This year marks the 200th anniversary since the establishment of the Audit Office in Malta in 1814 by Governor Thomas Maitland to address lax accounting practices, corruption, poor financial information, competence of officials and inadequate remuneration. Maitland wrote to Lord Bathurst, Secretary of State for the Colonies, on October 24, 1814, on measures taken to ensure “a permanent and settled mode of administering the expenditure of the public money in the various departments of this island”.

There was a great deal to criticise in the way public accounts in Malta were kept and rendered during the first years of British rule prior to 1814, but possibly the most unsatisfactory feature was the total absence of proper audit in Malta in any shape or form.

Sir Alexander Ball, who was the British Civil Commissioner of Malta between February 1799 and February 1801, has been blamed for much of the financial muddle of those early years, but blamed very unfairly. Records show that, as early as 1801, the London authorities had undertaken to furnish Malta with guidelines for the regulation of financial business but had subsequently failed to do so.

Ball took the matter up with London early in 1805 and suggested that the Auditor of Military Accounts would also audit the civil accounts on a regular basis. On several subsequent occasions, he again urged the appointment of a resident auditor, while stressing that he had received no financial guidelines, and was forced to work on the systems he found in place, which were those in force in the time of the Knights.

London failed to respond to Ball’s urgent concern. After Ball’s death in 1809, his insistence was taken up by Sir Hilderbrand Oakes, the British Civil Commander of Malta between May 1810 and July 1813, with further multiple reminders. This eventually bore fruit in 1812, when an Examiner of Civil Accounts, James Toole, was appointed for duty with the government of Malta.

Toole’s appointment was, in fact, part-time, because he had to couple his civil audit function with his other duties as an Army Commissary of Accounts. On this basis, the civil examiner (later renamed auditor) could not adequately cope with current audit business, let alone tackle the pre-1812 muddle, which remained far from sorted out.

With arrears further building up, and with the added confusion generated by the plague outbreak of 1813-1814, the decision was taken to appoint a second auditor specifically to examine all accumulated ‘arrear accounts’ over the period 1800 to 1814, with responsibility for current audits remaining with Toole.

This cleaning up of past accounts was assigned to William Thornton in 1815, who eventually completed the mammoth task in 1824. In the meantime, Toole, who had been virtually incapacitated by ill health for several years, had retired and the two posts of civil auditor were unified under Thornton in 1822.

Thornton’s particular merit is that he not only managed to unravel the obscure financial transactions of the earliest days of the British connection and the chaotic accounts of the plague period, but also had a major hand in introducing systems of regularity and accountability which were the basis of all subsequent financial administration through reforms introduced by Maitland (1813-1824), and later under the UK Treasury regulations of 1824.

He was a solid rock of dependability in financial matters throughout his long career (1815-1858) and, indeed, he was a major government player throughout this period, not just in his capacity as auditor but effectively also as the government’s financial adviser and trouble-shooter throughout his tenure of office, and particularly after Maitland’s time, from the mid-1820s onwards.

Thornton was the only auditor to earn a knighthood, a tribute, perhaps, to his long service as much as to his ability.

After age and pressure of work began to tell on Thornton, in November 1857 he informed the governor of his wish to retire. The governor approved his request and proposed that John Collings should be appointed auditor general in Thornton’s place. Collings was an English doctor who had received his education at the University of Malta. But he was not to last long in his new position, for four months after his appointment as auditor general, he died at Southampton while on leave in England.

As the office of auditor general fell vacant with Collings’s death, the governor thought he could make some changes in the distribution of offices. He decided that Richard Legh, at the time assistant secretary in the Chief Secretary’s Office, should be appointed auditor general. Legh occupied the post of auditor general from June 1858 till his death on January 10, 1876. Frederick Hoare was the next person chosen to fill the vacant post of auditor general. Hoare was the Collector of Revenue and Treasurer of Gibraltar.

Political convenience and the urgency of governmental programmes were unfavourable to rule-base administration. The partisanship that infected political thought and action competed for a civil servant’s attachment to the values of impartiality and neutrality

Neither Legh nor Hoare brought lustre to the auditor-general’s office, though between them they held it for 28 years; indeed, Hoare endured the humiliation of being the only auditor eased out of office for incompetence. George Cousin replaced Hoare in May 1885. He was the first Maltese auditor general.

Until after World War II, it was not uncommon for heads of departments to hold a military rank, generally as officers in the King’s Own Malta Regiment, a territorial force.

The accelerated promotion of Lieutenant Colonel Alfonso Trapani, auditor general from April 1922 till June 1937, aroused disquiet in 1922. Trapani was a part-time soldier. So too was Major Stephen Sammut Tagliaferro, who led the Audit Office during the first phase of post-war reconstruction (December 1942-February 1948).

On the other hand, many heads of the Audit Office, along the years, spent the formative years of their careers in other departments of the public service, as members of the administrative class.

As, for most of the past 200 years, the Audit Office was a department of the public service, there can be little doubt that the administrative culture of the Malta civil service established the foundations of the Audit Office’s tradition.

During the first half-century of British rule, British officers led the Maltese civil service. Influenced by the British, the civil service was soon transformed into a governing institution.

However, Malta’s small size, economic insecurity and electoral system encouraged intense political competition, clientelism and governmental paternalism. The unusual combination of comparative abundance of money, wealth and economic vulnerability encouraged ambitious development plans.

Political convenience and the urgency of governmental programmes were unfavourable to rule-base administration. The partisanship that infected political thought and action competed for a civil servant’s attachment to the values of impartiality and neutrality.

The incidents recounted in the auditor’s annual reports disclose the consequences for day-to-day administration of tensions and ambiguities, opportunities and constraints. Over a span of two centuries, they reveal the distinctive pattern of governance.

These ambiguities and constraints hindering Maltese public adminis­­tration always worried successive auditors general.

However despite their limited independence, the restraints on their jurisdiction, the chronic shortage of suitably qualified staff and the enduring inability or unwillingness of successive governments to address the auditor’s pleas, the auditor’s own reluctance to impose sanctions on defaulters led to successive auditors developing a tradition of independence, integrity and professional ability. They kept in close touch with developments at home and abroad. They always showed tenacity and persistence in discharging their statutory obligations.

In short, the history of state audit in Malta is unavoidably associated with constitutional and administrative development. Throughout the past two centuries, alterations to the auditor’ status marked more fundamental changes in the constitutional order. The auditor’s annual reports aired broader official concerns with a view to promoting scrutiny, debate and action.

The constitutional amendments that re-established the office of the auditor general in 1997 set the seal on the reform of central government inspired by the Public Service Reform Commission a decade earlier.

They brought to a close a period spanning almost two centuries during which the Maltese experience of paternal, centralised government reached its peak between 1964 and 1989, with the birth and consolidation of a sovereign state heavily engaged in planned socio-economic development.

Following the coming into force of these important legislative amendments on July 25, 1997, the National Audit Office obtained a clear mandate and empowerment to encourage accountability of public officers and to contribute towards better management of public funds and resources.

In this emerging scenario, it was felt necessary to establish a mechanism which facilitated and encouraged discussion and corrective measures to be taken on audit issues through the House of Representatives. This was finally established in March 1995 in the form of the Parliamentary Public Accounts Committee (PAC). This was carried out by means of an amendment, unanimously approved by Parliament, to Standing Orders of the House of Representatives.

The committee consists of seven members of Parliament, four from the government side and three from the Opposition. The chairman of the committee is nominated by the Leader of the Opposition after consultation with the leader of the House of Representatives. The PAC has the power, inter alia, to examine and act on reports made by the auditor general.

At least three members of the committee may request the auditor general to submit memoranda on any matter. Moreover, the committee is empowered to report and make recommendations thereon to Parliament.

The PAC represented an important development to the concept of accountability of the executive and legislative branches of government to Parliament. In addition, the PAC served as a catalyst to strengthen the state audit function in Malta.

The revised legal framework sought to enhance and consolidate the independence of the state audit function. This was primarily achieved by establishing that the auditor general be an officer of Parliament. Furthermore, the dependence on the Ministry of Finance and the Office of the Prime Minister for resourcing the office was removed. The NAO Act further empowered the auditor general to recruit staff for the office under conditions that he or she decides upon. NAO employees are not government employees, as was the case before the constitutional and legislative amendments relating to the office.

The constitution recognised that the independence of the state audit function would be strengthened and given more credibility if the auditor general and the deputy auditor general were appointed by the president acting in accordance with a resolution of the House of Representatives supported by the votes of not less than two-thirds of all the members in the House.

This procedure ensures that the auditor general and his deputy are accepted as politically unbiased figures. In fact, the appointments of both the present auditor general and deputy auditor general won the unanimous support of the House of Representatives.

The independence of the NAO has been further guaranteed through new funding arrangements. The annual estimates considered necessary for the running of the NAO are reviewed by the National Audit Office Accounts Committee prior to consideration and approval by Parliament.

Members on this committee include the leader of the House of Representatives and the chairman of the Public Accounts Committee. The Act also provides for the accountability of the office. The committee is obliged to appoint private sector auditors to audit the accounts of the NAO.

To enhance the effectiveness of the audit reports the NAO Act stipulates that the auditor general is to submit his annual report to the Speaker of the House not later than one year following the closing of the financial year under review.

The auditor general can also submit other reports to the Speaker of the House on any other issue of significance, materiality or value for money nature. All reports are tabled in the House of Representatives by the Speaker of the House.

Although previous legislative provisions did not exclude value for money (also referred to as performance) audits, these were given increased prominence with the new legislation.

Value for money audits are a natural consequence of the increased demands by the public for more economic, efficient and effective public service operations. Such demands for value for money and accountability in public service operations are catered for in the Act.

The mandate had been extended to cover more clearly all entities holding, administering or using, directly or indirectly, public funds.

On July 25, 1997, the National Audit Office obtained a clear mandate and empowerment to encourage accountability of public officers and to contribute towards better management of public funds and resources

The NAO uses the International Auditing Standards of Supreme Audit Institutions (ISSAIs) as guidelines of practices to be followed in the conduct of its audits.The office has also developed, and continues to develop, more detailed auditing guidelines in line with these international auditing standards.

The remodelling and strengthening of the state audit function had proved to be timely and of increased significance in view of Malta’s accession to the European Union on May 1, 2004. Such membership carries the obligation to ensure that EU funds transferred to/from Malta are properly controlled and accounted for.

The principal function of state audit is to promote accountability, proprietary and best practice in government operations and activities and to provide independent and objective analysis, assurances and advice to Parliament on the way Treasury, government departments and other entities in receipt of public funds use and account for taxpayers’ monies.

Consequently, one of the main challenges faced by the NAO is to continuously ensure that it has adequately trained professional staff to enable the office to carry out its constitutional mandate in the most effective and efficient manner.

The NAO gives due importance to its international relations, especially with other supreme audit institutions, and regularly participates in various international working groups.

Whenever requested, the NAO’s views are also submitted on standards, guidelines and other studies undertaken by Intosai, Eurosai and other international audit institutions.

The democratic process demands that the achievement of proper financial reporting, accountability, propriety and value for money in public administration need to be insisted upon and followed up constantly and vigorously.

Through the constitutional and legislative provisions referred to above, the NAO has the necessary mandate and empowerment to execute in an appropriate manner its primary function of serving as the guardian of the public purse, contributing to a stronger public sector for the benefit and in the interest of all Maltese citizens.

Mario Sant is public relations officer of the National Audit Office.