EU Investment Audit

The National Audit Office presents its 2025 Annual Activity Report, which reviews the most important audit findings, their impact and the systemic risks that have emerged. The annual review shows that audit recommendations contribute significantly to the sustainability of public finances, national security and the improvement of public services, but the changes envisaged on this basis are being implemented too slowly.
  
“The results of our annual activities and the ongoing monitoring of audit recommendations allow us to conclude that we are facing a stagnation of change in the country. Although we have achieved a high implementation rate of 87% for audit recommendations, the remaining part of the essential changes is getting stuck in a maze of inefficient processes. Chronic delays are becoming a vice in the governance of our state – when the best ideas get stuck in procedures, we lose not only time but also people's trust in the state. Our accumulated experience shows that we can only resolve this systemic problem through strong leadership, digitalisation, smoother law-making and public procurement,” says Auditor General Irena Segalovičienė.
  
Greater scope of activities and a flexible response to current issues
  
In 2025, the National Audit Office carried out 25 audits and assessments, submitted 6 opinions on fiscal discipline monitoring and 2 reports on the monitoring of the implementation of recommendations.
  
Two additional audits were carried out at the request of the Seimas – on the activities of Lithuanian National Radio and Television and on the “Curonian Nord” project, the first offshore wind farm in the Baltic Sea. These altered the planned scope of work, but the institution maintained its strategic priorities and independence.
  
In 2025, the National Audit Office responded to current issues by carrying out an assessment of the decision to add an extra 10 points to the results of state matriculation examinations and an overview of public sector staff salaries. Such independent and timely assessments help decision-makers to see the potential consequences and ensure greater transparency and soundness in decision-making.
  
Progress is evident, but one in four recommendations is delayed
  
Monitoring of the implementation of recommendations shows that positive changes are taking place in the public sector – in 2025, 87% of the National Audit Office’s recommendations were implemented and the majority (61 out of 66) of the planned change indicators were achieved. Some of the measures have already brought tangible benefits: access to pre-school education for children at social risk is being increased – the number of children growing up in families at social risk and receiving compulsory pre-school education has risen from 66 (in 2019) to 793 (in 2025), a portion of previously “stalled” one-off SODRA payments (EUR 162,000) has been identified and is reaching residents; conditions have been created to organise the work of the courts more efficiently and to provide notarial services remotely; and data-driven management of reimbursable medicines is being strengthened.
  
However, the implementation of some changes is still being delayed by protracted legislative, public procurement and information system processes, as well as the fact that responsibilities are not always clearly allocated between institutions. As a result, the implementation of almost one in four recommendations is delayed, and a third of the planned changes remain unimplemented. This indicates that, although decisions are being taken, their implementation lacks consistency and clear accountability for results.
  
Focus on finances and people’s safety
  
In 2025, the National Audit Office maintained its priority areas of activity: management of state assets, innovation and technological progress, a safe environment, and a healthy society. In response to the geopolitical situation, significant attention was paid to the defence sector – ranging from military recruitment and defence budget management to public warning systems and preparedness for civil resistance. Audits revealed systemic risks, and challenges regarding data reliability persist in public finances. Misstatements were identified in the annual financial accounts of the state regarding long-term tangible assets, mineral resources, biological assets, reserves, accumulated deficit and other significant data. Audits in the field of national security (Preparation of citizens of the Republic of Lithuania for civil resistance; Formation, accumulation and management of State Reserve; Modernisation of the public warning system, development of collective protection structures and shelters), revealed gaps in coordination and preparedness.
  
Acting as an independent fiscal institution, the National Audit Office has consistently strengthened the monitoring of public finances, analytical capabilities and the quality of forecasting. Regularly prepared macroeconomic forecasts, published alongside opinions on economic development scenarios, contribute to more consistent and transparent public finance planning and more informed decision-making. In 2025, an external review carried out by the Organisation for Economic Co-operation and Development (OECD) confirmed the significant progress made by the independent fiscal institution.
  
2025 also marks a historic change – the National Audit Office concluded its audit function regarding European Union investments, which it had carried out for more than two decades, and this function was transferred to the Ministry of Finance. The last audit carried out revealed significant problems in the management of EU funds – an error rate of over 14% was identified, as a result of which Lithuania had to cover around EUR 216 million in ineligible expenditure from the state budget.
  
What’s next?
  
2025 marks the start of a new strategic phase for the institution. It is focused on higher quality decision-making and greater value created by the public sector for people and the state. The National Audit Office emphasises that faster change in the country requires clear institutional accountability, consistent implementation of decisions and leadership that ensures decisions are implemented in a timely and effective manner.

From May 2025, the National Audit Office will no longer perform the function of the European Union (EU) audit authority, as the 2003 mandate of the Seimas to the National Audit Office to carry out audits of EU structural assistance received in the Republic of Lithuania in accordance with EU legislation expires. This function has been entrusted to the Ministry of Finance by a government decision from 2021 and the National Audit Office submitted its last audit report to the European Commission on 25 April 2025.

"With more than 20 years of experience in auditing the management and control systems for EU support and investment, we have a wealth of experience in ensuring the eligibility of activities and expenditure in EU-funded projects and assessing the risks of the management tools for each EU support period. It is crucial for us that the knowledge and practice of this largest audit of all EU financial mechanisms for Lithuania is used in other audits and assessments. Our colleagues who audit EU investments assess not only the legality of expenditure declared to the European Commission, but also the legal environment and projects in various areas of the public sector, and we are therefore pleased that the staff of the department performing the EU investment audit function took the opportunity to complement our other audit units with their professional experience," said Auditor General Mindaugas Macijauskas.

The European Union Investment Audit Department assessed the management and control system created for the implementation of Operational Programme for European Union Funds Investments for 2007-2013 and 2014-2020, and the eligibility of expenditure declared to the European Commission. The Ministry of Finance is carrying out the eligibility assessment for the new period (2021-2027).

You can find the full results of the EU investment audit here.
 

• The application of Covid-19 business support measures poses risks relating to the proper use of the money.
• There have been cases of construction work in special category buildings being carried out by legal entities and professionals who are not authorised to carry out such work.
• The overall error rate of 14.15% is the highest for the whole period.

The European Union (EU) Investment Audit Department of the National Audit Office has carried out an assessment of the functioning of the management and control system created for the implementation of the Operational Programme for Investments of the European Union Funds for 2014-2020, expenditure declared in the accounts and expenditure declared for the period from 1 July 2023 to 30 June 2024 for which reimbursement has been requested from the European Commission.

According to the auditors, not all of the COVID-19 business support was used properly. There was no adequate risk management control for the measure "Covid-19 e-commerce model" (worth more than EUR 40 million). As a result, the quality of most of the websites created with project money was not in line with the money spent on them. As a result of the risks identified by the Audit Authority, the Innovation Agency declared more than EUR 3.6 million of expenditure ineligible that should be recovered from the project implementors. The auditors point out that the new period of EU projects also contains a similar measure on e-solutions, so the Innovation Agency should assess the potential risks and take appropriate action to avoid errors.

The audit found that it is still common for construction contract projects in special category buildings to be carried out by subcontractors or specialists who are not authorised to carry out the construction work. For example, the construction works of the Medical Science Centre of the Faculty of Medicine of Vilnius University and of the Study Campus of the Lithuanian Academy of Music and Theatre were carried out by subcontractors without the required certificate. These non-compliances resulted in more than EUR 3.5 million of ineligible expenditure.

As every year, this audit identified procurement irregularities which were attempted to be resolved by changing the procurement practice regarding changes to works during the implementation of the contract: contract changes are now proposed to be calculated mathematically by assessing the difference, which creates a risk of abuse in the volume of changes made. The new practice raises a number of risks due to the lack of equality of treatment of former project participants.

According to the auditors, the overall error rate of 14.15% was found in 32 projects financed with EU money. This exceeds the European Commission's (EC) tolerable limit of 2% and is the highest in the history of the National Audit Office's audits of EU Structural Fund investments, so it is crucial to ensure that these errors do not occur in other EU projects.

"This error level has led Lithuania to make a financial correction of more than EUR 216 million, which is covered with state money. In this report, the auditors share risks of project administering authorities which I believe will be very useful for the administration of projects for the 2021-2027 EU funding period. I also hope that the errors now identified will not be repeated and will be significantly reduced in EU projects of the new period", said Auditor General Mindaugas Macijauskas.

The results of the audit have been submitted to the European Commission for approval as required by Article 139 of Regulation (EU) No 1303/2013 of the European Parliament and of the Council.