Issue link: https://maltatoday.uberflip.com/i/1542030
6 maltatoday | WEDNESDAY • 17 DECEMBER 2025 NEWS Audit flags €338m in unresolved balances and widespread procurement breaches SERIOUS shortcomings in fi- nancial reporting, governance and procurement practices persist across government ministries, departments and entities, according to concerns raised by the National Audit Office (NAO) in its review of the public accounts for 2024. Among the most signifi- cant issues highlighted are long-outstanding balances in suspense accounts linked to the transition from the Depart- mental Accounting System to the Corporate Financial Man- agement Solution. These unre- solved interdepartmental bal- ances, dating back to 2020 and 2021, amount to a net total of €338.4 million. The NAO not- ed that no progress has been made on resolving the matter over the past two years. The audit also found major weaknesses in bank reconcili- ations. A proper reconciliation between the Central Bank of Malta public account and the corresponding CFMS bank account was not being carried out. In addition, reconcilia- tion issues dating as far back as 1992 remain unresolved, with the Treasury maintaining that addressing them is not practi- cal due to cost and human re- source constraints. Internal controls over the receipt of dividends and fund transfers were found to be only partially effective. One notable case involved a €15.4 million dividend due to government from a public listed company that was neither traced nor received because of a pending disagreement between the par- ties. The NAO also reported that it was unable to verify ad- vances issued by government, including an advance of €11 million to Malta Air Travel Ltd that had already been repaid, due to delays in the provision of supporting documentation. Beyond financial reporting, the NAO identified wide- spread weaknesses in control environments and compliance with regulations. Procure- ment-related breaches were described as pervasive across audited entities, while several departments continue to rely heavily on manual processes, increasing the risk of error and fraud. At the Armed Forces of Malta, paper-based systems led to duplicate payments of a one-off annual allowance to 35 officers. A lack of segregation of du- ties was another recurring concern. At the National Sport School, a single officer was re- sponsible for handling and re- cording all transactions for two separate funds, including cash collections and payments. Sim- ilar risks were noted at Active Ageing and Community Care, where only two employees ver- ify large volumes of invoices from private residential homes. Payroll weaknesses were al- so flagged, particularly at Re- source Support and Services Limited, where inadequate checks resulted in incorrect payments and significant over- payments, including nearly €13,000 paid to one employ- ee working reduced hours. The entity was also criticised for weak governance struc- tures and poor personnel re- cord-keeping. Procurement and contract management failures featured prominently in the audit. The Welfare Committee contin- ued to procure incontinence supplies worth more than €2.2 million under an agreement that expired three years ago, while other services were ob- tained through direct orders without the required approv- als. The Civil Protection De- partment was found to have split procurement into small- er lots to remain below direct order thresholds, rather than issuing public tenders as re- quired by regulations. In several cases, entities failed to impose contractual penalties for significant project delays, including major construction works. Other breaches includ- ed entering into long-term lease agreements without fresh procurement processes or the necessary approvals. The audit also drew atten- tion to weaknesses in revenue collection and programme management. Gross outstand- ing arrears increased by €1.43 billion in 2024, while net col- lectable arrears rose by €577 million, pointing to persistent difficulties in recovering pub- lic funds. The Malta Tax and Customs Administration was found to have paid interest on VAT refunds even when de- lays were caused by taxpayer non-compliance, resulting in payments that may have re- warded non-compliant behav- iour. Budget overruns and ineligi- ble spending were identified in several schemes, including cultural initiatives admin- istered by the Ministry for Gozo, which exceeded allocat- ed budgets year after year and funded expenses that did not meet eligibility criteria. Other audits revealed overpayments in social assistance schemes, with some recovery periods projected to span more than a decade due to weak monitor- ing. The NAO warned that un- less these issues are addressed, government will continue to face risks of non-compliance, financial misstatements and prolonged difficulties in safe- guarding and recovering public money. NICOLE MEILAK nmeilak@mediatoday.com.mt An NAO audit found significant shortcomings in financial reporting, governance and procurement practices (Photo: James Bianchi/mediatoday)