Implementing Recommendations and Identifying Impact of the Audits: Perspectives from the National Audit Office of Malta

Author: Ms. Tanya Mercieca, Assistant Auditor General 

How do SAIs develop recommendations through the audit process?

The National Audit Office’s (NAO Malta) mission is to assist in promoting accountability, propriety, and best practices in government operations. This mission is continuously achieved through the substantial number of audits of a compliance, financial, performance or investigative nature in various Ministries, departments and Government entities. 

Recommendations are developed through a systematic audit process, beginning with comprehensive audit planning to identify audit areas, primarily based on risk. During fieldwork, the audit teams collect evidence through various methods, including interviews, document reviews, and data analysis. This evidence is then meticulously analysed to uncover weaknesses, inefficiencies, or non-compliance with pertinent rules and regulations. Based on the findings emanating from such audits, the NAO formulates realistic, doable and feasible recommendations aimed at addressing root causes and improving processes.

Before being officially published, these recommendations undergo internal validation, primarily comprising managerial and senior management review. Consultation is also made with relevant stakeholders through the submission of a management letter for their comments, as it is their ultimate responsibility to implement the recommendations in as timely a manner as possible. These reports serve as essential tools for informing policymakers, the audited entities/departments, as well as the general public, about areas requiring attention and improvement within the government. 

How does NAO (Malta) follow up and correspond with the audited agencies to track recommendation implementation?

Following the publication of the NAO’s annual report on public funds, the Governance Action Directorate, operating under the Office of the Principal Permanent Secretary, assumes an essential role in reviewing the recommendations highlighted in the foregoing report. It engages in robust communication with each relevant Ministry, compelling them to provide information on actions taken or intended to be taken in response to each recommendation. Ministries are mandated to implement accepted NAO recommendations within 90 days. A report, entitled ‘The Governance Action Report on NAO Recommendations on Public Funds’ is then published to this effect. 

On its part, the NAO has a systematic follow-up process in place to monitor the implementation of recommendations by audited bodies, ensuring accountability and progress tracking over time. As part of its follow-up process, the NAO makes reference to the Governance Action Report and follows up on the actions reported. Independent checks are also undertaken. Through this rigorous process, the NAO enhances the effectiveness and efficiency of government operations, while holding audited bodies responsible for addressing identified weaknesses and improving government operations.

The NAO compiles a follow-up report with information on the implementation of recommendations, detailing progress made by the audited bodies, levels of implementation, challenges encountered, and recommendations for further action, where warranted. These reports serve to provide transparency and accountability in the follow-up process.

The follow-up reports issued by the NAO for the last four years indicate that, for all audits included in the pertinent publications, on average, 81% of the recommendations were either implemented, in part or in full, or were in the process of being implemented by the Ministries and entities concerned.  

How do SAIs identify the impact that recommendation implementation has on improving government programs?

As a guardian of transparency and accountability, the NAO ensures that recommendations translate into enhanced service delivery to Maltese citizens, especially where performance audits are concerned. Moreover, the implementation of recommendations at times also leads to substantial cost savings, this being in line with the Office’s primary obligation to provide assurance that taxpayers’ monies are utilised in the best manner possible and in line with prevailing rules and regulations. 

NAO gauges effectiveness by conducting in-depth audits, analysing budget allocations, expenditure patterns and programme outcomes. At the end of each audit, the Office conducts a survey with the key stakeholders to gather qualitative data on the usefulness of the respective audit and the recommendations put forward. Moreover, rigorous examination of financial records, operational processes, and performance indicators, provides concrete evidence of how recommendations have contributed to improving government programs, ensuring accountability and fostering continuous improvement.