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The National Audit Office yesterday released its annual audit report on the 2003 public accounts in which it has identified several areas of concern relating to audits carried out in respect of the financial year ending 31 December 2003, listing a series of shortcomings which have exposed government’s inability to control its recurrent expenditure due to lack of financial control.
The analysis of the Financial Report 2003, covering the Consolidated Fund and the Statement of Assets and Liabilities, highlights issues regarding variances in ordinary revenue and expenditure, outstanding advances, loan repayments, investments and public debt.
One of these shortcomings included the weak recovery efforts by the Social Security Department which had resulted in overpayments amounting to Lm2.7 million. With no apparent form of communication existing between the Social Security Department and Inland Revenue in the collection of outstanding National Insurance Contributions preceding 1998, arrears today amount to Lm5.1 million.
Another area of concern was the number of outstanding travel advances which the NAO called “substantial and preoccupying”. The total outstanding travel advances for the 1993-2003 period is 559, carrying a face value of Lm261,647. A recommendation forwarded by the Working Group, set up by the Ministry of Finance in collaboration with the Office of the Prime Minister and the Internal Audit and Investigations Directorate, had to date not been taken into account in updating the guidelines and regulations regarding government transport.
No progress was made in the manual reconciliation of the Public Account bank balance for the period June 1992 to December 2001, the NAO said. The Electronic Bank Reconciliation of the Public Account held at the Central Bank of Malta was carried out on a monthly basis as from 1 January 2002. As at September 2004, Treasury completed the automated bank reconciliation till the month of November 2003. The Central Bank management plans that by March 2005, the automated bank reconciliation would be up to date, but allocating staff to rectify matters for a whole decade is “practically impossible considering that data for the period is not uniform, is unstructured and sparse”.
Arrears of revenue, totaling over Lm360.8 million as at 31 December 2003, of which one third are estimated as not collectible, is still an area where significant improvement can be registered by introducing efficient procedures for the collection of debt, enforcement procedures for the settlement of fines and correct documentation for the settlement thereof.
No audit trail is still in place in respect of items purchased using Students’ Maintenance Grants (SMG) swipe cards, resulting in insufficient proof that funds are being used for their intended purpose.
The NAO report also said that other weaknesses repeatedly featuring in the Auditor General Annual Reports have remained unaddressed, particularly weaknesses relating to internal controls, namely a non-adherence to procurement regulations and controls over purchases; payment vouchers not covered by VAT fiscal receipts; expenses not charged to their respective account or sub-item number, hindering an effective comparison of actual expenditure against those budgeted; and a lack of verification before authorizing invoices for payment.
In the revenue section, the NAO said the completeness of records could not be ascertained in various revenue generating departments due to inadequate audit trail and unreceipted revenue and that the lack of segregation of duties in the revenue collecting cycle and delay in remitting receipts, increasing the risk of misuse and adversely affecting the cash liquidity of Government.
In the area of transport, inadequate record-keeping and monthly certification of general use cars’ log-books resulted in poor control over the issue of fuel and use of government owned vehicles. The report also said that there had been unofficial use and lack of proper authorization for the use of government owned vehicles after office hours.
Within the government stores, mandatory annual physical stocktaking of various stores had not been performed, creating difficulty in identifying slow moving, deteriorating or obsolete items, as well as discrepancies occurring during the year. Variances between physical as against recorded balances and store items were also not properly coded. |
