Report by the Auditor General on the Workings of Local Government for the year 2022

The Auditor General, Mr. Charles Deguara, today presented to the Speaker of the House of Representatives, Hon. Anglu Farrugia, the annual report on the workings of Local Government for the year 2022.

A total of sixty (60) Local Councils, six (6) Regional Councils and the Local Councils Association submitted their audited accounts to the National Audit Office (NAO) by mid-October 2023, despite that these were expected to be received by end of June 2023. Those pertaining to eight (8) Local Councils, as indicated in this Report, were not submitted by the time this Report was finalised. Also, of significant concern to NAO is the fact that four (4) Local Councils did not even bother to reply to the Management Letter sent to them, which incorporated a number of shortcomings. This is totally unacceptable to this Office.

While NAO acknowledges the overall progress registered when compared to the preceding year, room for improvement still prevails; hence the Auditor General urges pertinent Councils to intensify efforts on this matter. It is important that the services given to the citizens not only meet the needs of the local community but are also provided in an effective, efficient and equitable manner. In this regard, NAO satisfactorily notes the efforts on the part of the Administration to ensure that, as far as possible, all Councils are provided with the required support to achieve their mission and register progress.

NAO remarked that some Councils still did not fully commit and collaborate effectively with the Local Government Auditors, hindering the audit process and causing delays in completing the respective audits. Moreover, four (4) compliance reviews conducted by NAO revealed that the main concern was the non-adherence to procurement regulations.

NAO firmly believes that there is room for improvement in the Councils’ internal controls as recurring deficiencies, such as errors of an accounting nature and inadequate management of fixed assets, have been reported upon year on year, suggesting that corrective action has not been taken to address the root causes. Another issue commented upon related to the fact that the Councils’ allocation was not always utilised efficiently and economically, resulting in either budget overruns or excessive savings of funds.

Other concerns included:

a. the audit reports of thirty-six (36) Local Authorities were qualified with an ‘Except For’ audit opinion, meaning that certain areas could not be audited due to insufficient supporting evidence; and

b. five (5) Local Councils had an Emphasis of Matter Paragraph in the auditor’s report, highlighting a material uncertainty related to going concern, implying that they might not be able to meet their financial obligations as they fall due.

This report analyses in further detail the shortcomings that were identified during the audit carried out by the Local Government Auditors on the financial statements as prepared by the Local Authorities.