The National Audit Office is celebrating its 200th anniversary and it is planning to culminate celebrations with a visit by President Marie-Louise Coleiro Preca. Anthony Mifsud spoke to Vanessa Macdonald about the office’s work and challenges.

Over the past decades, the role of the National Audit Office has changed. What is the impact in practice?

Through the Auditor General and National Audit Office Act of 1997, the department of audit was transformed to the National Audit Office. It no longer forms part of the civil service and no longer reports to the finance minister – but to Parliament.

We increased our autonomy and have been free to recruit our own staff without going to the Public Service Commission or the PAHR office at the Office of the Prime Minsiter.

Having said that, in the past 50 years since Malta become independent, when Malta’s budget was £30 million and now when it is €3.4 billion, we kept the same number of staff – around 55, including support staff.

You were appointed in 2008 and your term of office was renewed for a further five years under this administration. What are the implications?

It puts a greater pressure on our office as one administration appointed us and the next confirmed us. This show of trust in the office has to be reciprocated by all our staff doing their utmost.

Sometimes we are criticised that we always mention the shortcomings of government departments. Obviously, that is our work. There are a lot of positive factors throughout the public service, but it is not our job to report them.

There are quite a number of senior officers in government departments who really work hard and for very long hours. We must put everything into perspective.

All in all, since independence 50 years ago, this country has been well served by its public administration, in spite of all the shortcomings we mention.

This is a delicate period for the office. For almost 25 years, we had the same administration. Now it is a different administration and next month we will issue the National Audit Report for 2013, and that covers a three-month period of one administration and the rest for the present one.

Will people scrutinise them, looking for a bias in favour or against a particular administration?

Things do not change for us. We maintain our objectivity and always have to report factually. We are sometimes also given some delicate assignments, which are technically quite complex...

...Like the fuel procurement one?

Yes. We tend to approach university academic staff to help us with technical details. Usually people are forthcoming when we ask for assistance. Until now, we have not had any problems with people shying away from our assignments.

There is a lot of political weight to your reports. They are a real mirror of how competent an administration is at governing...

I would not say they reflect how competent a government is; I would say rather how competent departments and the public administration is.

After all, we do not report on policy, we report on administrative measures and shortcomings. We leave policy to politicians and do not interfere.

Those who read your reports are often shocked by the outcomes. It seems incredible that so many things are not checked, or are ignored.

Public administration changed drastically with membership of the EU 10 years ago. Top people – permanent secretaries and directors general – are so loaded with day-to-day work and EU work that they sometimes do not have time to supervise their subordinates. But it is important that we do not allow these shortcomings to become permanent issues.

You mentioned subordinates. But how many problems are down to human error or negligence? And how many are due to lack of structures or frameworks?

We do find departments who might have shortages of staff or ones that do not have the appropriate competencies. On the other hand, we also know that junior people sometimes need more training and direction. And those who develop policies should explain them clearly to people further down the line. We usually find that there is a lack of communication.

Sometimes there is considerable staff movement and departments suffer from a lack of institutional memory. They rely on the memory of one particular individual who has been there for a number of years.

However, there are cases of carelessness. An area which bothers us is the high level of arrears of revenue.

This obviously leads to sums of money which are non-collectible. That is an area that the ministry of finance follows closely. If departments realise that they are wasting their time and energy trying to get these arrears, they have to seek approval from the finance ministry to write those amounts off.

VAT and Inland Revenue are now doing a lot to identify inflated estimates, uncollectible amounts, perhaps because a company is closed and the owners dead, etc. The decision on whether to write them off or not would have to come from you, according to Finance Minister Edward Scicluna.

I have to clarify this. According to financial regulations, that decision would have to be taken by the Ministry of Finance. Remember this office can only recommend. We do not have any executive powers at all.

At the end of 2012, we had €1.6 billion due.

What do you recommend the Finance Ministry should do?

The ministry is taking positive action. It has decided to have a Commissioner for Revenue who would oversee Inland Revenue, VAT and customs – the three major revenue-earning departments of government. They would then have to decide what can be written off and what has to remain.

When you look back, have you seen any improvements?

Yes. Many departments take up our recommendations, but there are others that are reluctant – perhaps the word is hesitant – on what approach to take.

When our auditors go to a department, they go after the event has taken place and have the time to look at things carefully.

Sometimes, when you are in a department, you have to take a decision there and then as it is cumbersome to go by the regulations if you are trying to get the work done on time.

I can understand because I was a permanent secretary myself. Having said that, thanks to EU membership, public procurement legislation has improved and e-procurement has been introduced, but in other areas I think we need to update legislation enacted in the 1960s.

What is the solution? Are other audit offices around the world given executive powers?

The British model is that of a National Audit Office but the continental model is a Court of Audit, where the department concerned is ‘charged’ before the president of the court, who acts like a judge to decide whether there was a shortcoming and can impose fines.

Wouldn’t you like to do that? Perhaps for those departments that ignore your request for feedback or ignore your recommendations? Or where you do a follow-up audit and do not find any improvement?

In our case, the action usually has to be taken by the Public Accounts Committee, which can sanction a department.

Also, you must remember that in Courts of Audit, most audit staff hold legal professions, which is not the case for audit offices, such as ours.

Let us take roadworks. There are a number of projects which were over-budget and over-time. Has anything improved?

There are areas where there was improvement but this depends a lot on specific factors.

You mentioned roadworks. Sometimes the contractors are really busy with other projects and cannot cope or reach their targets.

Please do not expect me to cry for them. They should not have taken on the contract in the first place, if that were the case...

You are right in your argument. But sometimes it is difficult; these contractors have problems with their workforce, with turnover of employees, for example.

It is no use finding out that a project is over-budget and over-time when it is finished – whether a road or the Parliament building. Isn’t it better to flag the problems when there is still time to do something about it?

Traditionally, national audit offices used to be reluctant to pre-audit but nowadays we are moving towards a scenario where we audit as the work is being done. However, you have to be careful not to disrupt the work itself if the audit has to be done while the work is under way.

Many departments take up our recommendations, but there are others that are reluctant – perhaps the word is hesitant – on what approach to take

How many times is action instigated by a ministry or department, asking for your help?

Ministries and departments usually go to the Internal Audit and Investigations Directorate, which forms part of OPM. The difference is that they do not publish their reports but present them to the permanent secretary concerned who then has to decide with the minister how to improve any shortcomings identified. We do sometimes receive requests to carry out a particular audit but these usually come from the PAC. I can also carry out investigations on my own initiative.

We are very careful as we need to lead by example. Our budget is around €2.5 million, increasing slightly over time.

Most audit offices internationally calculate that they save their governments roughly 10 times as much as they spend. So our work can save government around €25 million.

Can I be simplistic? If we gave you €5 million, would you save the government €50 million?

You cannot say that doubling the budget would bring about the same return, as international studies also indicate. We compare ourselves mainly to the UK NAO, which has 800 staff and also carry out intensive work on performance and value-for-money and obviously have one of the best operating PACs, which meets twice a week.

We have close contacts with them and with the European Court of Audit through meetings twice a year.

Where would you like the office to be by the time your five years are up?

I hope that the departments realise that the NAO is their helper. Some see us as their overseers or outside intruders while others realise that they have shortcomings and they accept our recommendations and immediately start to implement them. Where we receive a department’s backing, things usually improve in a relatively short time.

In that way, when their turn comes before the PAC, they can give real evidence that they have started improving certain things and that they have controlled wastage.

The problem with procurement is that there are so many different types of contract and so many projects. Some of them are one-off – like a hospital – so there would not be the expertise locally. It is a major headache for most administrations.

It does not help when a preferred bidder for the casino contract is announced and is then reviewed. Things that change half way through a race tend to raise a lot of question marks over procurement...

Departments should avoid those kinds of situations but that is sometimes easier said than done.

Circumstances might crop up. A large project tender would take some time to be issued, adjudicated and awarded. However, departments must have a clearer vision.

There are periods – as we had last year – when a new administration is keen to start implementing its electoral programme. If things are hurried up, then there could be some shortcomings.