Hefty mobile phone bills and expensive gifts

The Auditor General has called on local councils to comply with financial regulations after noticing irregularities in the tendering process, astronomical mobile phone bills and gifts given to councillors worth hundreds of liri.

According to the public accounts report just published by the National Audit Office (NAO), many local councils have to a great extent failed to comply with financial regulations while their internal controls "continued to deteriorate" in 2003.

Seven private audit firms, appointed as local government auditors to review the financial activities in 68 local councils, issued 55 qualified reports for incorrect accounting treatment or disclosures, irregular banking procedures, fixed assets incorrectly accounted for or "not verifiable" and failure to provide for bad debts, among other reasons.

Some shortcomings arose due to the Local Councils Department's failure to amend the law on time and to enhance software. These concerns included the omission of budget figures from financial statements.

Besides the lack of compliance on accounting issues and issues such as sponsorships and donations exceeding 0.5 per cent of the annual allocation and individual donations that exceeded Lm50, the report highlighted that in one case, a direct order amounting to Lm14,486 was given for road and street patching without a call for tenders.

Works carried out on pavements costing Lm21,113 were also not covered by a call for tenders in another case.

The law specifies that local councils have to issue a call for tenders when expenditure on a project exceeds Lm2,000.

Auditors also discovered discrepancies in gross wages between the financial statements and the FSS returns in some cases and payment to employees in lieu of unused vacation leave.

In another locality, a "Heritage Route Project which has been going on since 1999 was initially estimated to cost Lm99,293. The project will have exceeded the adjudicated cost by Lm209,382," the NAO report stated.

With regard to reimbursement and allowances for mobile phone bills, top-up cards and travelling expenses, for instance, payments were at times not given against receipt, the NAO report says. In one case, a mayor's mobile bill that was reimbursed by the council amounted to Lm870.

In one locality, though the report does not specify which, councillors were given a gold "pin" in recognition of the work performed and a Christmas hamper costing Lm415 and Lm240 respectively.

There were nine local councils where expenditure exceeded income, namely Mdina, Balzan, Ghaxaq, Kalkara, Kercem, Pembroke, St Julians, Santa Venera and Swieqi.

In its recommendations, the report said that a measure called for by the NAO to address internal controls and weaknesses in 1998 has, till now, not been fully implemented.

The NAO had said the Department of Local Councils should set up a Local Councils Support Unit. Though the unit was set up, it only consists of one employee.

According to the NAO, the Local Councils Department had started a process to recruit two monitoring officers and a senior monitoring officer. However, the initiative was not accepted by the Management and Personnel Office of the Office of the Prime Minister following consultation with the Finance Ministry, the report said.

Giving his opinion on local councils' financial statements covering up to March 31, 2004, the Auditor General said that a number of shortcomings highlighted in previous years had re-emerged in 2003 as the number of defaulting councils also increased when compared with previous years.