Annual Audit report finds number of issues to be addressed
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The Auditor General presented to the Speaker of the House of Representatives, the Annual Audit Report on the Public Accounts for 2011 on Monday. It comprises 21 reports on the workings of various Departments and other Government entities, including an analysis of the Financial Report 2011. Some of the main observations are reported below:
Following a detailed analysis of the Financial Report 2011, the National Audit Office (NAO) noted that:
• Letters of Comfort and Bank Guarantees reached €1,142 million (against €1,037 in 2010). These constitute Contingent Liabilities for Government; and
• substantial excess of actual over the budgeted figures of various items of Expenditure was once again reported; in some instances identical to previous year.
From the verification of Arrears of Revenue Returns forwarded to NAO, it transpired that most entities failed to reach Government’s budgetary target of reducing arrears in 2011 by 10%. Audit Reports and Management Letters prepared by Local Government Auditors revealed that a number of weaknesses and concerns reported in previous years still prevail, and have been included again in this Report.
The following concerns were also noted:
• For the second consecutive year, no audit opinion was expressed on the Financial Statements of one Council, due to the various material shortcomings encountered.
• Seventeen Local Councils and two Regional Committees recorded a negative Working Capital in the Statement of Financial Position.
• Twenty-three Local Councils and two Regional Committees registered a deficit in the Statement of Comprehensive Income.
From a review on Personal Emoluments at the Gozo General Hospital, it transpired that the related payments are not always backed-up with proper records to substantiate the expenditure, especially in the case of Consultants where no records are kept to indicate the number of sessions performed. Internal controls in various areas relating to salaries were weak or entirely lacking. Inadequate budgetary control on overtime was also noted.
An audit of capital and recurrent expenditure incurred by Wasteserv Malta Ltd. revealed long delays and substantial cost variations on capital projects. Lack of transparency and non-compliance with procurement regulations were also noted, especially regarding sub-contracted labour. The inadequacy of the overall internal controls is a major concern.
Internal controls by the then Ministry of Education, Employment and the Family were not sufficient to ensure efficient administration of public funds in line with standing laws, regulations and policies. Various control weaknesses were identified, including inadequate verifications resulting in incorrect payments, lack of proper stock records, and in the procurement process for Professional, Medical as well as Cleaning Services.
Shortcomings in various areas, including management of fixed assets and payroll was noted following a review at Agenzija Sapport, within the Foundation for Social Welfare Services. Inadequate control on fuel consumption was also evident in the use of general-use cars, while in a number of instances, the procurement regulations were not followed.
Action taken by the VAT Department in relation to Fiscal Receipt Defaulters reported by Government Departments during 2011 was rather limited. The audit, which also examined complaints from the general public, revealed other shortcomings, such as long outstanding complaints not being acted upon, as well as minimal follow-up on missing quarterly submissions reporting defaulters by Government entities in line with the applicable directives.
Insufficient supporting documentation, evidencing the utilisation of funds granted to beneficiaries, was encountered during a review of the National Lotteries Good Causes Fund administered by the Ministry of Finance, the Economy and Investment, for the years 2006 to 2010. Other shortcomings included funds distributed before completion of projects, receipt of funds not always backed-up by a signed declaration from the respective beneficiaries, and incomplete application forms, if at all.
An analysis of Direct Order approvals, granted by the Ministry of Finance, the Economy and Investment during 2011, highlighted a number of concerns. These included the incidence of retroactive approvals, as well as failure by entities to take the necessary actions to comply with Procurement Regulations, thus resorting to purchasing from the open market.
An audit of Personal Emoluments was conducted on a sample of different classes of employees working within Mater Dei Hospital. Testing revealed that salary payments of Consultants were not substantiated with records of attendance. Substantial amounts are expensed on staff allowances, with the highest allowance paid to a Consultant in 2011 exceeding €80,000. However, insufficient controls were observed in this area and on the overall salary payments. Various other shortcomings as well as significant overpayments were revealed during the audit.
In view of the claimed urgency to acquire Medicines and Surgical Materials, the Government Health Procurement Services within the Ministry for Health, the Elderly and Community Care disregarded financial limits approved for direct orders. The excessive and expired stock of medicinal items that the entity is many times ending up with, is also a matter of concern.
Lack of compliance with procurement regulations, expired contracts, as well as inadequate controls over expenditure incurred for specific services rendered to Mater Dei Hospital, were the main findings emerging from an audit on Non-medical Equipment Facilities Management.
Procurement regulations were not always followed by Mount Carmel Hospital, particularly in the provision of nursing services. Furthermore, certain services were not covered by a formal agreement and/or Bank Guarantee. Various other shortcomings were noted, amongst which at times payments were not adequately substantiated. The full Report can be viewed on NAO website: www.nao.gov.mt as from tomorrow.