In terms of the Local Government Act, the National Audit Office (NAO) is mandated to carry out audits of all local councils, as well as all regional councils in Malta and Gozo on an annual basis. 

Following extensive discussions between the NAO, the Local Government Division (LGD), and the Local Councils Association (LCA), it has been decided that as from next year, while the NAO will focus on the audit of the financial statements of all local councils in Malta and Gozo, monitoring and reporting on compliance to pertinent rules and regulations will be undertaken by the Division for Local Government. This will increase the efficiency and efficacy of the current annual process.  The Division for Local Government will be strengthening its capacity through the creation of a new directorate responsible for financial and procurement compliance. An annual report on monitoring and compliance will be published by the division ahead of the initiation of the annual audits.  

Through this agreement it is anticipated that the issue of duplication of work will be addressed, while providing local councils as well as the regional committees with more time to dedicate to their community.  

This notwithstanding, the NAO reserves the right to continue to carry out compliance audits, as and where deemed necessary, on a sample basis. These will be included together with the financial audits in the Annual Report on the Workings of Local Government issued by the NAO.