In 2014, the National Audit Office (NAO) celebrated the 200th anniversary since the setting up of the first public audit institution in Malta. This year, the office commemorated one of the most significant milestones in its relatively long history, namely the 20th anniversary of the constitutional amendments, agreed to unanimously by both sides in Parliament, which effectively guaranteed the total independence of the NAO from the executive in discharging its audit mandate.
One surely cannot overemphasise the significance and importance of this milestone; indeed through the promulgation of the new Auditor General and National Office Audit Act (Chapter 396) and the amendment to article 108 of the Constitution, the hitherto government department falling under the Minister of Finance was transformed into a totally autonomous institution ‒ a primary prerequisite for every credible and serious State audit institution in a truly modern and democratic country.
This was in line with one of the most important declarations ever issued by the International organisation of Supreme Audit Institutions (INTOSAI), the most significant section of which is quoted (box on right) regarding the sine qua non need of total independence of all supreme audit institutions, like the National Audit Office. In actual fact, the consequential radical changes brought about by these two legislative instruments were various, the most significant being:
Both the Auditor General as well as the Deputy Auditor General needed to obtain at least two thirds of the total votes in Parliament to be appointed to their positions; the NAO, within the limits of its budgetary allocation, became solely responsible for the recruitment and deployment of its employees; following an extensive scrutiny of the previous year’s audited accounts as well as the following year’s plans and objectives, the National Audit Office Accounts Committee draws up a parliamentary resolution, to be approved by the plenary, for the office’s budgetary allocation; and another Parliamentary Select Committee, the Public Accounts Committee, which is the only one to be chaired by a member of the Opposition, was set up with its main function being to scrutinise and discuss the reports issued by the NAO.
In my opinion, the NAO’s operational independence from all political parties and any other authority or pressure group, an autonomy which the office is duty bound to safeguard, is the main reason for this office’s sustained high level of credibility which it enjoys within Maltese society.
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This is not simply due to the fact that the principle of total autonomy is, as stated above, enshrined in the Constitution itself, but even more so because successive governments have de facto respected fully this independence which allowed the NAO to carry out its constitutional mandate without any interference or hindrance.
Another reason for such high level of credibility, undoubtedly of equal importance, is the commitment and professionalism shown by past and present NAO management and staff in carrying out their duties. Invariably and scrupulously basing their work and assignments on the fundamental values of integrity, objectivity and fairness. In this regard, reference is made to my two predecessors, auditors general Joseph Galea and Anthony Mifsud, who have led the office since the NAO was established in its present format 20 years ago.
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Acknowledging that the human resources available at the NAO constitute its most important and valuable asset, the Office is committed to provide the best professional development programmes for our staff. Indeed, following an extensive internal consultation process our Deputy Auditor General, Noel Camilleri, together with our finance and human resources manager, Ian Rizzo, developed an extensive training programme, which effectively commenced last July, the modules of which will be attended by practically all NAO employees.
NAO needs to befully responsive to change
The programme is being run in collaboration with the Chartered Institute of Public Finance and Accountancy (CIPFA) – a world leader in the provision of public finance programmes. To commemorate this important anniversary, various dignitaries have visited the office throughout this year. These included the president of the European Court of Auditors, Klaus-Heiner Lehne, accompanied by the Maltese member within the court, Leo Brincat, Prime Minister Joseph Muscat, the former Opposition leader Simon Busuttil and Speaker of the House of Representatives Anġlu Farrugia.
The activities organised by the NAO were brought to an end by a visit by President Marie-Louise Coleiro Preca on December 7. Her clear message to all NAO employees, namely “your incessant work, invariably based on the fundamental values of objectivity and integrity, in the best interest of the people of Malta and Gozo is greatly appreciated” summed up the words of appreciation for the work carried out at the NAO publicly conveyed during all these visits.
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In addition to the usual various audits undertaken by the four separate sections within the NAO, namely those focusing on financial and compliance, performance, investigations, and IT, another important initiative undertaken for the first time during this year was the issuance of a Follow-Up Audit Report (November 14) which effectively analysed in detail the level of implementation of various recommendations made by our auditors in 11 audit assignments carried out during these last years.
The findings of this report show that in the large majority of cases audited recommendations were duly addressed or are being considered by the ministries concerned, though a number of issues remain outstanding. Incidentally, the need of effective follow-up by audit institutions was also the theme of the fourth annual conference, organised jointly by the NAO and the ECA (September 12) on the initiative of Mr Brincat.
While organising these various activities to commemorate such an important milestone, the NAO is actively focused on its future strategy and operations. After all, as Thomas Jefferson, one of the greatest US presidents, rightly stated: “I like the dreams of the future better than the history of the past.”
In this regard, an extensive consultation process involving both internal as well as external stakeholders, is presently underway to enable the drawing up of a strategy document which will give a clear sense of direction and purpose to the NAO during the coming five years.
This is necessary so that the NAO will remain a vibrant and relevant state auditing institution; thus carrying out, as best as possible, its main function of providing adequate and reliable assurance to Parliament, and ultimately to the taxpayer, that public resources are being economically, efficiently and effectively, in line with prevailing financial rules and regulations.
A primary requisite in this regard is that the NAO needs to be fully responsive to change such as, to give just one example, through the gradual use of the big data concept to provide more meaningful audit findings. Essentially this entails that all available data is processed through new techniques to produce comprehensive analysis in the best way possible.
Although being a relatively small organisation, we strongly believe that the NAO possesses the necessary leadership and human resources to ensure it continues to improve the service it provides to Malta’s public administration within the context of an ever-changing social, economic and political environment. Ultimately, through facilitating timely and objective parliamentary scrutiny, as well as the safeguarding of the Maltese taxpayer’s interests, the NAO would thus adequately justify its historical description as the ‘guardian of the public purse’.
1. Supreme Audit Institutions can accomplish their tasks objectively and effectively only if they are independent of the audited entity and are protected against outside influence.
2. Although state institutions cannot be absolutely independent because they are part of the state as a whole, Supreme Audit Institutions shall have the functional and organisational independence required to accomplish their tasks.
3. The establishment of Supreme Audit Institutions and the necessary degree of their independence shall be laid down in the constitution; details may be set out in legislation. In particular, adequate legal protection by a supreme court against any interference with a Supreme Audit Institution’s independence and audit mandate shall be guaranteed.
Section 5, Independence of Supreme Audit Institutions
The Lima Declaration, October 1977
Charles Deguara is the Auditor General.