The National Audit Office - Malta (NAO) is established under the Constitution. The Head of the NAO is appointed by the President, acting in accordance with a Resolution of the House of Representatives supported by the votes of not less than two-thirds of all the members in the House. He/She is elected for a 5 year term and can be re-elected for one further term of 5 years.
The Auditor General may at anytime be removed or suspended from his/her office by the President, upon an address from the House of Representatives supported by the votes of not less than two thirds of all members in the House. Such removal may only be made on the ground of proved inability to perform the functions of his/her office, whether arising from infirmity of body or mind or any other cause or proved misbehaviour.
Conditions of service of the Auditor General to secure independence of the NAO include:
The Auditor General is an officer in the House of Representatives and reports directly to the Speaker of the House. The Auditor General appoints his/her own staff and determines the number of employees required by the office, their grades, salaries and conditions of service.
The NAO's jurisdiction extends to the following, with no limitations imposed on NAO's jurisdiction.
State Law is not explicit as to whether the accounts and activities of private bodies/persons receiving Government grants/subsidies may be subject to NAO's audit, unless specifically stated in an act or agreement or if requested by the Minister of Finance or by the Public Accounts Committee.
NAO also has jurisdiction over following:
The NAO has power to requisition all records of the auditees to discharge its mandate, in terms of Section 108 (5) of the Constitution of Malta and Section 3 of the Second Schedule of the Auditor General and National Audit Office Act. It does not have the power to enforce or initiate enforcement action to secure access to needed records which are not provided. However, the Auditor General would report to the House of Representatives instances in which he/she may not have received all the information and explanations he/she required from auditees.
The NAO has the power to seal documents and other related items considered necessary for audit and inspection. The NAO is not a Court of Audit. It cannot decide on claims of interested persons in connection with official actions, duties and behaviour of persons subject to its audit and inspection. Such claims would be decided by the relevant authorities. The NAO does not have the authority to dispense with, in whole or in part, the audit of Central and Local Governments accounts and other related matters. Audits of Central and Local Government accounts are mandatory in terms of State Audit and Local Government legislation. The NAO does not have the power to take punitive action and/or impose surcharges. However, the NAO has the power to recommend surcharges on auditees to the Minister of Finance.
The NAO has the power to access the computer systems of the auditees and to download and use electronic data either on site or off site. Furthermore, it can also review the development of computer systems of the auditees and make recommendations. The NAO does not have any role in the appointment of other external auditors engaged by the auditees for meeting statutory requirements, except for Local Government. In the latter case, NAO appoints the auditors. For Local Government, the role of the NAO is two fold. The first role is an administrative one concerned with the appointment and remuneration of private sector auditors, known as local government auditors. The second role is a technical one which is intended to lend support to auditors and to ensure that their observations and recommendations are given due consideration.
The NAO complies with the INTOSAI Code of Ethics and Auditing Standards in the conduct of its audits. NAO also has its own audit manual and other instructions that auditors use as guidelines in conducting their audit work. The NAO can consult and/or collaborate with other SAIs and international organisations on matters relating to audit. It may carry out concurrent audits and/or studies on specific audit areas with other SAIs.
The NAO does not discharge judicial functions. Audit findings are taken into account in subsequent year's audit plans and possibly by subsequent Public Accounts Committee hearings on the entity connected with audit findings in question. Enforcement of audit recommendations may only be carried out by the top management of the entity concerned.
The NAO prescribes Financial and Compliance, Performance & Investigative/Special Audits within its scope of audit. EDP audit is not specifically mentioned but is implied. The NAO may carry out an audit at any stage of activity, i.e. pre-audit, concurrent or post-audit. However, emphasis is on post-audit.
Audit methodologies are decided upon by the NAO without any outside interference. Methodologies and procedures include:
The Auditor General is entitled to engage other auditors, consultants and other experts to assist in the audits.
Following the completion of any audit, a report is prepared and submitted to the auditee for its comments. Material issues uncovered during audits of a financial and compliance nature are reported upon in the Annual Audit Report. Findings in Performance and Investigative/Special reports are reported upon in separate audit reports. The Annual Audit Report, as well as the other reports, are presented to the Speaker of the House of Representatives. Reports of any nature usually contain both findings as well as recommendations. Most Audit Reports are reviewed by the Public Accounts Committee.
The NAO is constituted as an audit office with monocratic status. It is headed by an Auditor General who, together with the Deputy, are officers of the House of Representatives. The audit structure of the NAO, below the posts of Auditor General and his/her Deputy, is divided into two main Sections. One Section is responsible for Financial and Compliance (Regularity) audits and is headed by an Assistant Auditor General. This Section includes four Audit Units, each headed by an Audit Manager. Three Units have an audit portfolio of Ministries and Departments. One of these Units is also responsible for the audit of Local Government and other Public Bodies. The fourth Unit is responsible for investigative and special audits. The other Section, also headed by an Assistant Auditor General, is responsible for Performance Audits. This Section includes two Audit Units, each supervised by a Principal Auditor who reports to his/her/her Audit Manager. Other Sections or areas of activities are headed by Managers who are responsible for finance and human resources, information technology, NAO policy and international relations.
The NAO prepares its own budget independently from Government. The NAO's budget is brought to the attention of the National Audit Office Accounts Committee of the House of Representatives. This Committee reviews and presents it, together with any possible comments on its part, to the House of Representatives, which approves the NAO's estimates. The annual accounts of the NAO are audited by certified private sector auditors, appointed (through the NAO) by the National Audit office Accounts Committee. The Committee also presents these certified accounts to the House of Representatives, together with any comments thereon by the Committee or any of its members.
Apart from the Annual Audit Report and other reports on audit findings, the Auditor General also issues an annual audit report on the work and activities of the NAO.