Just three out of 68 local councils in Malta and Gozo received a clean audit opinion for last year’s accounts, the National Audit Office annual report on 2010’s public accounts revealed yesterday.

Smart card scheme for tertiary students deemed ineffective

The report slams several councils for their error-strewn accounts and failure to reply to management letters highlighting accounting irregularities. Less than one-third of councils submitted audited financial statements and management letters by the May 2, 2011 deadline. Two councils had not submitted any statements at all by mid-October 2011 and were therefore excluded from the report.

Of the 66 that did submit accounts, 15 failed to reply to management letters highlighting audit findings and recommendations.

In uncharacteristically strong language, the report goes on to state: “Not even bothering to reply to NAO ’s management letters indicates a total lack of willingness on the part of these local councils to address the shortcomings identified.”

It goes on to lambast councils for repeatedly committing the same auditing errors, year after year, without any remedial action being taken. “It is evident that ... certain local councils simply ignore these management letter points, indicating a total lack of accountability,” the report states.

The annual report’s 314 pages cover all aspects of public finance and highlight a number of shortcomings in public spending procedures.

It found that several ministries, most notably that for Gozo (see box below), had not followed appropriate procedures in several instances.

The smart card scheme for tertiary-level students was deemed “ineffective”, with the report saying “the costs of administering the scheme could be outweighing the benefits derived”. It reserved particular criticism for the “inadequate and unsatisfactory ” monitoring of retail outlets accepting the smart card.

The NAO found cases in which both Giovanni Curmi Higher Secondary School and the University of Malta failed to inform the smart card scheme administration of students’ resignations, resulting in students keeping their grants even though they were no longer enrolled.

It said the scheme had to be reassessed, and suggested “adding the entitled maximum amount to the yearly grant payable on a monthly basis”.

There were several irregularities in the way with which fully-expensed cars were purchased, supplied and accounted for within several ministries.

The Malta College of Arts, Science and Technology came in for significant scrutiny with a number of signature inconsistencies, petty cash mismanagement and a consultant paid without the necessary timesheets made available.

The Transport and Infrastructure Ministry received a similar black mark for issuing payments for cleaning and lift maintenance services without necessary checks and balances.

Numerous flaws at Gozo Ministry

Although the report finds some form of irregularity in several government ministries, the Gozo Ministry takes the unenviable gold medal.

In several cases, goods and services were procured direct from the open market without any tenders being issued and without the Finance Ministry ’s approval.

There were numerous failures to adhere to public procurement standards, ranging from the provision of towels and dialysis machines at Gozo General Hospital to the landscaping of public areas.

A consultant was paid over €21,000 to provide a communications plan for Eco -Gozo – without a call for tenders being issued or the Finance Ministry being informed.

Another consultant, who was engaged to work on the Marsalforn and Xlendi regeneration projects, submitted an invoice which was €2,424 over the approved amount. The NAO could find no timesheets for the work done.

The report mentions a number of other irregularities – too many to mention – and makes three pages of recommendations.

It includes the ministry’s responses to the NAO ’s findings. The Marsalforn and Xlendi consultancy fee, it pointed out, also included designs covering the Qbajjar promenade and Xlendi car park, while the lack of timesheets could be explained because “the consultant had perforce to carry out the required work away from the Ministry for Gozo”.