the audited entity has started the recovery of losses itself, but the assessment of the liability of officials is still ongoing in two proceedings.
In another 20 cases, losses totalling to more than 48,000 euros were indemnified voluntarily already during the audit, without initiating the loss recovery proceedings.
The report puts forward 16 proposals for improving the regulation by covering both the improvement of procedural order and substantive aspects. These include proposals for strengthening the principle of subsidiarity, clarifying the limitation period and the burden of proof, introducing the reversed burden of proof, as well as developing uniform practices and guidelines for determining the degrees of fault. These recommendations are aimed at ensuring a legal, effective and transparent process for recovering losses by strengthening the accountability of state institutions and public trust in state administration.
To ensure that the proposals put forward in the ex post evaluation turn into concrete improvements, the State Audit Office of Latvia has developed an action roadmap. It provides for three main stages, in which it is planned to advance the improvement of the recovery regulation step by step. The first step is to present the report to the Saeima to stimulate a political and public discussion on the necessary improvements. The next stage is planned for early 2026, when meetings will be organized with representatives of ministries, legal experts, policymakers and non-governmental organizations to agree on solutions for harmonising the legal framework and improving practice. In its turn, in the final stage in mid-2026, the State Audit Office of Latvia, in cooperation with the Ministries of Justice and Finance, as well as the Corruption Prevention and Combating Bureau, will prepare specific draft amendments to the laws. In this way, one intends to safeguard that the proposed improvements are implemented in practice by strengthening the rule of law, responsible handling with public funds and public trust in state administration.
Additional reading: 🔗️ Ex post Evaluation Report of the Function of the State Audit Office of Latvia to Decide on the Recovery of Losses Caused by Unlawful Conduct.
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.