Local councils act

The principal Local Councils Act – Act XV of 1993
Local councils in Malta execute their functions mainly with funds advanced by central Government from the public coffer. In order to ensure that such funds are put to proper use and that the resources of local councils are properly safeguarded against misuse, the Local Councils Act and the amendments thereto provide a framework within which each council has to function. This framework is laid out in numerous Local Council Procedures covering financial, audit, tendering, human resources, prosecution, bye -laws, council meetings, and office organisation and administration procedures.

Financial procedures
The council secretary is the executive, administrative and financial head of the council, and he or she is responsible to the elected council. The Financial Procedures define a standard recording and accounting framework to ensure that financial information is handled and presented in a uniform manner to facilitate consistent presentation, interpretation and assessment of the council’s plans, budgets, income, expenditure, reports and financial performance. They also contain a specimen of the financial statements, which are to be adhered to, together with a specimen of the audit opinion being requested from the appointed auditors.

The finances of a local council should be treated similarly to those of a private entity. The council secretary is therefore responsible for establishing and maintaining a proper accounting and financial management and control system, which includes the recording of and accounting for revenue, expenditure, assets and liabilities following the local councils’ chart of accounts. The financial management system also includes planning for and maintaining a positive cash balance.

Audit
Through local councils, Government wishes to ensure that decentralisation will not lead to any diminution of accountability. Government also wishes to ensure that financial matters are dealt with by councils in a consistent manner. The Act therefore provides for the audit of local councils to be entrusted to Certified Public Accountants and Auditors, and the regulations issued in terms of the Act prescribe the audit requirements for local councils.

In addition to the audit of the financial statements, the auditors of a local council are required to make additional enquiries and tests aimed specifically at whether the local council has made proper arrangements for securing economy, efficiency and effectiveness. The task to determine this has been split into two assignments:

• The annual analysis and comparison of the council’s indicators to measure performance, which analysis is to be submitted by the end of June of each year together with the statutory audit
• A full value for money audit to be conducted every three years as directed by the Auditor General. A report on this assignment is to be submitted to the Auditor General within six months of the date the audit is commissioned by the Auditor General.

The internal structure of a local council
The council must organise itself such that proper internal control procedures are practised. Good internal control includes all systems of controls, financial and otherwise, established by the council to ensure the smooth running and efficiency of the council’s operations., the reliability of its records and the safeguarding of its assets.

A local council should engage the prescribed number of employees necessary to operate in an efficient manner and both councillors and employees should have the appropriate expertise for their individual roles.

Strategy and objectives
A local council must define its purpose and ambitions – it must state clearly what it wants to achieve within an established period and how the said objectives are to be achieved. The council should establish performance criteria against which to measure results.

The council’s objectives have to be interpreted in a 3-year business plan, which should include a budget. The plan must be approved by both the council and the Minister responsible for local councils, and must be reviewed annually during the national budget process. The council must secure a visible commitment to serious planning to achieve its aims.

The local council should, in consultation with the public, identify development projects of priority to the locality. Prioritising projects must be decided by the council and not by the mayor or council secretary singlehandedly.

Budgeting and information systems
An important element of control is planning; financial planning is normally interpreted in the form of a budget. The attention given to the annual budgeting process gives a clear indication of whether the council is committed in its endeavour.

The budget must be based on reliable information. It must take into account the current year’s financial performance to date and forecast results up to the current financial year end (31 March), expected changes in costs, quality standards and other factors and quantification of any planned changes for the coming year together with forecast capital expenditure.

Capital expenditure and tendering
Section P1.09 of the Financial Procedures lays down strict detailed procedures for the tendering process involved with regards to capital expenditure. These procedures address the whole tendering process from drafting the tender document, publishing it, opening tenders, evaluating them and issuing the acceptance letter. They also deal with the procedure that must be followed in the case of abandonment of an awarded contract.

All capital expenditure must be supported by proper records of costs incurred. Contract work-in-progress should be monitored closely by a contract manager appointed by the council. The contract manager should also ensure that the finished works comply in all respects with the specifications of the tender documents.

Office practice and style
Administrative procedures are to be reviewed periodically and, if necessary, changes should be effected to ensure best possible practice. Running costs are to be kept under close scrutiny; professional advice is to be sought as and when necessary.

A local council must commit itself to seek continuous improvement in the services it provides to the public. This implies that both local councillors and employees must show their commitment to service improvement in their approach with the public, in their attitude towards complaints from the public, and in the action they take to resolve complaints. The office environment must be conducive to good customer service. In this regard the council should provide initiative and professionalism on the part of employees, by providing them with the opportunity to receive the necessary training. Regular meetings should be held with employees to set priorities and to resolve problems.