Public Audit

• In the period between the first half of the 2022 and 2025 period, over EUR 3 billion was allocated to promote business innovation, but only half of this amount has been utilised.
• Currently, around 70 percent of innovation funding in Lithuania comes from European Union (EU) grants, but by 2028 this figure is expected to fall by more than three times – to EUR 226 million in 2027 and EUR 58.6 million in 2028.
• Funding for innovation in the state budget will also more than halve, falling from EUR 221.2 million in 2026 to EUR 99.7 million in 2028.EUR
• Although tax incentives for innovation cost the state budget an average of EUR 179 million annually, the incentive for research and experimental development (R&D) is utilised to a limited extent – only 41 percent of companies receiving direct support for innovation have taken advantage of it.
• The state lacks comprehensive information on innovation infrastructure: of the seven science and technology parks monitored, as many as three did not carry out any R&D activities, while data on the activities of most business incubators and clusters is not collected at all.
• The need for innovation is growing, but the state does not ensure a consistent innovation development process and does not always assess whether the funded projects have delivered the planned results.

An audit of the business innovation promotion system carried out by the National Audit Office showed that there is both funding and a range of measures available to promote business innovation in Lithuania. However, these do not yet function as a single system helping businesses to progress from an idea to a successful product on the market. Some of the funding remains unused, the innovation infrastructure is managed in a fragmented manner, the results achieved by funded projects are not always assessed, and, with European Union support on the decline, the state has not yet set out how it will ensure long-term funding for innovation. Meanwhile, less than half of the companies eligible for tax incentives – which are among the most important incentives for investing in R&D – actually make use of them.
  
“Future public finance projections clearly indicate the need to increase state revenue. Therefore, in order to maintain the country’s economic growth and fiscal stability, we must substantially increase labour productivity and invest in high added value. Consequently, innovation policy cannot be assessed solely on the basis of how much money has been allocated or how many funding instruments have been created. The most important question is how many new products, technologies and competitive businesses this helps to create. Today, we cannot always say what results government investment has yielded; therefore, we must focus more on the outcome and the actual impact rather than the process,” says Auditor General Irena Segalovičienė.
  
Millions of euros remain unspent because funding instruments are created without assessing the actual need
  
In the period between the first half of the 2022 and 2025, 174 funding schemes were implemented to promote innovation, with a total budget of EUR 3.02 billion. However, only half of this amount – EUR 1.5 billion – has been utilised. An audit of 28 funding schemes revealed that only 6 of them were clearly justified by data on actual business needs. In most cases, no assessment was carried out of the extent to which businesses actually needed such support or of the expected impact of providing it. The audit results show that some of the funding does not reach businesses. Of the EUR 1.68 billion allocated to the measures assessed, more than EUR 1 billion remained unspent, and in more than half of the measures, at least 90 percent of the planned funding could not be distributed. Once a measure’s implementation period has ended, these funds are not always quickly redirected to other initiatives that attract greater interest from the business sector.
  
The National Audit Office recommends that new funding measures be developed on the basis of a clear assessment of business needs. It is also important to create opportunities to redirect unused funding more quickly to where it is most needed. This would allow for more efficient use of funds earmarked for innovation and enable the planned results to be achieved more quickly.
  
It is unclear how priority areas for innovation will be funded in the future
  
Today, the majority of funding for innovation in Lithuania comes from EU funds. During the period audited, funding from EU funds and the Economic Recovery and Resilience Plan accounted for around 70 percent of total innovation funding – more than EUR 2.1 billion out of a total of EUR 3.02 billion allocated to innovation.
  
However, this source of funding is not permanent. EU funding for innovation will decrease in the coming years – to EUR 226 million in 2027 and EUR 58.6 million in 2028. Funding for innovation in the state budget will also decrease, from EUR 221.2 million in 2026 to EUR 142.7 million in 2027 and EUR 99.7 million in 2028.
  
The audit revealed that the state has not yet made a clear decision on how priority areas of innovation will be funded in the future and which objectives will be given priority. This is particularly important in the run-up to the new EU funding period for 2028–2034. The European Commission’s proposal for the future European Competitiveness Fund and the Horizon Europe programme provides for nearly EUR 400 billion, but the funding model and allocation of funds are still being finalised. In the National Audit Office’s view, it is essential to identify strategic areas for innovation in advance and to plan their long-term funding. It is also important to move away from funding individual measures towards a coherent innovation chain covering the entire journey from research to the product’s launch on the market. This would help to ensure the consistent implementation of innovation policy in the future and maintain Lithuania’s competitiveness.
  
Patenting activity is low
  
Patenting activity in Lithuania remains low – in 2024, there were 45 applications per million inhabitants, which was three times lower than the European Union average (152). This low level of patenting activity may be influenced by the incompatibility of patent funding conditions and the length of the process. Businesses also lack information on intellectual property protection. The audit found that, out of 30 selected projects, only one result was patented, even though products were developed or commercialised in 27 cases. The lack of information on intellectual property protection and shortcomings in the reimbursement of patenting costs limit patenting activity.
 
The state allocates millions to tax incentives, but businesses make limited use of them
  
The state encourages business innovation not only through direct funding but also through tax incentives. Between 2022 and 2024, these cost the state budget an average of EUR 179 million per year. The largest share was accounted for by the investment project relief (EUR 142.5 million per year), as well as the triple deduction for R&D costs (EUR 21 million) and the preferential 5 percent corporation tax rate on income from the commercialisation of intellectual property (EUR 15.6 million).
  
However, the audit revealed that these incentives are being utilised to a limited extent. Only 41 percent of companies (122 out of 301) that received direct support for innovation also made use of the R&D tax relief. Over the three-year period, the total number of companies taking advantage of the relief actually fell by 5 percent.
  
Companies state that complex administrative procedures and documentation, unclear requirements and the risk that expenses may not subsequently be recognised as R&D activities are hindering their use of the relief. This is particularly relevant for small and micro-enterprises, for which administrative costs often become disproportionately high.
  
In the auditors’ view, the problem today is not the size of the incentives – the problem is that it is too complicated for some companies to take advantage of them. The National Audit Office, therefore, recommends reforming the administration of R&D tax incentives, applying standardised rates and reducing the administrative burden on business.
  
Science parks, incubators and clusters – a system the state fails to recognise
  
Science and technology parks, business incubators and clusters are intended to help businesses drive innovation, but the audit revealed that the state lacks a comprehensive overview of the activities of this infrastructure. The Innovation Agency monitors only seven science and technology parks, although the audit identified a further 53 entities carrying out similar activities. Of the parks being monitored, as many as three have not carried out any R&D activities over the past two years. Between 2009 and 2020, EUR 11.6 million was invested in the parks’ infrastructure. Due to insufficient monitoring and management shortcomings, it is difficult to quantify the parks’ contribution to the development of the country’s innovation system.
  
The situation is similar in the area of business incubators – the Ministry has data on only one, the European Space Agency’s incubator. Meanwhile, there is still no comprehensive system for the registration and monitoring of clusters in Lithuania, even though this problem was identified as far back as 2014.
  
The National Audit Office recommends establishing criteria for identifying science and technology parks and business incubators, setting out the principles for their inclusion in monitoring and evaluation, and ensuring that their performance is assessed and the results utilised when making decisions on the development and maintenance of innovation infrastructure. In the area of clusters, it is further proposed to clarify the legal framework.
  
Untapped opportunities for innovative public procurement to promote business innovation
  
Although the Ministry of Economy and Innovation has allocated EUR 5 million for methodological support and established a centre of excellence, the scale of innovative public procurement in the country is growing extremely slowly (from 34 procurements in 2022 to 52 procurements in 2025). This sluggish growth indicates that the measures implemented by the ministries responsible for innovative procurement remain too cautious and lack ambition; therefore, to achieve a real breakthrough, it is necessary to introduce not only methodological guidelines but also specific financial incentives and risk-sharing mechanisms. This would create motivating conditions for contracting authorities to develop innovative public procurement, which should act as a strategic catalyst for private-sector innovation and encourage business investment in high added value.
  
As investment in defence grows, so does the need for innovation
  
Defence technology is becoming an increasingly important area for innovation. However, the audit revealed that the state does not ensure a coherent process for creating value from innovation – from research and prototyping to the deployment of products in the market and the public sector. At present, the innovation funding system is focused more on individual measures than on a coherent innovation chain. EUR 206.7 million is earmarked for research, EUR 491 million for prototyping, while the largest share of funding – EUR 1.83 billion – is allocated to the development and export of products that have already been created.
  
The implementation of the Defence Innovation Vouchers measure demonstrated significant business interest in defence innovation. According to the audit findings, demand for the measure exceeded the allocated funding, leading to the publication of an additional call for applications. However, an audit of 10 projects, which had been allocated EUR 279,800, revealed that no assessment had been carried out to determine whether the products developed met the characteristics and criteria for which points had been awarded during the evaluation of the applications.
  
In the National Audit Office’s view, state support for innovation must be linked not only to the use of funds, but also to the results achieved. This is particularly important in the defence sector, where the value of innovation is measured not by the number of applications, but by the technologies actually developed and implemented.
  
It is important to assess not only the money spent, but also the impact achieved
  
The audit showed that the impact of measures to promote innovation could be greater if the need for them were based on data, clear selection criteria were established, and results were consistently evaluated. Although evaluations of some measures are carried out, there is still insufficient information to assess which of them generate the greatest benefits. It is therefore difficult to make informed decisions regarding the continuation and improvement of these measures.
  
In the National Audit Office’s view, what Lithuania needs most today is not new measures, but a coherent innovation system that would not only fund innovation but also identify which investments create the greatest value for the state. Such a system should combine funding, tax incentives, innovation infrastructure, talent development and innovative public procurement into a single coherent chain – from the idea to the product on the market.

• In the 2024–2025 school year, as many as 94 percent of children with special educational needs (SEN) attended general schools, but 56 percent of them do not receive the necessary support.
• Support for these children is often delayed or fails to reach them due to the lengthy needs assessment process and parental resistance, while the needs of gifted and talented children often go unrecognized.
• One in two (52 percent) general education schools and 75 percent of vocational training institutions lack educational support specialists and pupil assistants. This leads to uneven workloads—the number of children per full-time position in these institutions ranges from 16 to 337 pupils.
• Funding for educational support is increasing (EUR 287.4 million allocated for 2025), but the independent contribution per student by municipalities varies by a factor of hundreds, and current funding is sufficient only for children with minor needs.
• More than 90 percent of pupils with SEN successfully obtain vocational qualifications, but as many as 70 percent of them do not find employment..

In Lithuania, the vast majority of children with SEN are currently enrolled in general classes or preschool groups alongside their peers. However, an audit conducted by the National Audit Office titled “Educational Support in Schools” shows that the mere opportunity to learn together does not in itself guarantee full inclusion. More than half of pupils with SEN do not receive the full range of support recommended by the Pedagogical and Psychological Service (PPT), and some children are left without any support at all.
  
“The mere physical presence of a child in a general class does not in itself mean inclusion. Today, the numbers on paper show beautiful statistics—as many as 94 percent of children with special needs are studying alongside their peers—but behind these numbers lies another, painful reality. More than half of these children do not receive the help they need, and families are left to face their challenges alone. We cannot tolerate a situation where a child’s right to a full-fledged education turns into a geographical lottery, in which the support provided to a single child varies by a factor of hundreds across municipalities, and a vocational training diploma ultimately fails to open doors to the labour market. Following this audit, mere cosmetic changes to the system will not suffice—legislation must guarantee real support to every child who needs it,” emphasises Auditor General Irena Segalovičienė.
  
There is a shortage of specialists, and those who are there are facing critical workloads
  
In Lithuania, during the 2024–2025 school year, as many as 94 percent of children with SEN will be attending general schools and classes alongside all other children. The accessibility of the education system is also demonstrated by the fact that as many as 93 percent of parents surveyed indicated that their children were successfully admitted to their chosen or preferred school, and that municipalities essentially satisfied all applications.
  
However, the audit revealed that more than half (56 percent) of pupils with SEN in schools do not receive all the services recommended by educational support specialists, and as many as 5 percent receive no support at all. This creates a risk that pupils will be unable to fully participate in the educational process and reach their potential. This is also confirmed by parents’ experiences—27 percent of them acknowledged that their children do not receive the necessary support at school, and more than half (57 percent) of families were forced to seek out private specialists outside of school.
  
This situation is further compounded by the fact that, at the time of enrolment, schools often lack prior information about the extent of a child’s needs and are therefore unable to distribute pupils evenly. Although it is recommended that no more than three pupils with significant or very significant needs be placed in a single class, in reality there are classes where the number of such pupils reaches as high as six. To ensure that information about pupils’ special educational needs reaches schools in a timely manner, allowing them to prepare to provide educational support and form classes, the National Audit Office recommends that the Ministry of Education, Science, and Sports (MESS) allow schools to access information about the identified special educational needs of newly admitted pupils before the 1st of September.
  
This systemic problem is further deepened by the fact that as many as 52 percent of general education schools and 75 percent of vocational training institutions lack educational support specialists and pupil assistants. As many as 91 percent of the audited municipalities are directly affected by this shortage. Although the state and municipalities are implementing various measures to attract staff— such as providing financial support to education students who sign employment contracts with municipalities, attracting the necessary staff nationwide remains extremely difficult due to unattractive working conditions, high emotional and administrative workloads, and part-time positions.
  
This situation leads to enormous disparities in workload: although the target is for one educational support specialist to be responsible for up to 111 pupils, the actual number of children per full-time position in municipalities ranges from 60 to 176 pupils. In individual schools, these variations are even greater: from 16 to 337 pupils per full-time position, and 6 percent of the country’s schools have no educational support specialists at all. As a result, some pupils do not receive all the services recommended for them, and the support they receive depends on whether a particular school is able to hire such a staff member.
  
In order to systematically address the enormous disparities in workloads among institutions and ensure that support reaches every child, it is recommended that the MESS urgently address the issue of attracting specialists and update the criteria under which certain primary and basic education classes would be required to have a second teacher (by introducing the open-class model) or a person providing educational support.
  
Delayed support, parental resistance, and the shadow of gifted children
  
The country’s extensive PPT network prioritises children with SEN who are most in need of support (e.g., before exams or when changing educational levels). However, support for children with SEN is often delayed: as many as 34 percent of agencies nationwide report that pupils must wait more than a month for a special education needs assessment, even though early intervention is a critical factor in achieving better educational outcomes.
  
The process and the work of specialists are also hindered by a reliance on documents submitted by parents—85 percent of agencies receive them directly from parents. The process is also hindered by resistance from the parents themselves—as many as 35.8 percent of agencies report cases where schools were unable to register a child for assessment due to parental refusal.
  
At the same time, another pressing problem has come to light: according to audit data, as many as 88–98 percent of PPTs and 73 percent of educational support specialists working in schools lack standardised tools for assessing pupils’ special educational needs. Furthermore, the country lacks a unified and clear system for assessing the achievements and progress of pupils with SEN that teachers could uniformly follow. When progress is not measured objectively, a child’s potential is restricted. There is also a lack of regulations on how to identify children with exceptional talents, so gifted pupils often go unrecognised.
  
To ensure that needs are identified in a timely manner, it is recommended that the MESS establish a clear sequence of actions for cases in which parents do not agree to undergo an initial assessment or refuse to sign the conclusions.
  
To ensure that educational support specialists and educational psychology services across the country can assess pupils’ special educational needs consistently, it is recommended that the Lithuanian Center for Inclusive Education develop and implement a standard for the educational-psychological assessment of children and acquire the necessary tools. It is also recommended that the MESS develop uniform tools for monitoring and assessing the individual progress of pupils and establish clear measures for identifying gifted children.
  
Growing funding and municipal support that varies by a factor of hundreds
  
In recent years, total funding for education in the country has increased: in 2025, EUR 287.4 million was allocated for education in schools (compared to EUR 233.4 million in 2024). Of this amount, EUR 199.5 million came from the state budget, while municipalities contributed EUR 87.9 million from their independent budgets.
  
However, the state’s commitment to educational support should not depend on a child’s place of residence. The amount allocated from municipalities’ independent budgets for educational support varies by a factor of hundreds—from 1 euro to 648 euros per child. Although these financial disparities create unequal starting conditions, the availability of support at a specific institution is also strongly influenced by other complex factors, such as: schools’ ability to organise their work efficiently and the shortage of specialists in the labour market, which means that even schools with higher funding sometimes lack the necessary staff.
  
The audit revealed that current funding is often sufficient only for children with minor special needs, while pupils with severe or profound special needs would actually require approximately twice as much funding.
  
Vocational training: Diploma in hand, but the doors to the labour market closed
  
The prospects for continuing education after finishing school are encouraging—the majority of pupils with SEN who have completed 10th and/or 12th grade in general education schools successfully continue their studies at vocational training institutions (69 percent), and more than 90 percent of them successfully obtain a vocational qualification.
  
However, the audit revealed another problem—as many as 70 percent of these graduates do not find employment after completing their studies. The problem lies not only in the fact that employers often have preconceived notions about the abilities of pupils with SEN and are reluctant to hire them, but also in the structure of vocational education itself. Current qualifications and the training programs offered are not sufficiently aligned with the real needs of today’s labour market. As a result, young people who have completed their education simply have nowhere to go to work. Furthermore, employers do not benefit from government incentives (such as subsidies), and the mechanism for transitioning from school to the labour market is essentially non-functional.
  
This shows that simply providing the opportunity to learn is not enough—it is also necessary to ensure a successful transition into the labour market. To ensure that vocational training programs aligned with current trends and focused on the acquisition of practical skills are accessible to individuals with intellectual disabilities, the National Audit Office recommends that the MESS initiate and update qualification descriptions to create new vocational training programs that meet the needs of employers and the labour market.

Today marks an exceptional event at the National Audit Office—the National Audit Office, together with 56 Municipal Control and Audit Services (SKAT), has agreed to launch a cooperative public performance audit titled “Non-Formal Education System for Children.” During the kick-off meeting held at the National Audit Office, Auditor General Irena Segalovičienė and the municipal controllers representing the SKAT started signing the cooperation agreements.
  
“Non-formal education for children is much more than just after-school activities – it is the foundation of the state’s strategic security and social capital. At school, children learn what the world knows. Through non-formal education, they learn who they are. High-quality and accessible after-school clubs serve as the strongest preventive system, as they directly strengthen children’s physical and mental health, protect them from addictions, and create equal opportunities for everyone, regardless of their family’s financial situation or place of residence. Properly ensuring this network throughout Lithuania means investing in our families and our demographic policy. It is much cheaper and wiser to raise strong children than to later “repair” broken adults. That is precisely why we are seeking to assess whether this system is functioning as we expect, and what solutions are needed to ensure it creates the greatest value for children and society,” says Auditor General Irena Segalovičienė.
  
The National Audit Office’s 2026 Activity Plan includes a performance audit titled “Non-Formal Education System for Children,” and since SKAT are assessing or plan to assess the area of non-formal education for children in 2026, it was decided to join forces in order to assess systemic problems more consistently and compare municipal practices.
  
The audit will assess whether the state-established system for funding non-formal education for children enables the achievement of the intended goals, whether the quality and accessibility of services are ensured, how state and municipal funds are used, and whether they reach the children with the greatest needs, including pupils with special educational needs and children growing up in families at social risk. It will also assess whether municipalities ensure adequate oversight of the use of funds, the expansion of the service network, and the monitoring of service quality.
Although state funding for this area has more than doubled over the past decade—from 9.7 million euros in 2016 to 25 million euros in 2025—increasing funding alone does not guarantee that the system operates efficiently and reaches all children. A preliminary study conducted by the National Audit Office shows that the non-formal education system for children faces systemic challenges. Furthermore, the range and accessibility of programs vary greatly across municipalities; there is insufficient data on the services actually provided; there are no uniform quality assessment criteria; and some children still cannot find activities that meet their needs.
  
It is important to note that each SKAT will act independently under this agreement, in accordance with its established competence, and will cooperate with the National Audit Office to the extent that this relates to the operation and funding of the non-formal education system for children at the local government level. The SKAT will carry out the audit procedures set forth in the audit plan prepared by the National Audit Office, collect and analyse information, document the results of the procedures performed, and prepare an audit report on the activities of the control and audit service of the specific municipality. The National Audit Office’s auditors will prepare the joint audit report, which is scheduled to be published in the fall of 2027.
  
The National Audit Office hopes that this cooperative audit will not only identify systemic problems but also provide the most optimal recommendations that will help bring about real change by ensuring that the non-formal education system is accessible to all children. To this end, it is important for municipalities to be involved and to share a common goal of ensuring that investments in children’s education are used in a targeted and transparent manner and generate the greatest benefit for society.