INTERNAL AUDIT FUNCTION WITHIN GOVERNMENT MINISTRIES Speech - ADDRESS BY THE PRESIDENT OF MALTA

INTERNAL AUDIT FUNCTION WITHIN GOVERNMENT MINISTRIES

An audit of the Internal Audit function within Ministries was undertaken by the National Audit Office. The objectives of this review, which was undertaken in terms of the Auditor General and the National Audit Office Act 1997, were to evaluate the Internal Audit function and to make recommendations as to its future role.

The Internal Audit function, which was established within Ministries in 1994, is currently being carried out by sixteen Internal Auditors within twelve Ministries. Internal Auditors report directly to the Permanent Secretary on all audit matters and to the Director of Corporate Services on administrative issues. Such a structure is intended to conform with the principle of increased delegation levels and the introduction of decentralised accountability structures.

The Audit Policy Monitoring Unit (APMU) within the Ministry of Finance has been established to assist in the effective implementation of Internal Audit Policy. It was also intended to generally fulfil the role of a centre of expertise and leadership in all matters relating to internal audit across Government. Audit Committees, to monitor Internal Audit Units within each Ministries, were also to be established to add further impetus to the Internal Audit function.

Audit Concerns

It was observed that the Internal Audit function fell short of the required level of effectiveness. It was not in a position to respond to current developments such as the demands for improved financial control in an evolving modern economy, the adoption of quality service charters and challenges posed by the increased role demanded by Government's policy vis-'�-vis the European Union.

The ineffectiveness of Internal Audit was mostly due to:

• inadequate central co-ordination

• limitations to independence within Ministries

• lack of Management Support

• deficiencies in Recruitment and Training Practices

Recommendations

The National Audit Office recommends:

• a stronger central co-ordination set-up

• the enhancement of Internal Auditor independence

• increasing Management Support

• recruitment, retention and training of Human Resources

Developments

The need for Government ministries to have a strong Internal Audit structure is essential in order to consolidate financial control within the Ministries and Departments. Government has undertaken to reform the Internal Audit process.

25.01.2000