Montenegro’s State Audit Institution has identified €21.57 million in outstanding property taxes and municipal development charges in Ulcinj, alongside significant deficiencies in public revenue collection, financial reporting, procurement and municipal administration.
The audit of the municipality’s financial statements found €18.06 million in unpaid property taxes and €3.51 million in outstanding development-related charges at the end of the reporting period. Combined liabilities increased by approximately €2.95 million during the year.
The State Audit Institution (DRI) issued a qualified opinion on Ulcinj’s financial statements and an adverse opinion on compliance with applicable laws and regulations. Auditors reported that they could not obtain sufficient appropriate evidence to fully support the financial statements, while the identified compliance deficiencies were material and pervasive.
Property Tax and Development Charge Collection Shortfalls
Property taxes represented the largest category of outstanding municipal revenue. Ulcinj assessed €5.88 million in property taxes but collected only €3.72 million. Consequently, outstanding liabilities increased by approximately €2.17 million compared with the previous year, reaching €18.06 million.
Collection of municipal development charges also remained below assessed amounts. The municipality assessed €3.30 million in charges related to infrastructure provision for construction land and collected €2.52 million. Unpaid development charges increased by approximately €779,000, bringing total outstanding receivables in this category to €3.51 million.
These charges are directly linked to construction and real estate activity, representing municipal revenue intended to support infrastructure serving development projects. Collection shortfalls can limit the funds available for roads, utilities, wastewater networks and other services required by residential and tourism investments. The outstanding €21.57 million should not automatically be treated as immediately recoverable revenue, as some claims may be disputed, difficult to collect or subject to statutory limitation periods.
Auditors Identify Weaknesses in Municipal Financial Management
The audit also identified deficiencies in financial reporting by municipal enterprises, personnel appointments, service contracts, public procurement and public asset registers. Some municipal enterprises had failed to provide complete information on their liabilities for inclusion in consolidated municipal financial statements.
Auditors also found cases in which acting officials remained in their positions beyond statutory limits. In addition, service contracts had been used for activities already covered by established permanent organisational structures. Weaknesses in asset accounting meant that the municipality did not maintain sufficiently complete information on the acquisition cost, depreciation and current value of certain public assets. These shortcomings affected the completeness of municipal financial reporting and the information available for public investment planning.
DRI Issues 33 Corrective Recommendations
The State Audit Institution issued 33 recommendations requiring Ulcinj to address the identified deficiencies. Among the proposed measures is a formal strategy for collecting outstanding receivables, supported by an action plan identifying responsible institutions, implementation deadlines and regular reporting to the municipal assembly.
Auditors also recommended classifying outstanding claims according to their recoverability and establishing appropriate accounting treatment for receivables that can no longer legally be enforced. Ulcinj is required to submit an implementation plan, followed by a report on the corrective measures taken.
