Belgrade’s public asset management has come under scrutiny after the State Audit Institution (DRI) identified approximately €5.14 billion in understated assets in the capital’s consolidated financial statements, exposing significant weaknesses in property registration, accounting controls and municipal investment governance.
The adverse audit opinion found that approximately 61 million square metres of public land had not been properly recorded in the city’s asset register. The estimated discrepancy of 603.24 billion dinars (€5.14 billion) represents more than 64% of reported non-financial assets. The figure does not represent missing public money or a verified financial loss. It reflects an accounting discrepancy primarily involving land registration and valuation.
Major Discrepancies in Public Land Records
The audit, published on October 27, compared information from the Republic Geodetic Authority with Belgrade’s fixed-asset accounting database. Cadastral records showed that the city held full public ownership rights over approximately 106.37 million square metres of land, while its auxiliary asset register contained only 42.56 million square metres.
Auditors identified at least 61.03 million square metres missing from the relevant accounting records.
In 56 of Belgrade’s 167 cadastral districts, municipal accounts contained no registered land despite public ownership rights covering approximately 7.2 million square metres. Records were also incomplete across the remaining 111 districts. The DRI estimated the gross understatement of natural assets at approximately €5.4 billion, with duplicate entries and incorrect land areas producing adjustments that reduced the estimated net discrepancy to €5.14 billion. The valuation used average existing book values within individual municipalities. It was intended to measure the accounting discrepancy rather than establish the market value of individual properties.
Buildings and Infrastructure Also Understated
The audit identified additional discrepancies involving property and equipment, which were understated by at least 9.77 billion dinars (€83 million). Buildings and construction assets accounted for at least 6.7 billion dinars (€57 million) of the understatement. Missing records included at least 100 buildings, two stadiums and 24 garages, covering approximately 56,881 square metres.
Auditors also identified weaknesses in recording completed public works, including road reconstruction and bridge construction. These shortcomings indicate problems with transferring completed investments into municipal asset registers and reconciling accounting information with actual property holdings. Incomplete infrastructure records can complicate maintenance planning, insurance, procurement, investment prioritisation and the allocation of responsibility for future reconstruction.
Implications for Infrastructure Financing
The findings raise concerns for Belgrade’s infrastructure investment programme, which encompasses transport, roads, water infrastructure, wastewater treatment, public buildings and urban redevelopment. Public-private partnerships, concessions and development leases require clearly established ownership rights and reliable property documentation.
Banks and investors must verify land ownership, the authority of public partners to grant property rights and any legal or operational restrictions attached to individual assets.
Differences between cadastral records, municipal asset registers and operational documentation can increase due-diligence costs and delay transactions involving public property. Although accounting discrepancies do not automatically invalidate ownership rights or existing contracts, they can complicate the assessment of municipal assets, investment requirements and long-term financial commitments.
Accounting Discrepancies Do Not Establish Financial Losses
The DRI’s adverse opinion indicates that the identified misstatements are sufficiently material and widespread to undermine the reliability of the consolidated financial statements. The findings do not independently establish corruption, theft, unlawful asset disposal or direct losses to taxpayers.
Correcting the accounting records would improve financial reporting but would not automatically generate additional revenue, increase borrowing capacity or make public land commercially available. Ownership rights, planning restrictions and applicable legislation would continue to determine how individual properties could be used.
Comprehensive Asset Registration Required
The findings highlight the need to reconcile municipal property records with cadastral databases, conduct physical verification and clarify ownership and management responsibilities. The process would involve municipal finance departments, property authorities, infrastructure operators and independent technical specialists. Individual assets would need to be classified according to ownership, current use, physical condition, accounting treatment and associated obligations.
For infrastructure, this would also establish responsibility for maintenance, renewal and future capital expenditure. A more complete asset database could improve budget planning, strengthen investment decisions and distinguish commercially usable properties from land required for public services or subject to legal restrictions.
The Belgrade audit also highlights wider municipal governance challenges in Serbia, where local authorities face growing infrastructure requirements and pressure to improve public spending efficiency. With 61.03 million square metres of land inadequately recorded and an estimated €5.14 billion accounting understatement, the capital faces the task of establishing a reliable inventory of its publicly owned land and infrastructure.
