Performance Audit: Agreements between Government and YMCA Valletta

The Auditor General presented to the Speaker of the House of Representatives the Report highlighted in caption relating to the two Agreements between Government and the Non Government Organization (NGO), YMCA Valletta. This NGO provides accommodation and related services to homeless persons. This audit followed a request by the Ministry for the Family and Social Solidarity (MFSS), which was subsequently endorsed by the Minister for Finance on 5 March 2015.

The Report acknowledges that YMCA, with the exception of capacity-related issues, generally implemented its service delivery contractual obligations. However, the Office raises various concerns relating to contractual deficiencies, particularly within the 2008 Joint Venture Agreement between the Housing Authority and YMCA, whereby the former donated half the ownership of a property in Msida to this NGO as well as financed its refurbishment. This agreement is an atypical arrangement and deviates from the Authority’s standard operating procedures which stipulate that the leasing of property to NGOs should be on the basis of subsidized rates or ‘mera tolleranza’.

This agreement was also subject to other contractual lacunae, namely the omission of time-frames relating to project completion as well as the capping of public funds to be allocated for the refurbishment of the Msida Hostel. The contract also refrains from outlining penalty clauses in cases of non-adherence with contractual obligations. These circumstances contributed to a project delay of around three years, and prohibited the NGO from accommodating the maximum number of 25 persons stipulated by the Public Social Partnership (PSP) Agreement signed with the MFSS in April 2014. During 2014 and 2015, the service users accommodated by YMCA decreased by more than half. In turn, together with the significant decrease in fund raising by YMCA, the foregoing negatively influenced the revenue generated by the NGO for its operations.

Corporate governance concerns within YMCA affected its financial management whereby, as at end 2015, the NGO accumulated accruals of around €675,800 with respect to employees’ income tax and social security contributions as well as utility bills. Furthermore, the NGO’s payment procedures did not adhere to generally accepted accounting practices. Since 2012, YMCA did not present annual audited financial statements. This is in breach of contractual obligations with MFSS and the Voluntary Organisations Act. These circumstances encroach on operational transparency and accountability, which constitute basic prerequisites for ensuring that public funds are being utilised as contractually agreed.

It is augured that the recommendations proposed in this Report, together with the endeavors of the Government Entities and the NGO concerned contribute towards ensuring that services provided are sustainable and render their intended social benefits.