Public hospitals and Wasteserv among entities with serious audit shortcomings

The Auditor General has pointed towards a number of serious shortcomings in his audit report on the public accounts for 2011, among which include the Gozo General Hospital, Wasteserv, the Ministry for Education and the Ministry for Finance.

From a review on Personal Emoluments at the Gozo General Hospital, it transpired that the related payments were not always backed-up with proper records to substantiate the expenditure, especially in the case of Consultants where no records were kept to indicate the number of sessions performed.

"Internal controls in various areas relating to salaries were weak or entirely lacking. Inadequate budgetary control on overtime was also noted," the Auditor General said.

The NAO carried out an audit of Personal Emoluments on a sample of different classes of employees working at Mater Dei Hospital. Testing revealed that salary payments of Consultants were not substantiated with records of attendance. Substantial amounts were expensed on staff allowances, with the highest allowance paid to a Consultant in 2011 exceeding €80,000.

"However, insufficient controls were observed in this area and on the overall salary payments. Various other shortcomings as well as significant overpayments were revealed during the audit," the Auditor General reports.

The report goes on to say that, in view of the claimed urgency to acquire medicines and surgical materials, the Government Health Procurement Services within the Ministry for Health, the Elderly and Community Care disregarded financial limits approved for direct orders.

"The excessive and expired stock of medicinal items that the entity is many times ending up with, is also a matter of concern," the report says.

"Lack of compliance with procurement regulations, expired contracts, as well as inadequate controls over expenditure incurred for specific services rendered to Mater Dei Hospital, were the main findings emerging from an audit on Non-medical Equipment Facilities Management."

According to the NAO, procurement regulations were not always followed by Mount Carmel Hospital, particularly in the provision of nursing services. Furthermore, certain services were not covered by a formal agreement and Bank Guarantee.

"Various other shortcomings were noted, amongst which at times payments were not adequately substantiated."

An audit of capital and recurrent expenditure incurred by Wasteserv Malta Ltd. revealed "long delays and substantial cost variations on capital projects". The Auditor General said that lack of transparency and non-compliance with procurement regulations were also noted, especially regarding sub-contracted labour.

"The inadequacy of the overall internal controls is a major concern," the report points out.

 On the then Ministry of Education, Employment and the Family, the Auditor General found out that internal control were "not sufficient to ensure efficient administration of public funds in line with standing laws, regulations and policies".

"Various control weaknesses were identified, including inadequate verifications resulting in incorrect payments, lack of proper stock records, and in the procurement process for Professional, Medical as well as Cleaning Services," the report reads.

Following a review at Agenzija Sapport, within the Foundation for Social Welfare Services, the National Audit Office found shortcoming in various area, including management of fixed assets and payroll. "Inadequate control on fuel consumption was also evident in the use of general-use cars, while in a number of instances, the procurement regulations were not followed."

The NAO described the action taken by the VAT Department in relation to Fiscal Receipt Defaulters reported by Government Departments during 2011 as "rather limited". The audit, which also examined complaints from the general public, revealed other shortcomings, such as long outstanding complaints not being acted upon, as well as minimal follow-up on missing quarterly submissions reporting defaulters by Government entities in line with the applicable directives.

The Auditor General reported finding insufficient supporting documentation, evidencing the utilisation of funds granted to beneficiaries, during a review of the National Lotteries Good Causes Fund administered by the Ministry of Finance, for the years 2006 to 2010.

"Other shortcomings included funds distributed before completion of projects, receipt of funds not always backed-up by a signed declaration from the respective beneficiaries, and incomplete application forms, if at all."

Concern was also raised following an analysis of Direct Order approvals, granted by the Finance Ministry during 2011. "[The analysis] highlighted a number of concerns, including the incidence of retroactive approvals, as well as failure by entities to take the necessary actions to comply with Procurement Regulations, thus resorting to purchasing from the open market."

The Auditor General also found that most entities failed to reach Government'ss budgetary target of reducing arrears in 2011 by 10%. Audit Reports and Management Letters prepared by Local Government Auditors revealed that a number of weaknesses and concerns reported in previous years still prevail, and have been included again in this report.

The full Report can be viewed on NAO website: www.nao.gov.mt <file:///C:Documents and Settingscache013.corpMy DocumentsDocumentswww.nao.gov.mt> as from tomorrow.