Preliminary review: NAO’s role in reviewing Government’s measures relating to the COVID-19 pandemic

The Auditor General, Mr Charles Deguara, presented the Preliminary Review highlighted in caption to the Honourable Speaker of the House of Representatives Dr Anglu Farrugia. This Review served as a precursor to future work by the National Audit Office (NAO) in connection with the measures taken by Government to mitigate the effects of the COVID-19 pandemic. Evidence-based studies related to similar situations in other countries, undertaken by respective supreme audit institutions (SAIs), note that the state of emergency in which Governments had to operate to deal with an immediate crisis increased the risks related to good governance. This Preliminary Review explains the role of SAIs, including the NAO, within the context of the pandemic and provides an overview of the fiscal measures in place as at end of September 2020.

Government is continuously launching measures to anticipate and mitigate evolving circumstances brought about by the pandemic. This Review was concerned with measures in place as at end September 2020. Apart from these fiscal measures, announced with the specific aim of alleviating the socio-economic effect of the pandemic, Government also announced a number of health-related measures to bolster the healthcare sector’s preparedness. By the end of the period under review, Government provided €592 million in total financial assistance, which included disbursed funds, deferred tax revenue and bank guarantees. These measures sought to protect employment by increasing consumption which declined significantly in some economic sectors, most particularly in the industry sector pertaining to retail, tourism and food services.

The safeguarding of public funds by holding governments accountable in terms of their expenditure intensifies for SAIs, including the NAO, especially during emergency situations that require urgent action and large disbursement of public funds. In this regard, the International Standards of Supreme Audit Institutions (ISSAI) 5500 series guides SAIs to respond decisively in times of crises, disasters and emergencies. The NAO has also closely followed COVID-19-related work of other audit institutions and is actively participating in a European working group tasked with preparing and publishing audit compendia on national governments’ responses to COVID-19.

Similarly to other SAIs, the NAO’s audit scope on reviewing Government’s spending is limited by its own resources and the wider aspect of audit work. Consequently, the audit focus on COVID-19 related programmes and measures is to be determined through a risk analysis approach. On the basis of our preliminary research, the NAO will be adopting the following approach to review Government’s response to the pandemic:

• Phase 1 – Business continuity of operations within the public sector (Performance audit)

• Phase 2 – Financial and compliance aspects of Government’s measures

• Phase 3 – Impact of Government’s measures (Performance audit)

Although the NAO is still in the early stages of reviewing Government’s response to the pandemic, this Office has already gained an understanding of some important lessons. These relate to the heightened level of risk to public governance, the need for the NAO to adjust its auditing plans and, most importantly, ensuring the safety of its employees. Furthermore, the opportunity exists for this Office to play a key role beyond the crisis in reviewing economic recovery efforts, financial management and governance systems, as well as government preparedness for future disasters.