Delayed Financial Reports for this Year
In a recent report, the State Audit Office has highlighted that municipalities across Germany, including those in Saxony-Anhalt, have been allowing simplifications for outstanding annual closings due to the large number. This tightening is expected to further exacerbate the financial situation in the treasuries, potentially causing municipalities to slip into provisional budget management.
The situation in Saxony-Anhalt is particularly dramatic, according to the State Audit Office. As of 2021, 1,183 annual closings from 2013 remain outstanding. In contrast, the district level in Saxony-Anhalt has managed to create 101 out of 115 annual closings.
The creation of opening balance sheets, establishment of asset accounting, and implementation of double-entry accounting pose challenges for municipalities. The reform of the value-added tax law and audit reports from the audit offices present significant challenges for municipal treasuries. The extensive and complex requirements for annual closing are causing difficulties for municipalities in Saxony-Anhalt, making it challenging for them to submit the annual closing by April 30 of the following year.
The finances of municipalities in Saxony-Anhalt are causing significant concern. A county administrator has warned of a financial abyss, and the naming of finances as the most important field of action further underscores this concern. The cities of Magdeburg and Halle (Saale) are highlighted as facing financial pressures, with Magdeburg facing a significant budget deficit of around 57 million euros and struggling with rising social expenditures, high personnel costs, and infrastructure issues. Halle (Saale) is also under financial pressures, despite recording a record budget.
Our expert Matthias Wiener is providing an overview of the most important levers in the budget, especially for new municipal councils. The significant additional effort required for annual closing work will affect employees responsible for this task in most cases. The requirements for annual closing are considered too extensive by some experts.
Starting with the budget ordinance 2025 in Saxony-Anhalt, the competent authority will withhold the approval of budget ordinance parts until the auditable annual closing of the previous year has been submitted to the audit office. The audit office has a larger time window for the audit than the treasury has for the creation, with the annual closing needing to be audited and approved by December 31 of the following year.
The results of the autumn tax forecast are available as a PDF. According to the 2024 OB-Barometer of Difu, city leaders in Germany consider 'finances' to be the most important field of action for the first time. The situation of finances is currently the most important topic for municipalities in Germany.
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