Statutory auditing of Gozitan local councils : an analysis

Abstract

Purpose: This study was carried out to examine the most common and recurring weaknesses that Gozitan LCs have been facing between 2015 and 2018, while also providing ideas how such can be addressed. Moreover, the current audit process applied on Malta’s Local Government is also evaluated to determine whether any changes can be made. Design: The research objectives were achieved through the adoption of a qualitative research approach. 15 semi-structured interviews were carried out to discuss the current audit process and the weaknesses found in the MLs. Findings: The study found that there were several weaknesses pertaining to Gozitan LCs which were classified into control weaknesses and non-compliance weaknesses. Control issues comprised the lack of accounting skills that most ESs have, the inadequate ICSs of nearly all these LCs, weaknesses in the FAR and problems in the reconciliation process. On the other hand, non-compliance issues included weaknesses arising from the procurement process, the use of IFRS in the Maltese Local Government context and issues relating to the LCs’ response towards the MLs. Furthermore, the interviews also revealed that the current audit process is the most appropriate one for Malta. Conclusions: Most of the identified weaknesses have been present for a long time, indicating that more help and guidance is required from the LGD. Despite the current audit system being the most appropriate one for Malta’s Local Government, changes can still be made to enhance such system. Implications: This study aims to bring to light several of the problems that are being faced by Gozitan LCs, while also providing recommendations on how such can be addressed. Attention is also directed towards the current audit system used on the Maltese Local Government.