Montenegro’s State Audit Institution (SAI) gave the Municipality of Ulcinj a qualified opinion on its audit of the 2025 final budget accounts and a negative opinion on its compliance audit, issuing 33 recommendations for corrective action. The findings cover revenue collection, public-sector employment, asset records and compliance with laws governing municipal operations, with the municipality facing deadlines to report how it will respond.
The SAI said the financial audit was qualified because the auditor could not obtain sufficient appropriate evidence. Possible effects of undetected misstatements could be material but not pervasive, the report said. The audit panel was led by Milan Popović, a member of the SAI Senate, with Senate President Siniša Čađenović also serving on the panel.
For the compliance audit, the SAI found that Ulcinj had not aligned its activities with all applicable laws and other regulations. The panel said the identified non-compliance was material and pervasive, both individually and in aggregate, leading it to issue a negative opinion on regularity.
Revenue collection and debt records
The report identified gaps in records of borrowing by entities founded by the municipality. The budget borrowing report did not include data from Komunalne djelatnosti DOO, the Public Enterprise Center for Culture, the Wildlife Breeding and Protection Company and the Ulcinj Development and Construction Agency. During the response process, the municipality submitted a borrowing report for Komunalne djelatnosti Ulcinj dated 02.09.2026, showing 25,016.93 euros of debt at 31 December 2025; that amount was not added to the budget borrowing report.
Property tax arrears for legal entities and individuals, covering buildings and land, stood at 18,064,573.45 euros at 31 December 2025. Assessments for the year amounted to 5,883,698.47 euros, while collections totalled 3,717,756.22 euros. The SAI reported that the outstanding debt had increased by 2,165,942.26 euros from 31 December 2024.
Unpaid charges for the municipal servicing of construction land were 2,726,596.73 euros at the end of 2024. The municipality assessed 3,297,234.09 euros in charges during 2025 and collected 2,518,167.78 euros; total receivables reached 3,505,663.04 euros at year-end, 779,066.31 euros higher than at 31 December 2024.
Across the two revenue categories, the SAI said collections fell short by a combined 2,945,009.00 euros, a pattern it reported had recurred from year to year. The municipality keeps records of assessments and collections across four municipal secretariats, according to the report.
The SAI recommended a receivables collection strategy, followed by an action plan setting out measures, responsible parties and deadlines. It also called for periodic reporting to the Municipal Assembly on results. Under the recommendations, Ulcinj should classify receivables, assess their collectability and write off debts where the limitation period has expired or enforcement was not started on time.
It also recommended closer monitoring and coordination among local government bodies that assess taxpayers and collect local public revenues. The recommendations refer to compliance with the Tax Administration Law and are intended to improve the municipality’s records and collection of all local revenues.
Employment, assets and follow-up deadlines
The audit found that Ulcinj kept heads of municipal bodies and services in acting positions for more than six months, contrary to Article 124 of the Local Self-Government Law then in force. It also appointed people to acting positions who did not meet the requirements for the jobs. During 2025, the municipality signed 36 service contracts for work included in its internal organisation and job classification act. The SAI recommended control procedures to prevent similar irregularities in such contracts.
Asset inventories were not prepared in line with the State Property Law, the regulation on records and inventories of movable and immovable state property, and the relevant inventory guidance. Because of these shortcomings, information was not sent to the competent state bodies on time with a position as at 31 December of the year under review.
The inventory reports also omitted the acquisition, written-off and current values of assets, cash and bank-account balances, and the position of receivables and liabilities at year-end. The SAI’s wider findings cited non-compliance with laws on local government, local government finance, public-sector internal controls and audit, protection and rescue, municipal services, wages, labour, state property and public procurement.
Other cited breaches involved rules on office administration, taxpayer registration, tax accounting, financial reporting by local governments, simple procurement, public revenue payments, local treasury operations and state-property inventories, as well as Ulcinj’s tax debt rescheduling agreement. The SAI sent the final report to the Municipal Assembly of Ulcinj, the Ministry of Finance and the Ministry of Public Administration, which supervise local government, and to the Parliamentary Committee for Economy, Finance and Budget and the Union of Municipalities of Montenegro.
Ulcinj must submit an action plan for implementing the recommendations by 03 December 2026 and report on steps taken by 03 May 2027. The report was issued following the audit of the municipality’s 2025 final budget accounts.
