Malta was taking action to remedy the deficiencies noted by the European Court of Auditors in the paying agency handling EU agricultural funds, the government said.

In a statement, issued in the wake of the ECA annual report, Malta’s Permanent Representative to the EU, Richard Cachia Caruana said all elements in the report – not only those concerning Malta – would continue to be followed closely by the ­government.

The report was presented to Mr Cachia Caruana by former Speaker and Nationalist Minister Louis Galea, now Malta’s member on the ECA.

Referring to the inspection by the ECA in Malta, Mr Cachia Caruana said the Maltese Administration received mixed reviews.

He also noted that corrective measures were taken by Malta. “These corrective measures were assessed by the Internal Audit and Investigation Directorate during 2010 and it has concluded that the systems in place are now functioning well.”

In its annual report, published on Wednesday, the ECA found that the Maltese paying agency handling millions of euros in aid to the Maltese farmers was not up to standard and was classified as “not effective”.

Among the shortcomings, the ECA said the Maltese agency had insufficient audit trails, had applied penalties wrongly and even miscalculated aid eligible to farmers and made payments before solving anomalies.

In one particular case, miscalculation led to an overpayment of 69 per cent. When the ECA queried the EU Executive about this issue, the Commission admitted the problem and pointed out that the error affected overpayments to “519 farmers or an area of 203 hectares”.