Long-delayed audited accounts detailing the financial movements of the multimillion-euro sovereign wealth fund have yet to be published.
A report by the auditor general about the National Development and Social Fund (NDSF) said audited financial statements are “crucial” for providing an unbiased and objective assessment of the agency’s accounts.
The NDSF, which is funded by the proceeds from passport sales, is obliged to publish audited accounts annually. However, the last-available audit report dates back to 2020.
“Thus, for the sake of good governance, management is expected to comply with the reporting mechanism in a timely manner,” the auditor general warned.
The NDSF has for the past year been telling Times of Malta that its audited 2021 accounts are in the “final stages of review”.
It has put the delay down to a change in auditors as well as technical accounting matters.
The fund’s board assured the auditor general that it is “fully aware” of the importance of timely financial reporting.
As part of his assessment, the auditor general also highlighted the lack of documented policies and procedures for the selection of projects to be given funding by the NDSF.
The auditor general urged the NDSF the ensure that good governance is safeguarded when distributing public money, particularly through the adoption of fair and equitable distribution policies.
For the sake of good governance, management is expected to comply with the reporting mechanism in a timely manner
Critics have in the past slammed the fund’s use by politicians to score points with voters.
In 2021, some €3 million was used by the fund to promote projects in the constituency of MP Alex Muscat, who at the time was responsible for the passports scheme.
The fund has also been used to buy private properties occupied by band clubs threatened with eviction by the property owners.
Muscat has described this as a “bold move” intended to end years of uncertainty that neither band club patrons nor private property owners deserve.
The auditor general also zeroed in on the NDSF’s failure to obtain detailed costings for certain projects it funded.
Urban greening projects in Ħamrun, Mosta, Qormi and Żabbar, as well as that of the Mdina Illumination Project were cited as examples of such failures.
In his report, Auditor General Charles Deguara said detailed costings and cash flow budgets are essential tools for effective financial management and decision-making when it comes to social grant programmes.
The auditor general said such costings help ensure that resources are allocated and managed efficiently, transparently and with accountability, ultimately benefitting those in need of social assistance.
“Thus, all the required documentation is to be obtained before a project is considered as eligible for funding,” the auditor general said.
The NDSF told the auditor general that proposals for funding are normally backed by “high-level cost estimates”, and the actual cost estimates are only determined once the respective tender documents are drawn up by the beneficiary.