Potential dues by government in the form of letters of comfort and bank guarantee reached almost €1.5 billion, the Auditor General reported in the Annual Audit Report on the Public Accounts for 2016, presented to Speaker Anġlu Farrugia on Wednesday.
The report comprises 22 reports on the operations of various ministries, departments and government entities, including an analysis of the financial report 2016. Separate audit opinions on the financial and compliance audits were published
The observations made include that substantial excess of expenditure over budgeted figures was again reported; and outstanding advances were issued in favour of third parties, totalling some €49.4 million and these would continue to be repaid out of public funds.
The auditor noted funds on Church Schools almost doubled over a 10-year period, from €32 million to €63 million but it was not possible for the NAO to verify whether such expenditure was duly authorised and properly accounted for due to lack of an audit trail.
Following a physical inspection carried out in a number of Gozitan schools, it was noted that there was a lack of control over inventory items.
An audit on the collection of annual circulation licence fees by Transport Malta and the procedures for the collection of dues in relation to contravention tickets implemented by the Local Enforcement System Agency revealed a number of control weaknesses in relation to the latter, concerning the chasing of debts.
The NAO was concerned that temporary lifting of contravention tickets was done by the external supplier, and that the agency was not in a position to extract the report on such instances itself.
The NAO noted significant delays in the transfer of funds emanating from fees collected on behalf of the government by the Malta Communications Authority, apart from a lack of independent verifications.
Although the Central Procurement and Supplies Unit within the Ministry for Energy and Health adopted cost efficient measures in relation to medicines and surgical materials expenditure, the actual consumption depended entirely on requests generated from different entities, which were not ultimately held accountable for a pre-established budgetary provision.
No major changes were made to the terms and conditions of the contract for the management of the carpark at Mater Dei Hospital which was effective from August 1. The main shortcomings emanating from the service concession contract split were not addressed and consequently the government continued to lose substantial amounts of revenue.
While the Government was paying significant amounts of money to film production companies by way of cash rebates with very good results, in so far as film production in Malta was concerned, verifications carried out at the Malta Film Commission concluded that effective controls were not in place to ensure that income attributable to the government in the form of tax payable was actually paid in full.
The main concern identified from an audit at the Malta Air Traffic Services Ltd. related to the complete reliance on an intergovernmental organisation, namely the Eurocontrol, for the estimation and collection of income associated to the provision of air navigation services.
From verifications carried out during an audit of expenditure at the Detention Service within the Ministry for Home Affairs and National Security, it transpired that internal controls in the payroll process were lacking, indicating that there was minimal monitoring to ensure effective management of human resources.
Although there was a net surplus position at the end of 2016, the Malta Police general fund was still in an unstable financial situation.
A review of the 2016 Arrears of Revenue Return submitted by ministries/departments revealed that 59% of the reported gross arrears of approximately €3 billion were deemed to be statute-barred. A further €177 million were under contestation. Over a year, the unpaid net balance, as at January 31, 2017, increased by 29%.
This report, in its entirety, may be accessed through the NAO website.