A Special Report by the Audit Office reveals a picture of systemic failure in the auditing of financial statements across the wider public sector, with thousands of annual accounts remaining unchecked, in some cases for decades.
The report identifies major weaknesses in the submission and auditing procedures for financial statements of public sector organisations, offering an overview of outstanding audits for municipalities, community councils, school boards and other public law bodies.
As of 31 December 2025, a total of 6,734 financial statements for the years up to and including 2023 were still pending audit.
Impact on good governance, transparency, accountability
These outstanding audits concern mainly local authorities and other public bodies, with significant delays recorded in many cases, including statements dating back decades.
The Audit Office stresses that timely submission and completion of audits is essential for good governance and the safeguarding of the public interest. According to the report, such delays undermine the reliability of financial statements and hinder the timely adoption of corrective measures. Delays in providing and processing financial information, as well as the late completion of audits, effectively restrict proper oversight by supervisory authorities and limit transparency to the public.
The report notes that this situation seriously affects the principles of transparency and accountability in the management of public resources, while creating conditions that may facilitate waste or even the misuse of public money.
Municipalities
For municipalities, the report records 237 financial statements pending audit for the period 2010-2023.
Most pending audits relate to recent years, partly due to the implementation of local government reform but also because of delays in the auditing process itself. The report also notes that a large number of municipalities continue to have outstanding audits for older financial years.
Community councils
The biggest problem is found in community councils, with 4,118 financial statements pending audit.
In many cases, there are extremely long delays in submitting financial statements. For example, the Community Council of Palaichori Oreinis did not submit financial statements for the period 2001-2023, a delay exceeding 23 years. The Community Council of Kritou Terra has delays of up to 16 years, while significant backlogs are also recorded in the councils of Pachyammos, Agia Varvara (Nicosia), Agios Georgios (Paphos), Agios Theodoros (Limassol) and Gerasa.
School boards
A large backlog is also recorded for school boards, with 1,897 financial statements pending for the period 1995-2023. These delays affect numerous boards nationwide, highlighting systemic weaknesses in the submission and auditing processes for this sector.
Outstanding audits are also noted for several other public sector organisations, including the Cyprus Energy Regulatory Authority, the Health Insurance Organisation, the State Health Services Organisation, the University of Cyprus, the Cyprus University of Technology, as well as various sewerage boards and public funds.
Efforts to accelerate the process
The Audit Office notes that, in 2025, a new procedure was introduced allowing audits to be assigned to private audit firms under certain conditions, in an effort to accelerate the completion of outstanding audits. Under this process, the Auditor‑General may direct the assignment of audits to private firms to reduce the large backlog.
However, the report emphasises that the effectiveness of this measure depends greatly on the timely cooperation of the audited bodies and the proper submission of financial information.
The accumulation of thousands of unaudited financial statements highlights the need, the report notes, for more effective accountability mechanisms, better administrative organisation and faster audit procedures to ensure the proper management of public funds.