gov.mt

pr172029

PR172029

12/09/2017

PRESS RELEASE BY THE OFFICE OF THE PRINCIPAL PERMANENT SECRETARY: The Principal Permanent Secretary’s speech delivered during ‘The National Audit Office’s seminar entitled Audit Follow-Up in the Public Sector: Enhancing Accountability’

Honourable Members of Parliament, ladies and gentlemen, 

Good morning, 

It was with great pleasure that I accepted the invitation of the Auditor General to address this seminar, particularly more so because concrete action by the Public Administration to follow up on the recommendations of the National Audit Office was pioneered by my office in late 2014 with the launch of administration-wide Governance initiative. It was the first of its kind, and resulted in the publication of the first Governance Report issued on 29th April 2016, a detailed report outlining the action taken by the Public Administration on the NAO’s Annual Report on Public Accounts for 2014.  This is more than just a report: it is a public statement and commitment towards the ongoing drive to strengthen transparency and accountability as core values of the Public Administration. 

It all started some four years ago when, upon taking office, I was presented with a substantial number of audit and other investigative reports covering the Public Administration that were finalised prior to 2013.  What stood out as a common denominator was the lack of any follow-up, not to mention the implementation of the recommendations contained therein.  Amongst these reports there were also those by the National Audit Office. 

With particular reference to the reports by the NAO, it was noted that, year after year, recommendations were being repeatedly put forward by the Auditor General.  This enforced the implication that such recommendations were not being adequately acted upon, if at all.  This in turn implied a lack of, or a slacking, in accountability.  It was certainly far from a desirable situation and it therefore necessitated immediate remedial action.  It warranted a change in the approach and the mentality in the way responsibility is assumed, and not just with regard to audit matters. 

Responsibility, transparency and accountability do not stop with sound financial management, but are also underlying principles for service delivery improvements.  As such, we are also targeting the culture and the mentality of “anything goes” within the Public Administration, by defining intangible yet crucial concepts such as quality; and we are determined to ensure that the principles and values of good governance underpin all our systems and operations.  Our focus is on sound financial management and compliance, as well as, on a quality service delivery, enhanced people and standards management, and improved performance. 

In 2014, I had also stated that the Public Administration was challenged by a leadership crisis, with a lack of timely decisions or decisions which were not being pursued.  This too showed weakened accountability, which is a risk to good governance; the situation, therefore, could not be allowed to remain the same. 

It is within this context that we energetically embarked on our journey to renew the Public Administration; to transform it into a properly performing organisation with robust core values of good governance.  Following up on the recommendations of the Auditor General is seen as one of the crucial elements to reach our goal of having an efficient and effective Public Administration that is people-centric, transparent and accountable. 

Immediately after the NAO published its Annual Report on Public accounts for 2014, all permanent secretaries were required to submit feedback on the corrective actions taken with respect to recommendations put forward to the departments and entities falling under their Ministry.  In those instances, where insufficient or no action was taken by the management of the respective department or entity to address the recommendations put forward by the NAO, they were required to submit an action plan clearly indicating what actions will be implemented and by when. 

We did not rely only on the replies given by the permanent secretaries. We deemed it necessary to involve the Internal Audit and Investigations Department (IAID), in its capacity as the internal audit arm of the Government, and with its expertise in conducting financial and compliance audits within the Public Administration, to carry out a review of management replies and to undertake the necessary testing so as to ensure that such replies are actually reflected in the procedures being adopted by the management.  Moreover, when the corrective action taken or being proposed by the management was found not to be sufficient to address the respective recommendations, discussions were held between the internal auditors and the audited entity to clearly explain the weaknesses and limitations noted.  

Extensive exit meetings attended by the IAID and the senior management of the audited department or entity were held, together with the respective permanent secretaries.  The scope of these meetings was to discuss the observations resulting from the review carried out by the IAID and in each case to agree on an action plan that ensures that the recommendations put forward by the National Audit Office are adequately acted upon in a timely manner.  

Only then did we publish the account of how the recommendations in the 2014 report were addressed, including details of all implemented actions, and set dates for those actions that were yet to be implemented. 

I must state here that there were instances where the management did not agree with the NAO on particular recommendations or specific aspects of a recommendation. These cases were also reported in the Governance publication with an explanation being furnished by the management as to why that particular recommendation was not being accepted or could not be implemented. 

An example of one recommendation that was not accepted in the 2014 report was from an audit on personal emoluments on the Office of the Permanent Secretary in the Ministry for Home Affairs and National Security (MHAS).  This concerned a claim by NAO of “excessive” sick leave availed of by a pregnant employee prior to maternity leave, which sick leave was duly covered by a valid medical certificate, and hence management did not accept the recommendation on this case.

We did not stop with the issue of the Governance publication in April 2016! 

Action plans committed to be implemented beyond April 2016 were duly followed upon post-publication and this brought with it the need for a fresh cycle of verification audits. 

The recommendations on which the follow-up focused on at this stage were those that were still pending, that is those which fell due between April 2016 and end December 2016.  These comprised a total of 18 audits and involved 13 Ministries. 

Therefore, in November 2016, the Internal Audit and Investigations Department (IAID) was once again engaged to carry out another verification exercise on the implementation or otherwise of the actions publicly committed to be implemented.  As was done earlier, the IAID were also required to give an opinion on whether the corrective actions presented by the permanent secretaries and reviewed by the IAID represented a true and fair view of the actions actually implemented and that the actions included in the Governance Report 2016 were indeed addressed. 

The publication of the NAO Annual Audit Report, Public Accounts for 2015 heralded the start of a new follow-up exercise, coordinated centrally by my Office, as was done previously.  The IAID were once again tasked to verify the actual implementation of actions as well as the adequacy of the actions to address shortcomings and weaknesses giving rise to the recommendations. 

Once again, we had exit meetings during which we ‘rapped’ those entities that were lagging behind in implementation. 

Again, there were recommendations by the NAO that the management did not accept, and, as on previous occasions, the concomitant reasons for these rejected recommendations were fully explained and included in the second Governance publication which was issued in April 2017. 

For instance, the management at the VAT Department within the Ministry for Finance did not accept a recommendation by NAO a claim of anomalies in a signature of the authorising officer because the officer concerned confirmed and insisted that both signatures were his. 

This time round, that is in the 2015 Audit Report, the entities audited were different from those of the previous year’s report, and so, to a certain extent, the context changed, and so did the sectors being audited.  However, the principle of consistent and persistent follow-up to implement the recommendations made by the NAO remained constant. 

To date, the result of the actions taken collectively by the various Ministries to implement the NAO recommendations is that of 80% implementation rate (for both the 2014 and 2015 Annual Audit Reports on Public Accounts).  

We are pleased to note that now that we have set the example and taken the lead in this area, the Auditor General too is taking steps to follow up on the recommendations of audit reports published by the NAO. 

We sincerely auger that our initiative, complemented by that of the NAO, will have a snow ball effect on the implementation of audit recommendations that will result in the much desired culture change and in nourishing accountability as the norm.

To aid and complement our governance follow-up measures, my Office has furthermore commissioned a report by a private consulting firm to determine to what extent the findings and recommendations by the National Audit Office recur within a particular entity in consecutive reports, and if these were also evidenced as recurring in other audited entities.

The Audit Reports analysed covered the years 2012, 2013 and 2014.  

While the ensuing report was useful to find out which areas constituted weaknesses for the Public Administration, it did not yield patterns of recurring issues in same entities and departments.  This shortcoming was attributed to the change in Ministerial portfolios in 2013 and again in 2014, and to the fact that the NAO rarely audits the same entity or department repeatedly year after year in the same area. 

The report did however serve as a hazard indicator of target specific areas that gave rise to weaknesses, issues, and findings in financial and compliance audits, instigating action in these areas. 

One such weakness, repeatedly identified by the NAO and one which also recurs in subsequent reports and impacts several Government departments, was that of public procurement.  This led us to take measures to strengthen the capacity of departments to ensure accountability and compliance with the Public Procurement Regulations. Ministerial Procurement Units were set up.  We started with two Ministries, and then another three, and the rest will follow. The setting up of these units is a concrete demonstration of our commitment to enhance transparency and accountability while at the same time address shortcomings and weaknesses in our systems. 

The Ministerial Procurement Units will carry out scrutiny of contracts to ensure transparency and compliance with regulations, but this will not be their only task. They will also promote smart procurement through better planning and coordination of commonly purchased goods to achieve the best value for money. 

I must say that we have not limited ourselves to NAO reports in our quest to ensure accountability and good governance. 

Since 2014, my Office has published a yearly account of the implementation of the Annual Budgetary Measures.  These measures are what is committed by government to be implemented in each financial year, with some measures even running through several subsequent years.  Every Budgetary Measure owner is required to prepare an action plan with milestones and a timeline to completion, which is the basis of our monitoring. 

Not only do we follow up religiously every month on progress, highlighting those measures that fall behind schedule and alerting Ministries about them, but we then publish a report detailing quarterly progress for each measure for each financial year. 

The public is then our “external auditor” as we see this publication as a tool and a service for public auditing and another means of being transparent and accountable to the tax payers. 

Our most recent measure to continue to ensure the strengthening of accountability and good governance in the Public Administration is the systematic follow-up of internal audit reports carried out by the Internal Audit and Investigations Department (IAID).  Previous to my Office taking the initiative in this area, there was practically little follow-up on such audit reports.  In our analysis of the problems afflicting compliance, we found out that several issues and findings that were published in the NAO Annual Reports on Public Accounts had already featured in internal audit reports.  We therefore arrived at the logical conclusion that had there been due follow-up and action taken to address the findings reported by the IAID, certain risks, weaknesses and issues, particularly with regard to non-compliance, could have been addressed earlier and pre-empted from featuring once again in the NAO reports. 

We strongly believe in internal audits as a main tool through which the Public Administration may nip in the bud shortcomings that could give rise to bigger issues and promote it as the proverbial ‘apple a day that keeps the doctor away’. 

The Public Administration will continue striving to be better by promoting good governance through accountability and transparency measures. An effective Public Administration is one which delivers in a timely manner whilst being duly responsible in the delivery of its actions. 

And this is what this administration stands for.​ 

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