Wrong messages from the National Audit Office

 

The National Audit Office (NAO) has recently published its report for 2017. In a democracy, the role of the NAO is of paramount importance. Its role of ascertaining the presence (or absence) of good governance at all levels is crucial in determining the health of the public sector.

The report lists the investigations carried out during 2017 in respect of which separate reports have been published and discussed publicly. These include the annual report on the public accounts, the consolidated annual report on local government, special audits and investigations and performance audits. Last year also saw the publication of a stand-alone report on the results achieved by the three main revenue-generating departments of the government, namely the Inland Revenue Department, the Value Added Tax Department and the Department of Customs.

In his overview, Auditor General Charles Deguara welcomes the positive developments, highlighting the administration’s commitment to implementing the NAO’s recommendations as far as possible. This has been done for two consecutive years and it is to be hoped that it becomes an annual occurrence.

The report explains the efforts made to continuously train the staff, thereby ensuring that, as far as possible, an internal team of experts is available to monitor and investigate as required. This is essential in order that the NAO keeps the administration on its toes.

The NAO, in its present format, was set up 20 years ago. Since 1997, it has been part of Parliament, accountable directly to Parliament. Previously, although technically independent it formed part of the Ministry of Finance.

During the past 20 years, it has had much to do. Its specific investigations are the ones about which we hear the most but the workings of the NAO go much deeper. Its continuous examination of the country’s public accounts, and the recommendations made to fine tune or correct methods of operation are always work in progress.

In order for the NAO to be as effective as possible, it should ensure that it keeps at arm’s length from the administration’s day to day operations. For this reason I was worried when reading in the 2017 report a short list of a number of domestic working groups in which the NAO participated. These range from the International Public Sector Accounting Standards (IPSAS) Implementation Project Board, the Financial Legislation Working Group, the Local Government Good Governance Working Group and others. The NAO should have oversight and not sit around the same table forming part of working groups to implement or draft a proposal for implementation.

Some years back the Auditor-General, together with the Ombudsman and the Chairman of the Electoral Commission, had decided to go beyond their terms of remit and accepted the Prime Minister’s invitation to examine the issue of the salaries of MPs and holders of political office. I had taken the Ombudsman Said Pullicino to task about his stand when, together with Arnold Cassola I had met the trio. They then justified their stand by referring to legal advice from the Attorney General’s office and others! The three wise men did not realise that they had compromised their office because they cannot – and should not – switch from being regulators to being advisors, even if temporarily.

The NAO would do well to take a step back, thereby ensuring that it is at arm’s length from the administration. Otherwise it risks sending the wrong messages.

 

published in The Malta Independent on Sunday : 29 April 2018

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