Report by the Auditor General on the Workings of Local Government for the year 2019

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
2019.

By end September 2020, being the final deadline set by the National Audit Office to analyse the financial
statements of Local Authorities, the audited accounts of seven Local Councils, namely Birgu, Birkirkara,
Gzira, Qrendi, San Pawl il-Bahar, Swieqi and Xghajra were not submitted. These should have been received
by 12 June 2020. This year the official deadline was extended by four weeks due to the exceptional
challenges faced by the Covid-19 pandemic crisis. Indeed, fifty-two Local Councils, the five Regional
Councils and the Local Councils Association, managed to deliver by the deadline.

This Office once again commends the continuous commitment invested by the main stakeholders in
devising collaborative-based approaches through which Local Authorities, together with the
administrative body, collectively address local issues. Yet, the fact that certain shortcomings have been
repeatedly reported upon in recent years, indicates that there needs to be improvement in specific areas.

Prevailing issues related to inadequate management of fixed assets, non-adherence to statutory reporting
procedures, procurement not in line with standing regulations and accounting records that were not
always duly updated.

Other concerns included:

• lack of substantiating documentation; consequently, the respective Local Government Auditor
could not express an opinion on the financial statements as presented by Kalkara and Valletta
Local Councils;

• the audit reports of another forty-five (45) Local Authorities were qualified with an ‘Except For’
audit opinion, meaning that certain areas could not be audited due to insufficient evidence;

• eleven (11) Local Councils recorded a negative working capital, indicating that they will not be
able to meet their financial obligations as they fall due; and

• ten (10) Local Authorities had not yet submitted their response to the management letter by end
September 2020.

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