Arts Council Malta has prepared no financial statements for the last two years, the National Audit Office said in a damning report which noted shortcomings in several areas.

Auditors also highlighted the “habitual” use of direct orders, the failure to hold board meetings as required by law, weak credit control procedures and a lack of evidence of the required authorisations for bank signatories.

According to the NAO report, the Arts Council was allocated €9.2 million last year, which is primarily used to fund, support and promote various cultural schemes, events, programmes and organisations.

However, financial statements for 2016 and 2017, due six weeks after the end of the financial year, were still not available as of July this year, the NAO said, hindering the objectives of its audit.

In its reply, the Arts Council claimed the delays were due to a backlog caused by staff shortage and exacerbated by the additional workload in connection with the culture programme for the 2017 EU Council presidency.

Moreover, the audit office highlighted concerns over the amount of procurement carried out through direct order. The council resorted to direct orders 224 times last year alone, with a total value of €2.1 million.

Such direct order procedure should be used in exceptional circumstances only

“Although in 24 per cent of the cases, making up 76 per cent of the total value of direct orders, approval from the [finance ministry] was obtained, this is not considered to be promoting good governance since such direct order procedure should be used in exceptional circumstances only,” the NAO said.

It highlighted in particular a direct order of €135,000 for the organisation of the Malta Rock Festival 2017, on top of which the service provider was allowed to keep any generated revenue. It said that as this constituted a hybrid between a direct order and a concession, the organisers’ revenue should have been taken into account in the direct order.

The NAO went on to note that board meetings, required by law to be held at least every two months, had been held on only three occasions last year, with a nine month gap between the first two.

“In view of the sporadic manner in which meetings were held during 2017, NAO questions the effectiveness of the Board in carrying out its functions,” it said.

Amid other concerns, the audit office also highlighted insufficient debt collection efforts, which “consisted merely of occasional statements sent to debtors”. As of June, the council’s outstanding debt stood at €325,586.

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