Azerbaijan’s Chamber of Accounts promotes co-op-focused audit model (Exclusive Interview)

BAKU, Azerbaijan, July 23. Modern auditing
should be a strategic partner instead of a fault-finder.

This was reported by the Chairman of the Chamber of Accounts of
Azerbaijan, Vugar Gulmammadov, in a joint interview with Trend News Agency and Public
Television.

He said that the implementation of the 2025 state budget was
remembered for several record indicators in the history of
independence. The state budget revenues amounted to 39.2 billion
manat ($23 billion), and expenditures - 38.6 billion manat ($22.7
billion). At the same time, the lowest percentage of expenditure
implementation was recorded in the last 10 years.

According to him, as every year, reports on the implementation
of the 2025 state budget were widely discussed at both committee
and plenary sessions of the parliament. The opinion prepared by the
Chamber of Accounts on the draft law and the reports submitted with
it was widely referred to by the MPs during the discussions.

State budget revenues reach 39.2 billion manat ($23.1
billion) in 2025

Gulmammadov said that one of the Chamber of Accounts' top
functions is to provide an opinion on the execution of the state
budget. He noted that the main objective of the state budget is to
finance the state's functions.

"The purpose of the state budget is to finance the state's
functions. The Chamber of Accounts is also an institution that
assesses the extent to which these functions are carried out. We
believe that the most important issue is that the submitted draft
law and the report accompanying it are prepared within the
timeframes and in the format established by the Law on the Budget
System, and in line with the required indicators.

There are several important aspects to the execution of the 2025
state budget. The most significant of these is that, for the first
time in the history of our independence, state budget revenues
reached a record high of 39.2 billion manat ($23.1 billion). At the
same time, for the first time in the history of our independence, a
record level of budget expenditures was also recorded, reaching
38.6 billion manat ($22.7 billion).

Among these figures, I would like to note that despite executed
expenditures totaling 38.6 billion manat ($22.7 billion), the
execution rate was the lowest in the past 10 years at 93.2%. This
means that approximately 2.8 billion manat ($1.65 billion) of the
budget wasn't executed.

The failure to execute 2.8 billion manat ($1.65 billion) of the
budget affected the balance of the main budget, i.e., a budget that
had been planned with a 3 billion manat ($1.76 billion) deficit was
ultimately executed with a surplus of approximately 580 million
manat ($341.2 million)," he explained.

Main objectives of budget rule met

The Chairman of the Chamber of Accounts said that, as in all
budgets, the state budget of the Republic of Azerbaijan also has a
budget rule that plays the role of a macrofiscal framework.

According to him, the budget rule has two main objectives.

"As in all budgets, the state budget of Azerbaijan also has a
budget rule that is a macrofiscal framework. Our budget rule has
two main objectives. One of them is the ratio of the non-oil base
deficit to the non-oil gross domestic product. The requirement for
this rule has been met, and the indicator was 18.6%. The other
objective is the ratio of state debt to gross domestic product,
which was 20.1%," he said.

Chamber of Accounts submits nearly 46 new
recommendations

Gulmammadov noted that during the budget discussions, several
changes were made to the report and the draft law together with the
Ministry of Finance and other state agencies based on the proposals
of the Chamber of Accounts.

He pointed out that the Chamber of Accounts has submitted about
46 new recommendations regarding the implementation of the state
budget.

"Based on the proposals put forward by the Chamber of Accounts,
some changes were made to the report and the draft law during the
budget discussions, together with the Ministry of Finance and other
bodies. We have submitted about 46 new recommendations. These
recommendations are related to both legislative and institutional
changes.

In international practice, the opinion on the implementation of
the state budget is given based on two main components. One is the
consolidation of financial statements, and the second is the
opinion given on the results-based budget, i.e. the operating
budget," he clarified.

Opinion on state budget given based on control measures
and reports

Gulmammadov said that currently, opinions based on audit reports
are submitted only for the State Oil Fund of Azerbaijan.

According to him, the Chamber of Accounts also has the
opportunity to give an opinion on the budgets of extra-budgetary
funds that are part of the consolidated budget.

"Currently, we perform this function only on the State Oil Fund
of the Republic of Azerbaijan based on audits and audit reports. We
also have the opportunity to give an opinion on the budgets of
other extra-budgetary funds that are part of the consolidated
budget - the State Social Protection Fund, the Unemployment
Insurance Fund and the Compulsory Medical Insurance Fund. This
leaves only the state budget.

Currently, we give an opinion on the basis of reports submitted
by the state budget institutions on the budget's income and
expenses, as well as control measures carried out up to the period
of submission of the opinion.

However, we do not currently provide an opinion based on
consolidated financial statements applied in international
practice. Regarding the second direction, the performance budget,
you know that pilot projects on result-based budgeting have been
implemented in the state budget for several years. This is one of
our goals: to conduct an audit on the performance budget in the
next periods and present our opinions. Of course, the budget
submission period and the number of control measures "can make a
great contribution to the provision of opinion," he noted.

Nearly 70 institutions issued with non-compliance
certificates

The chairman of the Chamber of Accounts said that this year, for
the first time, the submission of reports established by law with
the help of digital solutions was evaluated on more than 100
indicators.

He noted that, based on the assessments conducted, about 70
organizations were provided with certificates of inconsistencies
and deviations.

"This year, for the first time, we tried to evaluate the
submission of reports required by the legislation with the help of
digital solutions on more than 100 indicators. Based on these
assessments, we have provided certificates of inconsistencies and
deviations to about 70 organizations to date. We ask them to
respond to these certificates.

At the same time, I would like to inform you that during the
preparation of the opinion on the implementation of the 2025 state
budget, we received more than 2,000 reports from more than 200
organizations. However, what is important is not the number of
these reports, but their level of adequacy.

The application of digital solutions has once again shown that
digital tools are not fully applied in organizations and there are
certain problems in this area due to the shortage of professional
personnel," he said.

Formal submission of reports reduces their analytical
value

Gulmammadov said that formal submission of reports reduces their
analytical value.

According to him, incompleteness and errors were also found in
the documents of the institutions that submitted reports on
time:

"I would like to note that I also stated this at the plenary
session. The number of those who submitted reports on time is
approximately 40% of the total. 60% of the institutions didn't
submit their reports on time.

There are also incompleteness and errors in the documents of the
institutions that submitted reports on time. This indicates that in
some cases the reports were submitted formally. Formal submission
of reports reduces their analytical value," he said.

Growth in ratio of public procurement to GDP
observed

In his interview, the Chairman of the Chamber of Accounts noted
that in 2025, 19,000 public procurements worth 10.8 billion manat
($6.3 billion) were carried out in Azerbaijan.

"The share of public procurement in gross domestic product
increased by 0.6 percentage points to 8.4% in 2025. Public
procurement is the main financial and legal tool for determining
the needs of the state and meeting these needs through public
spending. The quality of procurement has a significant impact on
both the country's economic development and fiscal sustainability,"
he said.

Share of public procurement in GDP reaches
8.4%

In his interview, Gulmamammadov said that the ratio of public
procurement to gross domestic product and state budget expenditures
is considered an important indicator.

"Public procurement is the main financial and legal process that
determines the needs of the state. At the same time, public
procurement is the main tool for meeting the needs of the state
through public spending. The quality of procurement has a
significant impact on both the country's economic development and
fiscal sustainability.

The ratio of public procurement to gross domestic product and
state budget expenditures is considered an important indicator. In
2025, 19,000 public procurements worth 10.8 billion manat ($6.3
billion) were carried out in Azerbaijan.

In international practice, the share of public procurement in
GDP varies between 13% and 20%, and its share in state budget
expenditures varies between 30% and 50%. Based on the 2025
indicators mentioned by me, the share of public procurement in
gross domestic product increased by 0.6 percentage points in 2025
to 8.4%,'' he explained.

Reporting of procurements omits some
indicators

The Chairman of the Chamber of Accounts noted that in recent
years, significant changes have been made in the field of state
procurement, both in terms of legislation and institutional
aspects. At the same time, qualitative changes have also taken
place in the activities of the body carrying out current control,"
he said.

According to him, two main points should be paid special
attention when assessing the current indicators.

"In recent years, significant changes have been made in the
field of state procurement, both in terms of legislation and
institutional aspects. At the same time, there have been
qualitative changes in the activities of the body carrying out
current control.

However, two main points regarding these figures should be
especially emphasized and reviewed once again. The first of these
is related to the accountability of procurements. Among the figures
I have listed, the procurements carried out by state enterprises at
their own expense, especially by bodies with a Supervisory Board,
are not reflected in this report. This is also in accordance with
the legislation. At the same time, the procurements carried out by
the State Agency of Azerbaijan Automobile Roads aren't reflected in
this report", Gulmammadov added.

Spending on procurement should be the main
indicator

Gulmammadov said that one of the main unregulated issues
regarding the calculation of the ratio of public procurement to the
state budget or gross domestic product is the difference between
the contract amount and the costs.

"One of the main unregulated issues regarding the calculation of
the ratio of public procurement to the state budget or gross
domestic product is that the contract amount for public procurement
is indicated, but the contract can cover several years.

The main issue here is how much money was spent on that
contract. That is, from this point of view, the cost is a more
important indicator," he said.

Number of public procurements increases by
52%

The chairman of the Chamber of Accounts recalled that the new
edition of the law "On public procurement" came into force on
January 1, 2024.

He noted that a comparison of the periods before and after the
entry into force of the new law shows a significant increase in
both the number and amount of procurements.

"The new version of the law 'On public procurement' has been in
force since January 1, 2024. Therefore, I would like to mention
some figures showing what changes have occurred before and after
the new law came into force.

First of all, when comparing 2023–2025, we see that the amount
involved in public procurement and the number of procurements have
increased significantly compared to 2023. The increase in terms of
number was 52%, and in terms of total amount, 43%.

This means that the volume of public procurement has expanded
and the application of the procurement mechanism in the
implementation of public expenditures has also increased," he
said.

Average amount per procurement contract
increases

Gulmammadov noted that although there was a decrease in the
number of procurements in 2025 compared to 2024, the total amount
increased.

"In 2025, there was a 3.1% decrease in the number of
procurements compared to 2024. However, an increase of
approximately 9.5% was recorded in terms of amount.

What does this indicate? If the number of procurements has
decreased, and the amount involved has increased, this means an
increase in the average amount per procurement or contract," he
said.

Main burden of procurements falls on 3rd and 4th
quarters

The chairman of the Chamber of Accounts noted that another
important issue is related to the timing of procurements and their
distribution throughout the year.

According to him, although there was some balancing in the
distribution of procurements in 2025 between the first and second
half of the year, the main burden still fell on the third and
fourth quarters of the year.

"The second important issue is related to the timing of
procurements. If we divide the procurements made in 2025 into two
parts, the specific weight of procurements made in the first half
of the year increased by approximately 10 percentage points, from
31% to 41%. In the second half of the year, this indicator was 59%.
This is a relatively balanced distribution.

However, when we look at the distribution by quarters, we see
that the main burden falls on the third and fourth quarters. The
spending of more budget funds at the end of the quarter and in the
last quarters of the year leads to a certain increase in the volume
of advance payments. This, in turn, leads to an increase in
liabilities," he clarified.

Chamber of Accounts supports balanced distribution of
procurements

Gulmammadov said that although there were no significant changes
in the quarterly distribution in 2025 compared to previous years,
certain cases of balancing were observed.

He noted that, according to the recommendations of the
Organization for Economic Cooperation and Development and the World
Bank, the distribution of procurements by quarter in the ratio of
40, 30, 20, and 10% is considered the most ideal option.

"In 2025, as in previous years, there were no significant
changes in the quarterly distribution. However, there are certain
cases of balancing.

I note that there are recommendations from the Organization for
Economic Cooperation and Development and the World Bank in this
regard. In those recommendations, the ratio is taken as 40, 30, 20,
and 10%. This is considered the most ideal option and a balanced
quarterly distribution.

Although this distribution isn't fully adhered to in our country
yet, we are in favor of continuing certain changes in the future,"
the chairman of the Chamber of Accounts added.

Non-competitive procurement has a higher growth
rate

The chairman of the Chamber of Accounts said that in terms of
structure, state procurement is divided into two main groups:
competitive and non-competitive procurement.

According to him, a comparison of the indicators for 2023–2025
shows an increase in both competitive and non-competitive
procurement. However, the growth rate of non-competitive
procurement is higher.

"As for the structural analysis of procurement, you know that
procurement is divided into two main types: competitive and
non-competitive procurement.

When comparing 2023–2025, we see that there is a certain
increase in competitive procurement. At the same time, an increase
is also observed in non-competitive procurement methods, which are
considered non-competitive, and this increase is higher.

Thus, if there is a stable growth in competitive procurement,
the increase in the number of non-competitive procurements is
approximately twice as much," he added.

Total amount of single-source procurement in Azerbaijan
rises by 532 million manat ($312.9 million)

Gulmammadov said that single-source procurement is one of the
forms of non-competitive procurement, and the specific weight of
this method depends on the economic model and regulatory rules of
the countries.

"Single-source procurement is one of the forms of
non-competitive procurement. In countries around the world and in
international practice, the specific weight of this method depends
on the economic model and regulatory rules of the countries.

"For example, last year, 9,035 procurements using the
single-source procurement method were carried in our country.
Although this indicator decreased by 7.6% in terms of number, it
means a growth of about 10% or 532 million manat in terms of
amount," he said.

Single-bid tenders account for more than 30% of all
procurement in Europe

The chairman of the Chamber of Accounts said that research shows
that the single-source procurement method is increasingly used in
military and defense industries around the world.

According to him, the share of single-source procurement in the
CIS countries is 30–50%, and in European countries it is about
40%.

"Our research shows that, as is the case all over the world, the
single-source procurement method is more widely used in the
military and defense industries than in civilian contracts.

The share of single-source procurement in the CIS countries is
30–50%, and in European countries it is about 40%.

However, I would like to make one point regarding European
countries. One of the studies of the European Court of Auditors
shows that there is a phenomenon of single-bid tenders in public
procurement in European countries.

What does this phenomenon mean? This means that the conditions
in procurement and tenders are set in such a way that only one
supplier can participate. Although on paper this is considered a
tender, in reality it turns into a form of single-source
procurement. Such tenders account for more than about 30% of all
procurements," he said.

What are the main concerns in public
procurement?

Gulmammadov emphasized in his interview that the main concerns
are the large differences between the estimated amount in public
procurement and the price offered by the winning organization, the
high share of non-competitive procurement, and the cancellation of
procurements.

According to him, three main points should be paid special
attention to in the field of public procurement at the present
time.

In more than 51% of procurements, the price difference
exceeds 20%

Gulmammadov said that before any procurement is made, its
estimated amount is determined. The winning organization can submit
a bid in accordance with both the upper and lower limits of the
estimated amount.

"I would like to highlight three main points at present. Before
any procurement is carried out, its estimated amount is determined.
The winning organization can submit a bid at the upper limit of the
estimated amount. At the same time, it can also submit a bid at the
lower limit of that amount.

The results of our research conducted last year showed that the
number of procurements that differed by more than 20% from the
estimated amount is more than 51%. In the CIS countries, the red
line for the difference between the amount offered by the winning
organization and the estimated amount is 15–25%.

That is, it's impossible to offer a price that is too low. In
general, the criterion of the lowest price is currently one of the
problems in most countries. Why? Because the lowest price is one of
the factors that ultimately leads to the project not being
completed or not being completed in a high-quality manner.
Therefore, if the upper limit is determined by the estimated price,
the lower limit should also be determined," he said.

In 37% of procurements, the price difference exceeds
30%

The chairman of the Chamber of Accounts noted that in Azerbaijan
there are differences between the estimated amount and the proposed
price of 20, 30, 40, 50, even 80%.

"Unfortunately, we have figures that differ from the estimated
amount by 20, 30, 40, 50, even 80%. For example, in about 37% of
all procurements last year, that is, in 3,761 procurements, the
price difference was more than 30%.

This may lead to the failure to execute contracts on time. This
is the first main concern," he added.

Share of non-competitive procurements still
high

Gulmammadov said that the second main concern is that the share
of non-competitive procurements remains high compared to
competitive procurements.

According to him, prices in single-source procurement contracts
are usually not lower than prices in competitive procurements
conducted by open tender, but on the contrary, they are more
expensive.

"The second point is that the share of non-competitive
procurements is still high compared to competitive procurements. In
addition, we have also identified one key point during our control
measures.

Usually, prices in single-source procurement contracts are not
lower than prices in competitive procurements conducted by open
tender, but on the contrary, they are more expensive. However, in
some cases, the opposite has happened. The price offered in the
open tender turned out to be more expensive than the price offered
in single-source procurement.

This in itself is a mystery, a question for us, and at the same
time it does not correspond to the philosophy of procurement," he
added.

In 2025, 1,360 procurements were cancelled

The chairman of the Chamber of Accounts said that the third main
issue is the number and amount of canceled procurements. He noted
that this indicator, although it decreased in 2025 compared to
2024, is still high.

"Finally, the third point is the number and amount of canceled
procurements. True, this figure decreased relatively in dynamics in
2025 compared to 2024.

In 2025, 1,360 procurements were canceled. This means
approximately 500 million manat ($294 million). There was a
considerable decrease compared to the previous year, and the
indicator dropped by 40%. A decrease was recorded in both the
number and amount of procurements.

However, the main and largest part of the decreasing
procurements are open tenders. 30% of the canceled open tenders in
terms of subject matter belong to the construction sector," he
said.

Share of canceled procurements in total procurements
amounts to 7%

Gulmammadov said that while in international practice the share
of quotations in total procurements in terms of amount is usually
zero percent, in Azerbaijan this indicator was 7%.

"The amount of cancellation under the quotation method is
approximately 20 million manat ($11.7 million). In international
practice, the share of canceled procurements in total procurements
in terms of amount is usually zero percent. In our case, this year
this indicator was 7%.

Besides, during the research conducted by us through the portal,
we determined that the cancellation of procurements is mainly due
to the non-compliance of the proposals with the set of conditions,"
he said.

Canceled procurements lead to failure to meet state
needs

In his interview, the chairman of the Chamber of Accounts noted
that all procurements are carried out to meet the needs of the
state. The cancellation of the procurement means that the intended
goods and property are not purchased in that period.

"Let me note one thing: all procurements are generally for
meeting the needs of the state. Failure to meet the needs of the
state and the cancellation of the procurement ultimately means that
those goods and property are not purchased for the intended
period.

We plan to conduct an analytical analysis in this area as a
control measure in the future. Our goal is to determine whether the
procurement method of the canceled procurement has changed later,
and whether the amount has decreased or increased. We want to make
the relevant assessment," he said.

Conceptual changes taking place in the audit of
procurements

Gulmammadov said that in the modern world, conceptual changes
are taking place in the audit of state procurements, and the
Chamber of Accounts does not want to remain outside of these
changes.

According to him, previously the main purpose of the audit was
to determine the extent to which the requirements of the
legislation were complied with.

"In the modern world, conceptual changes are already taking
place in the audit of public procurement. We did not want to be
left out of these changes.

Previously, the main purpose of the audit was to determine the
extent to which the requirements of the legislation were complied
with. In connection with the violations detected, it was determined
whether any activity complied with regulatory legal acts or
not.

In the new approach, the main focus is on how beneficial the
procurement is to the state, how efficient, economical, and
result-oriented the funds are used. In other words, we have begun
to give preference to result-oriented audits," he announced.

Two audits launch this year to assess effectiveness of
procurements

The chairman of the Chamber of Accounts said that two audits
have already been launched this year to implement the new audit
practice.

"We have already launched two audit events this year to
implement this practice. In addition to compliance with the
requirements of the legislation, these audit events determine the
extent to which the procurement contributes and is useful to the
two organizations we audit, and to what extent the state's needs
are met in the form that was previously foreseen, because we must
also pay attention to the correct and correct distribution of our
resources in the audit process.

Previously, we assessed this as a legal violation. Now, auditors
must also answer questions about the extent to which the
procurement will meet the expected result," he added.

Defect classification to update based on a single
approach

Gulmammadov noted that updating the defect classification is one
of the most important measures to be implemented in the audit
activities of the Chamber of Accounts.

"Revising the classification of deficiencies is one of the most
important measures of the audit activity of the Chamber of
Accounts. Our goal is to reflect the deficiencies and distortions
detected during the audit in the reports with a systematic, unified
approach and to analyze them correctly.

By comparatively analyzing the audit results, we will be able to
monitor their dynamics, identify cases of repetition, and more
precisely determine the measures to be taken in relation to these
deficiencies. As a result, we will be able to further expand our
analytical activities, which will have a certain impact on
increasing the quality of the audits we conduct.

At the same time, we would like to conduct the classification of
deficiencies in a coordinated manner with other institutions that
carry out the function of state financial control. Our goal is to
speak the same language with the institutions. This approach will
make a significant contribution to further strengthening discipline
and responsibility in state institutions," the chairman of the
Chamber of Accounts noted.

New strategic plan covers 2026–2030

The chairman of the Chamber of Accounts said that the
institution bases its activities on a strategic plan and continues
to form a practice of results-based accountability in this
direction.

According to him, the implementation of the previous strategic
plan covering 2021–2025 was completed at the end of last year, and
the new Strategic Plan covering 2026–2030 has already been
approved.

"As is known, the Chamber of Accounts bases its activities on a
strategic plan and has begun to form and promote the practice of
results-based accountability through annual and semi-annual
reports. At the end of last year, we finalized the implementation
of the strategic plan covering the years 2021–2025. Using
professional tools, we have defined a new strategic plan covering
the years 2026–2030.

While preparing the new strategic plan, we tried to take into
account the achievements achieved in previous years, the work done
and not done, the results of peer reviews conducted regarding our
activities, SWOT analyses, our analyses of the current situation,
the main challenges of the modern world and the expectations of
stakeholders. Our goal is to contribute to solving existing
problems in both our activities and in the management of public
finances, to preserve and further strengthen the achievements
made," he said.

Two main goals of new strategic plan
identified

Gulmammadov noted that the new Strategic Plan is built on two
main goals.

"The new strategic plan has two main goals. The first of these
is to support the improvement of public finance management by
implementing high-quality public audits. The second goal is to
contribute to improving the quality and efficiency of services
provided in the public sector," he pointed out.

State audit digitalization ranks among main
goals

The chairman of the Chamber of Accounts said that expanding the
scope of state audit, digitalization and strengthening
international cooperation are among the main priorities in the
coming years.

"In order to achieve the goals of the Strategic Plan, we plan to
expand the scope of state audit in terms of the consolidated
budget. We want to expand the preparation of audit-based opinions.
We plan to start auditing the medium-term expenditure
framework.

At the same time, digitalization of state audit, application of
artificial intelligence and data-based decision-making mechanisms
through integration into information systems, wider application of
international audit standards, and expansion of cooperation with
stakeholders, including international organizations and supreme
audit institutions of foreign states, are among our main goals,"
the official explained.

91% of the measures of the strategic plan for the first
half of 2026 implemented

Gulmammadov noted that separate operational plans have been
prepared for each period to implement the strategic plan.

"To achieve these goals, we have also defined operational plans
for each period within the Strategic Plan. We have already
implemented approximately 91 percent of the measures planned for
the first half of 2026," he said.

Gulmammadov noted that the Chamber of Accounts plans to move to
a new stage in the direction of full digitalization of state audit,
application of artificial intelligence technologies and operational
analysis of data: "The institution aims to expand the capabilities
of automatic risk assessment and big data analysis in the audit
process," he said.

According to him, the President has given important instructions
to state bodies in the direction of improving state finance
management and state financial control, and the Chamber of Accounts
has also defined new tasks to increase its responsibility in the
implementation of these instructions.

Digitalization of state audit ranks among main
priorities

Gulmammadov noted that an action plan for digital development
has been developed this year, and this document identifies the main
priorities in the field of digitalization, artificial intelligence
and e-government in the country.

"Relevant instructions have been given by the President Ilham
Aliyev to state bodies regarding the improvement of public finance
management and public financial control, and the implementation of
serious legislative and institutional changes in this area. The
Chamber of Accounts has also set new tasks to further increase its
responsibility in the implementation of these instructions.

You know that an action plan for digital development has been
prepared this year. A number of goals have been set in this action
program. The main goals are to determine priorities in the field of
digitalization, artificial intelligence and e-government in
Azerbaijan, and to accelerate the transition to an innovation-based
economic model. For this purpose, the Digital Council has been
established. The fact that the Council is headed by the First
Vice-President is an indication of the high attention paid to this
issue by the country's leadership. We believe that the goals set
for the Digital Council will be fully implemented," he said.

Chamber of Accounts of Azerbaijan creates digital audit
platform

The chairman of the Chamber of Accounts noted that various
directions of activity have been identified for the implementation
of the tasks set, and one of the most important of them is the
digitalization of state audit.

"We have started work on various directions of activity for the
implementation of the tasks. One of the most important directions,
as you noted, is the digitalization of state audit. We will try to
create a single platform by ensuring the receipt of reports from
organizations operating in the state sector through the information
systems established in this direction and implement their
operational processing.

Certain work has been done in this direction over the past
period. One of the main tasks is the creation of a technological
platform. We have placed our own information system in the
government cloud. We are also trying to obtain reports and data
through the system," he said.

Automatic risk assessment to be implemented

Gulmammadov said that after the information system is fully
operational, all main stages of the audit process will be carried
out in an electronic environment.

"After the system is fully operational, we'll carry out the
preparation of annual work plans, the preparation and planning
stage of the audit completely electronically. Automatic risk
assessment will be provided for various scenarios.

This will allow for a more correct distribution of our existing
resources and a reduction in risks arising from the human factor.
At the same time, as I mentioned, integration with other state
information systems will provide us with operational access to
information and help us obtain audit results more quickly. In the
coming years, we also plan to further expand the functions of the
information system and apply artificial intelligence technologies,"
he pointed out.

Artificial intelligence to improve quality of
auditing

The chairman of the Chamber of Accounts said that the
application of artificial intelligence technologies will serve to
base audit decisions on more reliable information and increase
efficiency in the management of public funds.

"Let me note that we believe that artificial intelligence will
play an important role in terms of increasing the quality of state
audits, basing decisions on more reliable information, and
increasing the efficiency of public funds management. The
electronic implementation of many processes that currently take
time will allow auditors to pay more attention to professional
judgment.

In general, the implementation of artificial intelligence, big
data analysis, and risk-based digital monitoring tools in the audit
process has been identified as one of the priority directions.
Currently, the Accounts Chamber is carrying out consistent work in
this direction. In the coming years, we intend to further expand
the functionality of the relevant information platform and increase
the application of artificial intelligence technologies.

One of the main issues that we treat with special sensitivity in
this process is the constant attention to cybersecurity
challenges," he said.

More than 70% of the audit portfolio made
public

Gulmammadov said that the Chamber of Accounts is implementing
its activities in the direction of disclosing audit results and
increasing transparency based on a special communication
strategy.

"The Chamber of Accounts has a communication strategy covering
2024-2026. The strategy consists of five SMART goals. During the
two years of the strategy's implementation, we are about to achieve
almost each of these five SMART goals.

I would like to highlight two areas in particular. One of them
is to increase the amount of information disclosed on opinions
given to budgets by 15% annually, and the other is to expand the
audit portfolio disclosed on external state financial control
measures by 3% annually.

We have already disclosed more than 70% of our audit portfolio
to the public in various forms. This information has been presented
to the public through magazine publications, the official website,
speeches and interviews," the chairman of the Chamber of Accounts
added.

Disclosure of audit results considered a preventive
mechanism

The chairman of the Chamber of Accounts noted that the
disclosure of audit results to the public is mainly considered a
preventive mechanism that serves to prevent the recurrence of
shortcomings.

"Regarding the media coverage of the results of audited
organizations, we consider the disclosure of audit results to be a
preventive mechanism that serves to prevent the occurrence and
recurrence of shortcomings in the future," he noted.

Strengthening accountability in extra-budgetary funds is
considered important

Gulmammadov said that three socially significant extra-budgetary
funds, which are part of the consolidated budget of Azerbaijan,
operate.

"In our country, there are three socially significant
extra-budgetary funds, which are part of the consolidated budget:
the Compulsory Medical Insurance Fund, the State Social Protection
Fund and the Unemployment Insurance Fund. In world practice, they
have various forms. There is a combined model, and there are also
models operating separately. This largely depends on the state's
policy and approach to social policy.

For us, as the Chamber of Accounts, we believe that their
accountability, proper organization of accounting, and
implementation of expenses within clearly defined boundaries are
more important than their independent or some other form of
operation," he pointed out.

No audited financial statements found for Compulsory
Medical Insurance Fund

The chairman of the Chamber of Accounts noted that recently, no
audited financial statements have been found for the Compulsory
Medical Insurance Fund.

According to him, the State Social Protection Fund and the
Unemployment Insurance Fund submit audited financial statements to
the Chamber of Accounts every year.

"For example, the Compulsory Medical Insurance Fund has not
recently come across audited financial statements. However, the
State Social Protection Fund and the Unemployment Insurance Fund
submit audited financial statements to us every year.

Yes, we may disagree on some issues related to the income and
expenses of the State Social Protection Fund and the Unemployment
Insurance Fund. But behind the financial indicators of these funds
lie certain obligations. It's an important condition that these
obligations are reflected in the financial statements," he
said.

Assets collected in funds serve to ensure rights of
citizens

Gulmammadov said that funds collected in extra-budgetary state
funds are intended to ensure the rights of citizens in relevant
areas.

"Strengthening the financial sustainability and accountability
of these funds is a very important factor for us. We are currently
holding discussions with the relevant executive authorities to make
some changes to the legislation on the State Social Protection Fund
and the Unemployment Insurance Fund," he announced.

Modern audit should be a strategic partner of public
administration

The chairman of the Chamber of Accounts said that in modern
times, the main mission of audit is to act as an institution that
supports the adoption of strategic decisions in public
administration.

"We believe that in modern times, the main mission of audit is
to be a strategic partner. That is, the supreme audit institution
should be an institution that supports the adoption of strategic
decisions in public administration. The audit institution has
undergone a great transformation. It has turned from an institution
that looks for errors into an institution that serves to improve
public administration," he said.

Auditing information systems will also be a key
priority

Gulmammadov noted that one of the main directions in modern
auditing is digital auditing, auditing of expenditures directed
towards sustainable development goals and climate finance, as well
as auditing information systems.

"Of course, one of the main trends in modern times is digital
auditing, and we have talked about it enough. The second important
direction is the audit of expenditures directed at sustainable
development goals and climate finance. These audits are mainly
carried out through performance audits. The Chamber of Accounts has
certain experience in this area and has already conducted relevant
audits.

At the same time, the audit of information systems is also one
of the important directions. Digitalization is no longer an
arbitrary choice, but an institutional necessity. We plan to
conduct an audit of information systems in the coming periods," he
shared.

Parallel audits provide an opportunity to study
international experience

The Chairman of the Chamber of Accounts said that one of the
main directions in the institution's activities is to support
strategic management and conduct parallel audits with partner
countries.

"As I noted, the Chamber of Accounts bases its activities on a
strategic plan and promotes this approach, and supports other
institutions in its implementation. This serves to form strategic
thinking in the public sector in general.

Finally, another important direction is the conduct of parallel
audits with partner countries. This allows both our auditors and
auditors of partner countries to compare the results of audits
conducted in different countries on the same topic, learn from each
other, and exchange mutual experience.

For example, last year we conducted parallel audits with the
supreme audit institutions of Türkiye and Kazakhstan. This year, we
are conducting parallel audits with the supreme audit institutions
of Uzbekistan and Pakistan," Gulmammadov added.

Decision made to conduct 33 control measures in the
first half of 2026

Gulmammadov said that in the first six months of this year, the
Chamber of Accounts decided to conduct 33 control measures.

"In the first six months of this year, we have decided to
conduct 33 control measures. The Board has made a decision on the
results of eight of them. The control measures cover various areas
of state finance. We have mainly focused on areas related to
education, public investments, and state apparatus finances. As
always, we have used compliance audits more often."

Eight performance audits launched in first six
months

The chairman of the Chamber of Accounts noted that the number of
performance audits in the first half of 2026 has increased
significantly compared to previous years.

"I would like to note one thing: in the first six months of
2026, we have already decided to launch eight performance audits.
That is, if in previous years we carried out six performance audits
per year, this year we have already decided to launch eight control
measures per half year.

These audits mainly cover agrarian insurance activities in
agriculture, the effectiveness of the state program in the field of
food security, dual diploma programs in the higher education
system, and activities related to increasing competitiveness,
activities carried out in some educational institutions, as well as
two control measures related to the effectiveness of
procurement."

More than 160 million manat ($94 million) of financial
violations detected

Gulmammadov said that as a result of the completed control
measures, more than 160 million manat of financial violations were
identified.

According to him, 49.8 million manat ($29.3 million) of this
amount constitutes damage to the state budget.

"We have identified more than 160 million manat of financial
violations in the almost completed control measures. 49.8 million
manat of this amount is damage to the budget. We have sent
decisions to the relevant agencies regarding the restoration of
damage in relation to 35 million manat ($20.6 million). We have
submitted materials to law enforcement agencies regarding
approximately 14 million manat ($8.2 million).

Meanwhile, 20.5 million manat ($12.1 million) is related to
financial distortions, and violations worth approximately 30
million manat ($17.6 million) involve efficiency audits," he
concluded.