Absence of audit trail and verification of transactions lacking in EU Presidency 2017 - NAO

An analysis carried out by the National Auditing Office (NAO) in to the expenditure incurred by Ministry of European Affairs and Implementation of the Electoral Manifesto (MEAIM) for the overall co-ordination and management of Malta’s Presidency revealed that the completeness of information submitted could not be ascertained by the NAO, partly due to the “absence of a complete audit trail and a general lack of verification of transactions before processing by the Ministry”.

Malta took up the role of the Presidency of the Council of the European Union between January 2017 and June 2017.

(In)Completeness of Information

According to the report, files necessary for the audit were supplied in a staggered manner, and only partially at that. On top of that, there were even files that were not available at all – particularly those relating to payments effected through the Central Bank of Malta.

Transactions were also only recorded in a single account on the Departmental Accounting System (DAS), with no distinction made between the different types of expenditure. The NAO report explained that this limited them from “obtaining a full and clear picture of the expenditure” and as such impeded them from reaching their audit objectives.

The NAO made it clear in its recommendations that “all documentation relating to payments expensed from the from public funds is to be adequately filed”, and that the NAO auditors should be granted free access to all documentation and information required.

The Ministry responded that, “all requested files, were duly forwarded to the attention of the NAO officers. Given that the documents were filed in different buildings used during the Presidency 2017, some files were provided with a time lag from the date requested.

“Furthermore, at the time it was not deemed necessary to create linked accounts for the purposes of this line item given the limited scope of transactions involved.”

Verifications and Corrections

According to the report, there was a general lack of verification in the processing of transactions, and whenever the shortcomings were noted by the Ministry, if at all, then they would be corrected after the fact.

They went on to single out discrepancies between amounts paid to service providers and the supporting documentation; instances of double payment and overpayment; lack of evidence of verifications of payments done with the EU Presidency debit card; and approvals obtained retrospectively.

In response, the Ministry said that whilst activities could have been and were planned in advance, there were various circumstances where decisions had to be taken to ensure smooth operations.