A National Audit Office report has noted that for the past two years, Arts Council Malta (ACM) did not prepare its Financial Statements, and has also found that credit control was weak.
The report notes that considerable procurement was being undertaken through direct orders. It states that there was a backlog in bank reconciliations, and a number of shortcomings impinging on accountability.
The NAO stated that the allocation of funds to the Council adds up to a total of €9,182,000.
During the 2017 financial year, "the Council issued 224 direct orders with a total value of €2,158,038 during the year," the report read
The scope of the audit was that during the 2017 financial year, expenditure incurred was daily authorised, properly accounted for and in line with the procurement regulations.
Financial Statements not finalised
The report noted that for the past two years the Arts Council did not prepare its Financial Statements, along with the findings that credit control was weak. Audited accounts for the years 2016 and 2017 were still not prepared by the end of July 2018. The Management Accounts for the years in question were also not ready. The ACM claimed that delays were due to a work backlog, reasons being the cultural programme preparations in connection with the 2017 six-month European Union Council presidency, as well as the absence of a Director Corporate Affairs, since the post remained vacant for over a year.
The Audit report recommends that the financial statements are to be finalised in time for the annual statutory audit to be conducted by external auditors. Also that management accounts are to be prepared quarterly as required by article 27 of the Act.
The ACM reflect that the long term solution regarding the financial statements not being finalised is the recruitment for the adequate human resources to ensure that deadlines can be effectively maintained, and that the Council has instructed the private auditors to finalise the audit for financial year 2016.
Board Meetings not regularly held
The Council's Board is composed of a Chairperson and not less than four and not more than eight other members, one of whom is nominated by the Minister responsible for Gozo. The relevant Act notes that Board meetings are to be held as often as necessary, or at least a max of once every two months. The NAO was informed that only three meetings were held during 2017, one on 10 January, 18 October and the last one 4December, revealing a nine-month gap between the first two. The audit recommends that ACM need to attain regular meetings.
Credit Card use not being monitored
The use of a credit card with a limit of €3,500 was approved by the Board on 29 January 2014, yet there was no evidence providing that the card was endorsed by the Ministry of Finance, the report read. The Ministry's policy, which was set back in December 2013, is only to grant entities the approval for the use of a debit card with a running balance of €2,500. The Annual Audit Report highlights that the transactions affected through the credit card are not being monitored independently. The Audit Report recommends that the management of the card is regularised, therefore the Council needs to make a formal request to the Ministry of Finance to obtain this necessary approval. The Audit also recommends that there is an officer within the Finance Section to be held responsible for the monthly monitoring of the related expenditures.
The ACM is requesting Perm Sec and the Ministry of Finance to approve the credit card with a limit of €3,500, and the credit card will be held by the Officer of the Executive Chair. ACM comments that one credit card is not enough to keep up the justified requests for credit card usage, and that a proposal is being discussed whereby Zfin Malta and Festivals Malta will have their own credit card.