The year drawing to a close has been another extremely eventful one for the National Audit Office (NAO). Starting with its core function, the NAO managed to maintain and improve on its commendable performance of previous years by issuing 17 reports, which included the review of around 44 government departments and public entities, as well as 68 local councils, five regional committees and the Local Councils Association.
These reports delved into issues relating to important sectors like health, energy, education and social policy, among others, and were produced by the various Audit Sections within the NAO.
Undoubtedly, the most important aspect of these reports was the impact of the recommendations put forward by this Office to address the identified shortcomings and ensuring that public funds are used in the best manner possible and in line with financial rules and regulations.
Through such reports, we invariably seek to promote the values of transparency and accountability, which constitute the pillars of good governance across the public sector.
Obviously, as a widely respected institution, we have the responsibility to practise what we preach. Throughout the year the Office embarked on internal initiatives deemed critical for the present and future fulfilment of our constitutional audit mandate.
To offer the best auditing service to the public sector, change is no longer an option. It is a necessity. Of particular relevance was the drafting and launching of the NAO Strategic Plan for the coming five years, entitled ‘National Audit Office Strategy – Improving Governance and Performance across the Public Sector 2019-2023’.
This important document was drafted following wide and extensive consultation, both internally involving practically all NAO staff and externally with some major stakeholders, including permanent secretaries across the public service.
In order to enable the NAO to adapt quickly and appropriately to emerging situations and circumstances in the matters falling within its remit, the Office identified six strategic goals to be achieved during 2019-2023. We would like to thank Prof. Edward Warrington for guiding us throughout the often complicated discernment process leading to the final selection of these goals. A special thank you also goes to our Deputy Auditor General for ably mentoring the evaluation process of the multitude of proposals and ideas received and leading the process to come up with a doable action plan to facilitate the timely implementation of these strategic goals
Towards the end of the year, the Office published a major investigative report entitled ‘An Investigation of Matters relating to the Contracts Awarded to ElectroGas Malta Ltd by Enemalta Corporation’. This had been requested by the Opposition members of the Public Accounts Committee.
The NAO positively notes that this report attracted wide media coverage and citizen interest, even being debated during a plenary session of Parliament, and is now expected to be discussed extensively within the Public Accounts Committee (PAC) in the near future.
We consider this committee to be one of our most important stakeholders since ultimately it ensures that NAO’s findings and recommendations are given due attention. In essence, the PAC fulfils its oversight role by ensuring that accountability pervades the expenditure of public funds, and that disbursement is incurred in line with parliamentary decisions.
This year the committee examined a number of NAO reports and senior officials of the audited entities were requested to provide information or explanations. As usual, senior NAO officials, together with the auditors responsible for the reports, attended the PAC meetings. The higher number of reports scrutinised by the PAC, the more value added is provided to the NAO’s work.
On an international level, the main highlight of 2018 was undoubtedly the organisation of the important EU Contact Committee Liaison Officers’ meeting in Malta on May 10-11. This meeting is held every year in preparation for the annual EU Contact Committee meeting of Heads of Supreme Audit Institutions (SAIs). It was the second one organised by our audit office, attracted 66 participants from the national audit institutions of the 28 EU Member States, the European Court of Auditors (ECA) and EU Candidate and Potential Candidate Country SAIs (who attended as observers). Ably chaired by our liaison officer Brian Vella, various EU-related matters, deemed of particular interest to the participating SAIs, were discussed.
The NAO’s mission is to help promote accountability, propriety and best practices in government operations
Another key event in 2018 was the participation of a senior management delegation at the EU Contact Committee meeting held in Croatia on October 11-12. This is considered the most important annual event for the heads of all national audit office institutions within the European Union. I was one of the panel speakers together with Klaus-Heiner Lehne, ECA President, and Kay Scheller, the Auditor General of Germany, during the first sub-session on ‘Interaction with EU citizens – looking out of the window’ as part of the seminar titled ‘Interaction with EU citizens – opening SAIs’. I emphasised the importance of interacting professionally with citizens while duly maintaining our national audit offices’ independence.
In conjunction with the European Court of Auditors (ECA), the NAO once again organised the annual joint seminar, this year focusing on a most topical subject ‘Public Audit in the Digital Age’. In my opening speech, I emphasised that auditors are required to adapt their audit methodologies in response to rapid developments in modern technology, such as blockchain, Artificial Intelligence and data analytics. It was therefore crucial to discuss how new and disruptive technology is driving change in auditing.
In his keynote speech, ‘Technology is driving change in audit’, Leo Brincat, the Maltese member of the ECA, said that technology – including blockchain – is expected to be among the main catalysts of change in the sphere of auditing. He emphasised that innovative auditing will necessitate new tools, referring in this context to the benefits that big data and data analytics can offer even to public entities.
Our Deputy Auditor General gave an extensive overview of the NAO’s new initiative: Integrating Data Analytics in Auditing. He highlighted the measures undertaken so far to eventually introduce this new methodology within the Office, particularly the setting up of a data analytics team composed of members drawn from all audit sections across the NAO. The main objective is to gradually introduce the concept of data analytics in a number of pilot audit projects, testifying to the NAO’s commitment to be at the forefront of embracing change in emerging technologies.
The main factor contributing to another eventful year was the availability and continuous support of our highly motivated, competent and committed staff members, who through their knowledge and expertise ensure the continued success of the Office. It comes as no surprise, then, that the retention of our professional and knowledgeable staff is one of our highest priorities. We do our utmost to provide excellent professional development programmes as well as to facilitate, as far as possible, adequate family friendly measures.
The supportive and learning atmosphere offered to all NAO employees ultimately leads to an extremely positive work environment. Throughout the year, a significant number of employees, including senior management, attended the Chartered Institute of Public Finance and Accountancy modules on Audit and Assurance, International Public Sector Accounting Standards and Financial Crime Investigation and Case Management. A very interesting training programme on the Issue Analysis and Drawing Conclusions Approach was delivered to NAO auditors by Welsh Audit Office senior staff.
This last initiative reflects our ongoing efforts to enhance our practical cooperation with other public audit offices with similar operating environments. In fact, the training programme by Welsh expert Susan Morgan was the result of bilateral discussions that proved beneficial to both Offices.
Moreover, the first exchange of staff between the NAO and the Court of Auditors of Slovenia took place following the signing of an agreement between Tomaž Vesel, President of the Court of Auditors of Slovenia, and myself in May 2018. Our Michelle Borg Brincat benefitted from a work experience in the Slovenian Office, while Simona Bevk reciprocated with a work placement at our Office. Another initiative by this Office was the participation of one of our principal auditors, Rebecca Vassallo, in the INTOSAI Development Initiative (IDI) SAI Young Leader programme, following a tough selection procedure.
We are doing our utmost to prepare ourselves for future challenges; public auditing, especially in such a small country, evidently offers particular challenges. However, I am confident that together as one team, particularly with the continuous support and enthusiasm of my Deputy Auditor General, we can continue to work in the public interest, particularly by adopting best practices in audit methodology and reporting.
The NAO’s mission is to help promote accountability, propriety and best practices in government operations. We strive to be of service to Parliament and to the public since ultimately our mission renders us a services-oriented organisation. Only thus can we aspire to continue performing our constitutional mandate in the most independent and professional manner possible.
Charles Deguara is the Auditor General.
This is a Times of Malta print opinion piece