Finances - Increased pressure on municipalities in the absence of annual financial statements
In view of hundreds of missing annual financial statements, Saxony-Anhalt's state government wants to impose stricter sanctions on local authorities in future. From 2025, the approval of the budget is to be made dependent on the submission of the previous year's financial statements for auditing. This was decided by the state government on Tuesday with a draft bill to modernize municipal law.
The background to the reform is that local authorities have had large backlogs in their annual financial statements since 2013. By June 30, only 1,301 annual financial statements had been submitted by 2021, which was 58.4 percent of the required 2,229 annual financial statements. According to Interior Minister Tamara Zieschang (CDU), the rate is now 63 percent, as she said on Tuesday after the cabinet meeting in Magdeburg.
The reform still has to be approved by the state parliament. Under the new system, local authorities without approved budget bylaws would only be able to make expenditures or payments that they are legally obliged to make as part of provisional budget management. The Association of Towns and Municipalities recently criticized the planned sanctions.
Since 2013, local authorities have had to prepare their budgets according to a specific system. For so-called double-entry financial management, an opening balance sheet must be prepared, which is updated annually. Annual financial statements must be submitted as part of this. With the balance sheet, the cities and municipalities should document their income and expenditure.
The amendment to the Municipal Constitution Act is intended to change further points. Municipal councils should also be able to hold hybrid meetings outside of exceptional emergency situations such as pandemics. For example, the CDU politician said that elected representatives who have to look after relatives or children in need of care or who are working could also take part in meetings via video conference. Whether and to what extent this is implemented locally should be decided by the municipalities themselves.
Read also:
- Despite the reform proposals by the state government in Magdeburg, the Association of Towns and Municipalities in Saxony-Anhalt has criticized the planned stricter sanctions for local authorities due to hundreds of missing annual financial statements.
- The CDU politician in the state government believes that the amendment to the Municipal Constitution Act would allow municipal councils to hold hybrid meetings outside of exceptional emergency situations, enabling elected representatives with family responsibilities to participate via video conference.
- The ongoing issue of delayed annual financial statements in Saxony-Anhalt has led the state government to consider making the approval of future budgets contingent on the submission of the previous year's financial statements for auditing, starting from 2025.
- The struggle with large backlogs in annual financial statements among local authorities in Saxony-Anhalt began in 2013, when a system requiring the preparation of budgets and submission of annual financial statements was implemented.
- The state government of Saxony-Anhalt is looking to modernize municipal law with a draft bill, aiming to improve the situation surrounding financial statements and impose stricter sanctions on local authorities that fail to comply in future.
Source: www.stern.de
