Plans for new law to regulate internal audit in public service

A bill to regulate internal audit and financial investigations within the public service has been approved by cabinet and will shortly be included in the agenda of parliament, the prime minister said yesterday.

He said the legislation would strengthen the powers of the internal audit and investigations directorate and also regulate its role as the anti-fraud interlocutor in Malta for the EU.

Dr Fenech Adami told the biennial conference on the public internal audit and investigative function that since the introduction of internal audit in the government in 1992, the function had always been regulated administratively. Past experience had shown that this method proved to be somewhat weak in cases where auditees resisted providing information, and assignments were abandoned prematurely as a consequence.

"This was especially so in assignments within autonomous entities which nevertheless continued to receive public funds or support."

He said that apart from the necessity to legislate in connection with the directorate's role as the anti-fraud interlocutor in Malta for the EU, it would also be desirable to regulate internal audit and financial investigations through specific legislation, hence the drawing up of the new bill.

He said the bill would provide the necessary powers and safeguards to meet the wide-ranging responsibilities of the directorate. It would also recognise that the internal audit and financial investigations function had the potential to develop into a strong and effective tool for better governance.

Dr Fenech Adami said the definition of the term 'financial investigations' did not provide the remit for the directorate to assume police powers.

Its role was to ensure that if criminal court proceedings were to be taken, the government had in its possession tangible evidence collated during the course of a financial investigation, as well as reports and proper certification from experienced professionals in the field of accounting, auditing and public finance.

"This responsibility will not replace, but will rather complement, related functions already established in individual government entities. The intended role is to coordinate, supplement and support such functions where necessary," he said.

As part of this function, the directorate had already set up a coordinating committee that served as a forum where common issues related to irregularities and fraud were discussed and solved through the appropriate exchange of information.

The committee was made up of representatives of those government departments and public entities that had an interest in the protection of public funds from any form of mismanagement and suspected cases of fraud.

Dr Fenech Adami said that in 2001, the first year of operation of the directorate, a total of 30 audit and investigation assignments were completed. During the first five months of this year, a further 32 assignments, including eight special audits, were completed.