18 July 2001

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Dalli applauds NAO, stresses that further changes must be made

Speaking at the fourth anniversary of the National Audit Office yesterday, Finance Minister John Dalli applauded the fact that the NAO is undergoing the necessary changes needed for a modern state audit institution.

However, Mr Dalli added that, while the NAO is obviously on the right track, there is still a good deal of work to be done to bring it up to scratch with today realities and circumstances. Adding to the Office’s staff compliment was cited by Mr Dalli as one example of such work that needs to be carried out.

However, given the positive certificate given to the NAO by the EU, as well as the evident improvement in audit reports in these past few years, Mr Dalli praised the Office as a strong state audit institution perfectly capable of handling both its current and future challenges.

Mr Dalli explained to attendants yesterday at the Mediterranean Conference Centre, "I am convinced that the Office has, within a short space of four years, registered substantial progress. It has developed into a relatively strong state audit institution, which is respected by Government Ministries and Departments and whose findings and recommendations are being given their due attention. It has developed from an institution whose main role was that of Financial Audit to one whose role now also encompasses Value for Money Audit.

The NAO, Mr Dalli explains, now does not just look into the correctness of the Government Financial Statements. It also looks into aspects of economy, effectiveness and efficiency of programmes and activities. It looks into the quality of service.

He adds, "I have noted with satisfaction that the Office no longer issues just one annual audit report. It also periodically issues Value for Money Reports on various themes, such as Customer Care, Government Vehicle Expenditure, Heritage Sites and Health Centres. Its reports are interesting and are a contributing factor to effecting changes that are required in the Administration. Indeed I see the Office as an agent that can identify, encourage and facilitate changes in the Public Service.

"A strong audit institution is also important as it can help Government bring about financial discipline to government initiatives and projects. Government's financial controls can be greatly enhanced with a well-functioning, independent and professional state audit institution. As the Minister of Finance, it is important that I am made aware of any serious shortcomings in financial control and misadministration so that my Ministry can take the necessary corrective measures."

The role of the NAO becomes more important in times of high Budgetary Shortfalls, as it can assist the Administration in identifying uneconomic practices, waste, inefficiencies and other shortcomings that negatively affect the State Budget, apart from being morally unacceptable and an unnecessary and unfair burden on the taxpayer.

Mr Dalli elaborates, "Change is an ongoing process that is dependent upon the evolution of society, changes in government policies, cultural, economic and other local developments as well as changes in peoples’ attitudes towards the environment, safety and health standards brought about by the increased awareness of a more educated population.

"Changes were and still are also dependent upon developments being undertaken in the international sphere.

Although government-related institutions have been undergoing changes to a greater or lesser degree throughout many years, the genesis for the more recent major changes can be traced back partly to a 1993 Government White Paper entitled "The Change continues…", and more recently, particularly since 1998, to Malta’s application for EU membership.

‘The Change continues’ document, Mr Dalli explains, is probably the main factor that set the changes which were eventually carried out at the National Audit Office in motion.

The document had specifically proposed the modernisation of the law, which regulated the powers, and functioning of the Government Auditor, with the aim not only of increasing his powers of review but also of strengthening his independence.

Through this document, the Government at the time had proposed that it was time to revise the method by which the Government’s principal Auditor was to be appointed. The functions assigned to him, as well as his relationship with the Government, Parliament and the people, also needed to be revised and updated to the then current needs of the country. It was argued that the Government Auditor must act as the citizen’s trustee by being able to examine and control Government administration and finances effectively, transparently and without any pressure or influence from any body, person or other authority.

Although the auditor’s independence was already guaranteed before 1993 by the relative provisions in the Constitution of Malta, it was felt that his independence and functions needed to be strengthened further, both legislatively as well as functionally.

However, Mr Dalli explains, changing the legislation is, of course, by itself not sufficient to ensure that things are carried out the way they should be. Legislative measures have to be accompanied by organisational changes and often by changes relating to the mentality of employees.

Meanwhile, in order to facilitate the changes that were required, Mr Dalli explained that the new legislation provided that the Auditor General be given statutory authority to select his staff in any way he deemed fit instead of having to depend upon the Civil Service for recruitment. The remuneration, conditions of work, staff discipline and all other matters relating to the NAO staff were also to fall under the Auditor General’s responsibility. In effect, NAO employees were to be cut off from the civil service and become employees of the National Audit Office.

The raison d’être behind these new legal provisions, according to Mr Dalli, was so the Auditor General would not be hampered by any unnecessary bureaucracy and to avoid the previous situation when Civil Service employees were transferred to or from the state audit institution with the Auditor General having little or no say in such transfers. This had led, in the past, to the unhappy situation where many of the Audit Office’s employees were misemployed and were not suitable for audit work.

In view of the importance, quality of work and technical expertise required in auditing, staff engaged with this organisation needed to be professional or quasi-professional staff. This was another reason why it was felt that the National Audit Office should be an independent entity with its own procedures for recruiting staff. Furthermore, it was felt necessary, especially also in view of international conventions on state auditing, to have the Office completely cut off from the Executive, that is the same Executive on which it was bound by law to carry out its audits and reviews.

The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
Tel: (356) 382741-3, 382745-6 | Fax: (356) 385075 | e-mail: editorial@networkpublications.com.mt