18 Local Councils recorded a negative working capital in the Statement of Financial Position, the National Audit Office has said.
Auditor General Charles Deguara presented to the Speaker of the House of Representatives, Anġlu Farrugia, the annual report on the workings of Local Government for the year 2024.
A total of 59 Local Councils, six Regional Councils and the Local Councils' Association submitted their audited accounts to the National Audit Office (NAO) by end October 2025, it said.
"Those pertaining to nine 9 Local Councils, were not submitted by the time this Report was finalised. The NAO acknowledges positively that all Local Authorities submitted their replies to the Management Letters by the end of October 2025. However, the fact that certain shortcomings continue to be flagged year on year, remains a matter of concern."
"Furthermore, compliance audits carried out by this Office at Mellieħa, Nadur and Xgħajra Local Councils revealed several issues, primarily related to non-compliance with procurement regulations."
The NAO said that the repeated occurrence of weaknesses such as accounting errors, inadequate management of fixed assets, and improper management of accounts payable indicates that underlying issues are still not being effectively addressed.
The NAO therefore reiterates the need to strengthen oversight mechanisms, invest in staff training, and implement timely corrective actions to improve internal controls.
The NAO also emphasises the importance of maintaining timely and complete documentation, together with a stronger commitment to resolving internal control gaps.
"Enhanced collaboration among all stakeholders will not only improve service delivery within local communities but will also promote sound governance and strengthen accountability. Other concerns identified during the review included: a) the audit reports of 37 Councils were qualified with an 'Except For' audit opinion; meaning that certain areas could not be audited due to insufficient supporting evidence; b) nine Local Councils had an Emphasis of Matter paragraph in the auditor's report, highlighting a material uncertainty related to the going concern, implying that the respective Councils might not be able to meet their financial obligations as they fall due; c) An audit opinion could not be expressed on the Financial Statements of another Local Council due to the various shortcomings encountered. d) 18 Local Councils recorded a negative working capital in the Statement of Financial Position. e) 33 Local Councils, two Regional Councils as well as the Local Councils' Association, registered a deficit in the Statement of Comprehensive Income."
The full report can be accessed through NAO website: www.nao.gov.mt as well as on NAO facebook page www.facebook.com/NAOMalta