NAO annual report: Over €3 billion in government revenues yet to be collected

Letters of comfort and bank guarantees by government have reached almost €1.5 billion, the National Audit Office’s annual report has revealed.

The annual report also showed a substantial excess of expenditure over budgeted figures was once again reported and outstanding advances issued in favour of third parties, totalling approximately €49.4 million, that will continue to be repaid out of public funds.

Disbursements from public funds on Church Schools almost doubled over a 10-year period, from €32 million to €63 million, but it was not possible for the NAO to verify whether such expenditure was duly authorised and properly accounted for due to lack of audit trail.

An audit on the collection of annual circulation licence fees by Transport Malta, and the procedures for the collection of dues in relation to contravention tickets implemented by the Local Enforcement System Agency, revealed a number of control weaknesses in relation to the latter, concerning chasing of debts.

“The NAO is concerned that temporary lifting of contravention tickets is done by the external supplier, and that the agency is not in a position to extract the report on such instances itself,” the office said.

Other interesting findings included:

• Significant delays were also noted in the transfer of funds emanating from fees collected on behalf of government by the Malta Communications Authority, apart from lack of independent verifications.
• No major changes were made to the terms and conditions of the contract for the management of the car park at Mater Dei Hospital which was effective from 1 August 2007. The main shortcomings emanating from the service concession contract split were not addressed and consequently the Government continued to lose substantial amounts of revenue.
• While the Government is paying significant amounts of money to film production companies by way of cash rebates with very good results in so far as film production in Malta is concerned, verifications carried out at the Malta Film Commission concluded that effective controls are not in place to ensure that income attributable to Government in the form of tax payable is actually paid in full.
• Although there was a net surplus position at the end of 2016, the Malta Police General Fund was still in an unstable financial situation.
• A review of the 2016 Arrears of Revenue Return submitted by Ministries/Departments revealed that 59% of the
  reported gross arrears of approximately €3 billion, were deemed to be statute-barred. A further €177 million were under contestation. Over a year, the unpaid net balance as at 31 January 2017 increased by 29%.