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L.S. 363.12 Regolamenti dwar Proċeduri għal Gvern Lokali

LOCAL GOVERNMENT (PROCEDURES) [ S.L.363.12 SUBSIDIARY LEGISLATION 363.12 LOCAL GOVERNMENT (PROCEDURES) REGULATIONS 20th September, 1996 LEGAL NOTICE 180 of 1996, as amended by Legal Notices 28, 152 of 2000, 320, 323 of 2002, 319 of 2003, 403 of 2004, 328 of 2006, 425 of 2007, 267 of 2017 and 166 and 276 of 2019 and 208 of 2022. 1. The title of these regulations is the Local Government (Procedures) Regulations. Citation. 2. In the exercise of their functions under the Local Government Act, Local Councils, their Secretaries and employees shall comply with the procedures set out in the publications listed in the First Schedule as may be amended in accordance with the provisions of any subsequent schedule. Compliance with procedures. Amended by: L.N. 28 of 2000. Cap. 363. 1 2 [ S.L.363.12 Amended by: L.N. 28 of 2000. Substituted by: L.N. 425 of 2007. Amended by: L.N. 267 of 2017. LOCAL GOVERNMENT (PROCEDURES) FIRST SCHEDULE (Regulation 2) L.C.P. 1/96 - Local Councils (Financial) Procedures, 1996 L.C.P. 2/96 - Local Councils (Audit) Procedures, 1996 L.C.P. 4/96 - Local Councils (Human Resources) Procedures, 1996 L.C.P. 5/96 - Local Councils (Prosecuting) Procedures, 1996 L.C.P. 6/96 - Local Councils (Bye-Laws) Procedures, 1996 L.C.P. 7/96 - Local Councils (Meetings) Procedures, 1996 L.C.P. 8/96 - Local Councils (Office) Procedures, 1996 SECOND SCHEDULE (Regulation 2) Added by: L.N. 28 of 2000. Amended by: L.N. 152 of 2000; L.N. 320 of 2002; L.N. 323 of 2002; L.N. 319 of 2003; L.N. 403 of 2004; L.N. 328 of 2006. Substituted by: L.N. 425 of 2007. Amended by: L.N. 267 of 2017; L.N. 166 of 2019; L.N. 208 of 2022. The Procedures specified in the First Column of the Schedule shall have effect subject to the amendments specified in the Second Column thereof. FIRST COLUMN PROCEDURES L.C.P. 1/96 - Local Councils (Financial) Procedures, 1996. SECOND COLUMN EXTENT OF AMENDMENT 1. P1.09 shall be amended as follows: (

  1. a)in item e.01, for the words "€232.94" there shall be substituted the words "€1,164.69"; and (
  2. b)in item e.02, for the words "€232.94" and "€2,329.37" there shall be substituted the words "€1,164.69" and "€4,658.75" respectively; (
  3. c)in item e.03 for the words "€2,329.37" there shall be substituted the words "€4,658.75". 2. Item C.09 of P1.14 shall be substituted by the following: LOCAL GOVERNMENT (PROCEDURES) [ S.L.363.12 3 c. Any money and income received shall be deposited at least once a month provided that the amount left at the Council’s premises does not exceed one thousand euro (€1,000), in total, in a given month, or unless decided otherwise by the Council and such decision is within the parameters of the Council’s insurance policy in place. Monies exceeding one thousand euro (€1,000) shall be deposited on the same day that this threshold is reached. 3. P1.01 shall be amended as follows: Immediately after item h.06 there shall be added the following: "h.07 The depreciation of fixed assets is accounted for through the month-end procedure on a monthly basis. The rates of depreciation are established in Appendix P1.XI.". 4. P1.02 shall be amended as follows: Immediately after item a.02 there shall be added the following: "a.03 Ensuring that every payment and commitment to pay, whether existent or in the future, is registered as required in a cumulative and consolidated format in terms of the established form in Appendix P1. XII, which form shall immediately reveal and also provide a projection of the emerging balance. When such projected balance falls below the level of the benchmark established in terms of regulation 4 of the Financial Regulations, both the Council and the Director shall be immediately informed in order to lay the ground for the commencement of the relative corrective procedure. A copy of this form (Appendix P1. XII) shall accompany the minutes of every Council meeting and shall be referred to Director.". 5. P1.05 shall be amended as follows: (
  4. a)Immediately after d.06 there shall be added the following new paragraphs: "d.07 A copy of this report shall be forwarded to the Director within fifteen days of its presentation to the Council as specified in the preceeding paragraph (i.e., by the 30th July, 30th October, 30th January and 30th April of each year). Should the Council fail to submit such report, the Minister shall, on the advice of the Director, provisionally retain any portion of the allocation of funds approved to the Council, until the Council abides by such obligation. 4 [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) Provided that the Minister shall only retain such funds following a period of time prescribed in a written notice where the Council is given the opportunity to rectify its failure. Provided further that the amount so retained shall not exceed 1% of the funds allocated to the Council during the financial year.". (
  5. b)Immediately after g.05, there shall be added the following: "h. The Council shall forward to the Director a copy of the approved minutes of its meetings as well as the minutes of the Finance Committee. Should the Council fail to submit such minutes within three working days after their approval, the Minister may, on the advice of the Director, provisionally retain any portion of the allocation of funds approved to the Council, until the Council abides by such obligation. Provided that the amount so retained shall not exceed 1% of the funds allocated to the Council during the fmancial year. i. The Financial Situation Indicator of a Council, as defined by regulation 4 of the Financial Regulations, is calculated by taking the total amount of current assets (cash in bank and debtors) and deducting from it the total amount of current liabilities (payments/creditors falling due in the short and long term), with the exception of long-term financial commitments approved in writing by the Minister in terms of the Act. In situations where the Council has an approved loan arrangement, the long term outstanding loan will not be taken into consideration, when calculating the Financial Situation Indicator. However, both the Council and the Director shall ensure that that the loan repayments are in line with the original agreement when the loan was approved and issued. i.01 Should a Local Council have a Financial Situation Indicator with a favourable balance which is less than ten per cent of the allocation which Government would have approved to the Local Council for that same Local Council financial year: LOCAL GOVERNMENT (PROCEDURES) (
  6. i)[ S.L.363.12 5 The Director shall issue a notice in writing about this situation to the Local Council. The Council shall thereby be bound to reply in writing so as to state how the next quarterly financial report will be drawn up, how the Council would improve its financial situation and which expenditure cuts the Council was about to effect to achieve the ten per cent mark; (
  7. ii)The Council shall be bound to appoint a Finance Committee which would include as members, the Mayor, another Councillor and the Executive Secretary, and should no person from the Council or the Executive Secretary be a qualified accountant, a qualified accountant shall be appointed by the Council. Before any decision is taken about any expenditure, the Council shall request the advice in writing of the Finance Committee which would evaluate the proposed expenditure, having regard to the financial situation of the Council; (iii) Should the Council, by the second quarterly financial report after the Director’s letter, fail to make provision for the ten per cent benchmark, the Minister may, on the advice of the Director, withhold the release of such amount from the allocation approved to the Local Council which would be equal to the difference between the actual balance and the ten per cent benchmark. The amount shall be withheld for so long as in any quarterly report made after the withholding of such amount, the ten per cent benchmark is achieved. On such occurrence, the Minister shall authorise the release of such amount to the Council: 6 [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) i.02 Provided that when a Council consistently registers a positive result, the Minister shall remove the application of the requirement of a favourable balance of ten per cent as long as the Council continues to register a positive financial position. The Minister may at any time reactivate the ten per cent requirement in such cases where the financial result or forecasts of the Council would require such measure. Should a Council have a Financial Situation Indicator with a negative balance of less than five per cent of the funds, which the Government would have allocated to the Local Council for that same Local Council financial year: (
  8. i)The Director shall formally call upon the Mayor and the Executive Secretary within fifteen days from the discovery of the negative balance; (
  9. ii)The Director shall request the Mayor and the Executive Secretary to prepare proposals regarding the removal of the negative balance so that the ten per cent benchmark of favourable balance may be achieved not later than twelve months after such time: Provided that, should the negative balance in the Financial Situation Indicator be registered at a time during the last year of the term of the Local Council, the ten per cent benchmark of favourable balance shall be achieved within two months from the date of a notice sent by the Director to the Local Council, and by virtue of such notice, the provisions of item (
  10. v)shall immediately apply; (iii) The proposals of the Mayor and of the Executive Secretary shall cover the method and the source of financing of the negative balance, which budget votes are to be used, and which projects would be minimised or terminated; LOCAL GOVERNMENT (PROCEDURES) i.03 [ S.L.363.12 7 (
  11. iv)Should the Director approve the proposals of the Mayor and of the Executive Secretary, such approved proposals shall in themselves supersede the allocations made in the Council budget and every decision previously taken by the Council; (
  12. v)If the Director does not approve the proposals made by the Mayor and the Executive Secretary, the Minister, on the advice of the Director, shall have the power to withhold from the allocation to the Council an amount of money equal to the difference between the negative balance and the ten per cent mark of favourable balance and to start paying by such sum such amounts as would be due by the Council to third parties; (
  13. vi)Should the Council, within a period of twelve months, fail to achieve the ten per cent benchmark, then there shall apply the provisions of paragraph i.03 of this provision, whatever the favourable or negative balance of the Council may be; Provided that wherever in this paragraph it is indicated that a rate of ten per cent in the case of a positive balance shall apply, for the period between 1 April, 2004, and 31 March, 2005, there shall apply a rate of five per cent. Should a Local Council have a Financial Situation Indicator with a negative balance in excess of the five per cent of the allocation made by Government for that same Local Council financial year: (
  14. i)Within one month from the date of the resulting negative balance, the Director shall, after consultation with the Council and its accountants and auditors, prepare a financial restructuring plan for the required months or years, depending on the magnitude of the negative balance, which period, however, may not exceed three years. 8 [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) Should the Director incur any expenses in the preparation of that plan or in the required consultation thereof, such expenses shall be defrayed from the allocation which Government would have made to that Council; (
  15. ii)The plan shall indicate the amount to be used of the allocation to the Local Council for the financing of the financial restructuring plan and, in general terms, which Council votes shall be used for this purpose; (iii) Prior to the implementation of the restructuring plan the Director shall inform the Minister about the plan, and the Minister shall, before confirming the plan, request and hear the views of the Local Councils Association; (
  16. iv)During the restructuring period, the Council’s accounts shall be controlled by the Director who shall have the right to refuse to finance any undertaking of the Council which adversely affects the restructuring plan; (
  17. v)The Council may not enter into any financial undertaking without the approval of the Director. (
  18. vi)Any document relating to a call for public tenders, and any documentation of the Council, including any correspondence which the Council may send, shall include a statement declaring that the Council may not enter into any financial commitment unless it has an agreement to do so in writing with the Director; (vii) Such funds as are allocated by the Government shall be held by the Director in the name of the Local Council and shall be spent according to approved procedures; (viii) Within the context of the restructuring plan, the Director shall have the right to pay such amounts as may be due by the Council to third parties.". Appendix p1. XI LOCAL GOVERNMENT (PROCEDURES) [ S.L.363.12 9 Depreciation Rates The depreciation rates that will be applicable are as follows: Land Buildings Office Furniture and Fittings Construction Works Urban Improvements (Street Furniture) Special Projects Office Equipment Motor Vehicles Plant and Machinery Computer Equipment Trees Plants Litter Bins Playground Furniture Traffic signs Road Signs Street Mirrors Street Lights % Rate 0 1 7.5 10 10 10 20 20 20 25 0 100 100 100 100 100 100 100 Appendix P1. XII 1. Consolidated Details of Income and Expenditure QTR No. YEAR TO DATE (YEAR) ACCT DESCRIPTION ACTUAL COMMITTED TOTAL BUDGET ACTUAL COMMITTED TOTAL BUDGET No. € € € € € € € € 2 Income 0000 Government 0020 Bye-laws 0090 Investment 0100 General TOTAL 1 Expenditure 1000 Personal emoluments 2000 Operations and maintenance 7000 Capital expenditure TOTAL 10 [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) Balance Op enin g Cas h and Bank Balances Less Future Commitments Add Balance (Surplus/ Deficit) Av a i l a b l e Funds Allocation for C o u n c i l ’s current year % Financial Situation Indicator Notes: 1 The amounts entered in the actual column will be the figures extracted from the Sage Reports. 2 The amounts entered in the committed column will be those amounts not yet entered into Sage as Creditors or Accruals in the case of expenditure and any accrued income or amounts due still outstanding. 3 Future Commitments will include any tenders which have been awarded which have not yet commenced or which are partly completed. The amount committed to the project (not yet utilised) will need to be entered in this part and details given on the projects. Declaration: The Mayor and the Executive Secretary declare that the above statements show a true and fair view of the Council’s position on the signing date and that all commitments have been included in these financial statements. Mayor 1.1 Executive Secretary Details of Income a ACCT No. 2 Date b c=(a+
  19. b)d DESCRIPTION QTR No. Income 0000 Government 0001 Annual 0002 Supplementary 0003 Special needs 0004 Public/ government delegations 0015 Others 0020 Bye-laws 0021 Community services 0036 Contravention of bye-laws 0056 Sponsorships 0066 General 0090 Investment e f g=(e+
  20. f)h YEAR TO DATE (YEAR) ACTUAL ACCRUED € € TOTAL BUDGET ACTUAL € € € ACCRUED € TOTAL BUDGET € € [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) 0091 Bank interest 0096 Government securities 0100 General 0110 Donations 0120 Contributions 11 TOTAL 1.1 Details of Expenditure a ACCT No. b b-a DESCRIPTION QTR No. c d d-c YEAR TO DATE (YEAR) ACTUAL COMMITTED TOTAL BUDGET ACTUAL COMMITTED TOTAL BUDGET € 1 Expenditure 1000 Personal emoluments 1100 M a y o r ’s allowance 1200 Employee salaries and wages 1300 Bonuses 1400 Income supplements 1500 Social Security Contributions 1600 Allowances 1700 Overtime 2000 Operations and maintenance 2100 Utilities 2200 Materials and supplies Repair upkeep and 2310 Public property 2311 Roads and Street Pavements 2312 Walkways 2313 Signs 2314 Road markings 2330 Office Furniture and Fittings 2340 Plant and Equipment 2 3 6 0 / Sundry / Other 70 Repairs & Upkeep 2375 Council Property 2400 Rent 2500 National/ International memberships 2600 Office services 2700 Transport € € € € € € € 12 [ S.L.363.12 2800 Travel 2900 Information services 3000 Contractual services 3010 Street Lighting 3020 Lease Equipment 3030 Insurance Coverage of 3035 Bank Charges 3040 Waste Disposal 3041 Refuse Collection 3042 Bulky Refuse Collection 3050 Cleaning Services 3051 Road and Street Cleaning 3052 Clean. & Maint. - Non-urban Rds 3053 Cleaning of Public Conveniences 3055 Cleaning Council Premises 3060 Other Contractual Services 3061 Clean. & Maint. Parks & Gardens 3062 Clean. & Maint. - Verges 3063 Clean. & Maint. - Beaches & Coast 3064 Clean. & Maint. - City N.U. Areas 3100 Professional Services 3200 Training 3300 Community and hospitality 3600 Local Enforcement Expenditure 3400 Incidental expenses 7000 Capital Expenditure 7001 A c q u i s i t i o n of property 7100 Construction 7200 Improvements 7300 Equipment 7500 Special programmes LOCAL GOVERNMENT (PROCEDURES) LOCAL GOVERNMENT (PROCEDURES) [ S.L.363.12 13 TOTAL L.C.P. 2/96 - Local Councils (Audit) Procedures, 1996 P2 P2.01 P2.02 P2.03 P2.04 P2.05 P2.06 P2.07 P2.08 P2.09 P2.10 P2.11 P2.I P2.II P2.III P2 P2.01 a b c Audit Procedures Background Information Local Government Act (CAP. 363) 65, 66 The Role of the Auditor General Local Government Act (CAP. 363) 65 Appointment and Remuneration of Local Government Act (CAP. 363) 65 Local Government Auditors Ty p e s o f A u d i t a n d R e p o r t i n g Local Government Act (CAP. 363) 65, 66 Requirements Local Government (Audit) Regulations 3, 4, 5, 7, 8, 9,10 F i n a l i s a t i o n o f A n n u a l F i n a n c i a l Local Government (Audit) Regulations Statements 3, 8 T h e L o c a l G o v e r nm e n t A u di t o r s ' Local Government Act (CAP. 363) 65 Report on the Financial Statements Local Government (Audit) Regulations 3, 8 T h e L o c a l G o v e r nm e n t A u di t o r s ' Local Government Act (CAP. 363) 66 R e p o r t o n S e c u r i n g E c o n o m y, Local Government (Audit) Regulations Efficiency and Effectiveness 9,10 Special Reports Local Government (Audit) Regulations 7 Appointment of Experts to Assist Local Government Act (CAP. 363) 65

(4)Local Government Auditors G u i d a n c e f o r M a y o r s a n d L o c a l Local Government (Audit) Regulations Councils’ Executive Secretaries 6, 8 Miscellaneous Appendices Specimen Annual Audit Report on the Local Council's Financial Statements Specimen Local Government Auditors’ Report on the Local C o u n c i l ’s I n d i c a t o r s t o M e a s u r e Performance Specimen Local Government Auditors' Report on Value for Money Audit Procedures Background Information These Procedures shall be read together with the Act and with the Local Government (Financial) Regulations, the Local Government (Audit) Regulations and the Local Government (Financial) Procedures. The Local Government Act provides for the decentralisation of certain aspects of Government which can be conducted and supervised more effectively at a local level. The Act provides for the audit of Local Councils, entrusted to Certified Public Accountants with a certificate to practise as auditors. The Local Government (Audit) Regulations issued in terms of the Act prescribe the audit requirements in accordance with the Act. These Procedures contain a specimen of the Financial Statements which Local Councils should adhere to as found in Appendix P2.I. In the case where such specimen is not in conformity with the International Financial Reporting Standards (IFRS’
  1. s)which may come into force from time to time and effecting Local Councils, the IFRS’s should prevail. 14 [ S.L.363.12 P2.02 a b .01 .02 .03 .04 c P2.03 a b c d e P2.04 LOCAL GOVERNMENT (PROCEDURES) The Role of the Auditor General The Auditor General has two main roles in terms of the Act. The first will be an administrative role concerned with the appointment and remuneration of Local Government Auditors. The second role will be a technical one which is intended to lend support to Local Government Auditors and to ensure that their observations and recommendations are given serious consideration. The technical role of the Auditor General is in some aspects comparable to that often attributed to Audit Committees in public companies. The following points should be noted: Local Government Auditors should develop a client relationship both with the Local Council and with the Auditor General. They are at liberty to discuss with the Auditor General any aspect of their audit work, and to answer any queries he may make, either directly or through his staff. The Auditor General will receive copies of all audited Financial Statements, special reports, etc. He may also commission Local Government Auditors to perform interim audits dealing with topics of concern to him. A mid-term audit shall only be carried out if requested by the Executive Secretary.. At the same time, the Auditor General is not there to replace management. Local Government Auditors should look at the Local Council and its management as the primary client. Reports should always be discussed with the Local Council and the Local Council's response should be noted in such letters. Where the Regulations necessitate that the Local Government Auditors report directly to the Auditor General, the Local Council should normally be informed of the report being submitted, except in those rare circumstances, such as where management fraud is suspected, where the Local Government Auditors may prefer to report in confidence. The Auditor General, too, will liaise with Local Government Auditors in a manner which may not exclude the Department for Local Government as the regulatory body responsible for Local Government. Department for Local Government officials may be invited to attend any meetings between the Auditor General and Local Government Auditors at which the affairs of Local Councils are being discussed. Correspondence between Local Government Auditors and the Auditor General may be copied to the Department for Local Government. Appointment and Remuneration of Local Government Auditors The Auditor General shall be responsible for the appointment of Local Government Auditors and for the renewal of such engagements on an annual basis. It is intended that the Auditor General should attain a fair distribution of work among Local Government Auditors, facilitate communications and understanding between Local Government Auditors and himself, reduce overall audit costs and promote audit consistency between Local Councils. The five year rotation of Local Government Auditors will also serve to attain these ends. On their part, Local Government Auditors will be expected to contribute to the process by having all Local Councils’ audits handled by a specialist team, at least, at manager and partner level, where audit firms are concerned. Letters of engagement will be issued by the Auditor General. Annual audit fees shall be agreed with the Auditor General and billed to his Office at the conclusion of the relevant work. Any additional costs arising from specific interim audits requested by the Auditor General (see paragraph e of section P2.04) would also be negotiated with him and billed to his Office. These arrangements do not preclude Local Government Auditors from providing non-audit services to a Local Council. The cost of such services should however be agreed with and billed to the Local Council. Executive Secretaries are to ensure that Local Government Auditors have obtained prior approval from the Auditor General to carry out any other non-audit services. In the case of mid-term audits, the fee is negotiated between the Auditor General and the Local Government Auditors and billed to the Local Council. In no case will the fee be in excess of that charged for the financial year end audit. Types of Audit and Reporting Requirements LOCAL GOVERNMENT (PROCEDURES) a [ S.L.363.12 15 The Local Government (Audit) Regulations provide for four types of audit - the annual audit on the Financial Statements of the Local Council, mid-term audit, interim audit, and an audit on whether the Local Council has secured economy, efficiency and effectiveness. b Annual audits represent the recurring normal audits required to issue an opinion on the Financial Statements of a Local Council (which are to be drawn up in the format as shown in Appendix 2.I), and to draw up a Management Letter thereon. Such work may be carried out entirely after the end of the financial year, or if preferred may include a visit before the year end to spread the work required. Such a visit is entirely at the discretion of the Local Government Auditor. c Two reports will be produced at the conclusion of the annual audit, and these should be completed by the end of June of each year. These reports are: .01 The Local Government Auditors' report on the Financial Statements, which report shall form part of the Annual Administrative Report presented by the Local Council. .02 A Management Letter which would deal with any weaknesses encountered by the Local Government Auditors. Both reports are amplified upon later on in these Procedures (vide para P2.06). d The second type of audit is the mid-term audit. The objective of this audit is to serve as an independent exercise when an Executive Secretary leaves the employment of a Local Council and another is appointed. This type of audit shall only be carried out if requested by the Executive Secretary. This will take the same form as the financial year end audit up to the last day of employment of the outgoing Executive Secretary. Local Government Auditors will be requested to confirm that the minutes of the Local Council’s meetings have been drawn up, approved, signed, available at the Local Council’s premises and appropriately filed. At the end of the mid-term audit, the Local Government Auditors are to present to the Auditor General the Financial Statements covering the period from the beginning of the year to the last day of the employment of the outgoing Executive Secretary, and an Audit Report thereon. The Local Government Auditors are also to draw up a Management Letter pointing out any weaknesses encountered. The Local Government Auditors are to supervise any adjustments and corrections that might be necessary. e The third type of audit is an interim audit which would be carried out at the specific request of the Auditor General on a topic or topics designated by him. Such interim audits are not expected to be frequent. They will be resorted to when the Auditor General is made aware of circumstances, such as suspected fraud, which are of a gravity which calls for an immediate investigation or when follow-up audits are called for to ensure that agreed action plans are actually implemented. Given the likely background to such interim audits Local Government Auditors should submit their report immediately upon the conclusion of their work. A maximum time limit of eight weeks is specified in the Local Government (Audit) Regulations. f In the fourth type of audit the Local Government Auditors shall conduct an annual analysis and comparisons of the Local Council’s indicators to measure performance on whether the Local Council has made proper arrangements for securing economy, efficiency and effectiveness for the financial year under review. This audit will be further amplified upon later on in these Procedures (vide para P2.07). P2.05 Finalisation of Annual Financial Statements It is the responsibility of the Executive Secretary to draw up Financial Statements which fairly present, in accordance with the accounting policies applicable to them, the Local Council’s income and expenditure for the financial year just ended, and its retained funds at the year end. The Executive Secretary is to draw up and submit to the Auditor General the Financial Statements signed by the Mayor and himself by not later than May 10, or if this happens not to be a working day, the first following working day. A copy is also to be submitted to the respective Local Government Auditor. 16 [ S.L.363.12 P2.06 a b c .01 .02 .03 .04 d P2.07 a LOCAL GOVERNMENT (PROCEDURES) The Financial Statements are to consist of the Statement of the Local Council Members’ and Executive Secretary’s responsibilities, Statement of Income and Expenditure, the Statement of Affairs, the Statement of Changes in Equity, the Cash Flow Statement, Notes to the Financial Statements and where applicable the Schedule of Special Needs Funds. After the audit work is completed, if there are no adjustments to be carried out, the Local Government Auditors will append the Audit Report on the Financial Statements and will submit this together with the Management Letter to the Auditor General by not later than June 30 or if this happens not to be a working day, the first following working day. On the other hand, if there are any adjustments to be effected, the Local Government Auditors are to bring these to the attention of the Local Council and return the Financial Statements so that the necessary adjustments are carried out and approved by the Local Council, and revised Financial Statements drawn up. Local Government Auditors will be available to attend the Local Council’s meeting when the adjustments on the Financial Statements are discussed in order to give any clarifications that may be requested or reply to questions asked. The final approved Financial Statements duly signed by the Executive Secretary and the Mayor are to be returned by the Local Council to the Local Government Auditors who will append the Audit Report on the Financial Statements and will submit this together with the Management Letter to the Auditor General by not later than June 30 or if this happens not to be a working day, the first following working day. The Local Government Auditors' Report on the Financial Statements In their report, Local Government Auditors are required to give an opinion on whether the Financial Statements comply with International Financial Reporting Standards, the Act, the Local Government (Financial) Regulations and Procedures and the Local Government (Audit) Regulations and Procedures. The second requirement of the annual audit is the Management Letter mentioned in paragraph c.02 of section P2.04. The Local Government Auditors are to forward to the Auditor General, six bound copies of their report and the Local Council's Financial Statements drawn up as per specimen at Appendix P2.I as well as three copies of the Management Letter addressed to the Council. These copies will be distributed as follows: One copy of the Audit Report and Financial Statements together with the Management Letter to remain with the Auditor General; One copy of above to the Local Council; Two copies of the Audit Report and Financial Statements together with one copy of the Management Letter to the Director (Local Government), one copy of which is to be forwarded to the Director General (National Statistics Office); Two copies of the Audit Report and Financial Statements to the Minister responsible for Local Government a copy of which is to be laid on the Table of the House of Representatives and the other copy is to be archived by the Clerk of the House of Representatives; The Mayor and the Executive Secretary in return are to submit the Local Council’s response to the Director (Local Government), the Auditor General and the Local Government Auditors by not later than August 14 or six weeks after receipt of the Management Letter from the Auditor General, after seeking the Local Council’s approval. The Local Government Auditors' Report on Securing Economy, Efficiency and Effectiveness This section deals with the Local Government Auditors' report containing their analysis, comments and recommendations, made as required by the Act, on whether the Local Council has made proper arrangements for securing economy, efficiency and effectiveness. LOCAL GOVERNMENT (PROCEDURES) b c .01 .02 d e f .01 .02 .03 .04 .05 .06 .07 g .01 .02 .03 [ S.L.363.12 17 In the case of Local Council audits, irrespective of the approach adopted to report on the Financial Statements themselves, Local Government Auditors are required to make additional enquiries and tests aimed specifically at economy, efficiency and effectiveness. This will necessitate a programme of work, to be performed on this topic. It will also necessitate a report which should describe the work performed and the results thereof. The task of determining whether a Local Council has made proper arrangements to secure economy, efficiency and effectiveness has been split into two as follows: The annual analysis and comparison of the Local Councils' indicators to measure performance, which is described later on in this section. This is to be submitted by the end of June of each year together with the Audit Report, Financial Statements and Management Letter. A full audit on the topic, covering the subject dealt with in the following paragraphs, which will be conducted every three years as directed by the Auditor General. The Local Government Auditors are to submit to the Auditor General a report on such an audit within six months from the date the audit is commissioned by the Auditor General. Paragraphs e through n of this section deal with the Local Government Auditor’s duties vis-à-vis the making of proper arrangements for securing economy, efficiency and effectiveness in Local Councils. The Local Government Regulations and the Procedures are intended to assist Local Councils in securing economy, efficiency and effectiveness in the management of their affairs and to ensure that Local Councils operate within their means. The Regulations and Procedures serve as reference documents for value for money audits. Local Government Auditors are not required to pass judgement on whether a Local Council has secured economy, efficiency and effectiveness but are to give their opinion to the Auditor General in a manner that the latter may decide whether economy, efficiency and effectiveness has been achieved. To this end, Local Government Auditors, are expected to make enquiries and tests on whether a Local Council has made proper arrangements for securing economy, efficiency and effectiveness. The emphasis is therefore the achievement of value for money which depends on the existence of sound arrangements for the planning, appraisal, authorisation and control of the use of resources. Value for money advocates which is called "good management practice" includes: Proper organisational structure with adequate classification of responsibilities, authority and accountability. Human resources management including arrangements for review of staff requirements, recruitment, training and direction of employees. The existence of well defined policies and practices. Arrangements designed to the advantage of economies of scale, particularly in procurement of goods, works and services. Arrangements for the proper management of all the resources of the Local Council. Systems of planning, budgeting and controlling income and expenditure and capital expenditure and for the allocation of resources. Regular monitoring of results against predetermined and quantified performance objectives and standards. The Local Government Auditors have no power to question Local Council policy as such but, only the way in which decisions are taken. As a result, they prescribe a rational model of decision-making, and will consider: Whether policy objectives have been determined and whether policy decisions have been taken with appropriate authority. Whether established policy aims and objectives have been clearly set out. The extent to which policy objectives are set and decisions based on sufficient relevant and reliable financial and other data, and with the critical underlying assumptions made explicit. 18 [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) .04 Whether there are satisfactory arrangements for considering alternative options, including the identifications, selection and evaluation of such options. .05 Whether subsequent decisions on implementation are consistent with the approved aims and objectives, and have been taken with the proper authority at the appropriate (or required) level; and whether the resultant instructions to employees accord with approved policy aims and decisions and are clearly understood by those concerned. .06 Whether the costs of alternative levels of service or options have been considered and are reviewed as demands and costs change. h The Act, Regulations and Procedures provide the first benchmark against which to gauge Local Council performance. This is because these documents specify standard policies, systems, practices, procedures, decision making structures, authority levels and relationships etc. which Local Councils must follow and respect. In addition each Local Council may define its own policies, systems, methods and time-scales to supplement the standard requirements but not inconsistent with the said requirements. A full value for money audit will entail an examination of whether the Act, Regulations and Procedures have been complied with. The Local Government Auditor’s report should include their opinion on such compliance, subject, of course, to any exceptions they may report. Local Government Auditors are encouraged as well to point out any shortcomings in the established Procedures which may come to their attention. i In the interests of audit efficiency, Local Government Auditors are encouraged to apply their professional judgement on materiality (Information is material if its omission or misstatement could influence the economic decision of users taken on the basis of the financial statements). j To assist them in monitoring economy, efficiency and effectiveness, Local Councils will be provided with a set of standard indicators to measure performance (e.g. typical refuse disposal costs per household) against which they could measure actual performance. Executive Secretaries are required to examine the performance indicators of their locality, compared to its indicators in previous years, to the predetermined standard for the locality and to the typical or average figures for all Local Councils taken together. k There will in practice be many valid reasons why performance indicators would vary between localities. It is the responsibility of Executive Secretaries ascertain these reasons and to ensure that any adverse variance is not the result of inefficiency on their part. l Lo c a l Go v e r n m e n t Au d i t o r s sh o u l d e a c h y e a r di s c u s s L o c a l C o u n ci l ' s performance indicators with the Executive Secretary to determine the causes of any material variances from year to year, etc. Their report should contain the comparison of p erform ance indicators which is specified in the L oc al Government (Audit) Regulations. It should also record the Local Council's explanations on such indicators together with any additional comments thereon which the Local Government Auditors may wish to make. m Finally, Local Government Auditors are bound to look for evidence that Local Councils are monitoring the quality of the services they are providing, many of which will be delivered by contractors. Such evidence should take the form of: .01 Local Council minutes recording this monitoring; .02 The settlement of complaints made to the Local Council, in accordance with the Local Government (Complaints) Regulations; and .03 The appointment of persons to verify the quality of services delivered by contractors. n The specimen format for the reports discussed in this section may be found in Appendices P2.II and P2.III. P2.08 Special Reports a The Local Government (Audit) Regulations provide for special reports which would be made by Local Government Auditors if they encounter: .01 Serious control weaknesses which, if left unattended, could result in a breakdown in accounting and control procedures; or LOCAL GOVERNMENT (PROCEDURES) [ S.L.363.12 19 .02 Suspected fraud, embezzlement irregularities or abuse of power on the part of Local Council officials and/or Local Council members; or .03 Matters which may lead to a qualification in their Audit Report on the Financial Statements; or .04 Any such other matter, as in the opinion of the Auditor General requires further review. b The issue of a special report denotes a matter of some gravity which calls for action on the part of the Auditor General and the Minister. Special reports should, therefore, be considered as a measure to be taken as a last resort. Particularly on items described in paragraphs a.01 and a.02 of this section, Local Government Auditors should discuss the problem with the Local Council with a view to resolving the matter without having to resort to a special report. c A special report on a case of suspected fraud, embezzlement, irregularity or abuse of power is likely to lead to a request by the Auditor General for an interim audit to investigate the matter or for an investigation by a board appointed under the Inquires Act. P2.09 Appointment of Experts to Assist Local Government Auditors a The Act provides for the appointment of experts by the Auditor General to assist Local Government Auditors in the performance of their duties. b The use of such experts would primarily arise by agreement between Local Government Auditors and the Auditor General. Examples of such uses could include: .01 Auditor General officials assisting Local Government Auditors in a fraud investigation; and .02 A civil engineer being appointed to look into the quality and costs of road maintenance works performed, as part of the audit. c In all cases such experts would be remunerated by the Auditor General. P2.10 Guidance for Mayors and Local Councils’ Executive Secretaries a In the course of their duties, Local Government Auditors would be working mainly with the Local Council officials and/or Local Council members. In liaising with their Local Government Auditors, Local Council officials should be guided by the following principles: .01 In all cases, the responsibility for the institution of sound internal controls, for the maintenance of adequate financial records and for securing economy, efficiency and effectiveness rests with the Local Council and its employees. The audit process assists in the attainment of these objectives, but in no way reduces the responsibility of management; .02 It is the Local Government Auditors' role to make enquiries and tests, for the objectives already discussed, but it is also their role to assist through their advice; .03 The maintenance of a sound system of internal control entails continual management judgement. Controls are justified when their cost is less than the benefit they yield and the assessment of their benefit entails a judgement on the likelihood and cost of losses which may arise if the control was omitted. Local Government Auditors can offer advice to management on such matters, but cannot make decisions on their behalf; .04 T he r eports submitted by Local Government Audi tors will contain the shortcomings noted in their work and their suggestions for improvement. Local Government Auditors will often legitimately seek to report all their findings, except for obviously petty ones, in order that their report contains an agenda of all matters that are worth discussing. Local Council official and/or Local Council members should take such reports seriously and discuss them thoroughly with the Local Government Auditors, who will note the replies received in the final document sent to the Auditor General; .05 There will be cases where Local Government Auditors and Local Council officials and/or Local Council members disagree on the practicability of correcting a particular control weakness. The responsibility for securing economy, efficiency and effectiveness falls upon the Council. 20 [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) .06 The Local Government (Audit) Regulations empower the Auditor General to recommend to the Minister on any action that is deemed appropriate in the circumstances. b Management Letters, and the Local Government Auditors’ reports on the arrangements made by Local Council for securing economy, efficiency and effectiveness shall be made available to the public. c Finally, Local Council officials and/or Council members should monitor the quality of service received from their Local Government Auditors and should communicate any misgivings to the Auditor General. This feedback would be useful to the Auditor General when considering audit appointments and renewals and the terms thereof. P2.11 Miscellaneous The Minister or the Auditor General, may request an ad hoc audit of any Local Council’s operations, from any other entity empowered to do so by any legislation in force. Appendix P2.I P2.I Specimen Annual Audit Report on the Local Council’s Financial Statements [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) 21 .................................... Local Council Annual Audit Report Prepared by: ABC & Co Certified Public Accountants ....................................... Local Council Appendix P2.I (continued) Annual Audit Report 22 [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) ------------------------------------------------------------------------------------------------------------ Table of Contents Section Page Statement of Local Council Members’ and Executive Secretary’s Responsibilities 3 Report of the Local Government Auditor to the Auditor General 4 Statement of Income and Expenditure 5 Statement of Affairs 6 Statement of Changes in Equity 7 Cash flow statement 8 Schedule of Special Needs Funds 9 Notes to the Financial Statements 10 ....................................... Local Council Appendix P2.I (continued) Annual Audit Report LOCAL GOVERNMENT (PROCEDURES) [ S.L.363.12 23 -----------------------------------------------------------------------------------------------------------Financial Statements for the year ended 31 March 2006 Statement of Local Council Members’ and Executive Secretary’s Responsibilities The Local Government (Financial) Regulations require the Executive Secretary to prepare a detailed annual administrative report which includes a statement of the Local Council’s income and expenditure for the year and of the Council’s retained funds at the end of year. By virtue of the same regulations it is the duty of the Local Council and the Executive Secretary to ensure that the financial statements forming part of the report present fairly, in accordance with the accounting policies applicable to Local Councils, the income and expenditure of the Local Council for the year and its retained funds as at the year end, and that they comply with the Act, the Local Council (Financial) Regulations, and the Local Council (Financial) Procedures issued in terms of the said Act. The Executive Secretary is responsible to maintain a continuous internal control to ascertain that the accounting, recording and other financial operations are properly conducted in accordance with the Local Government Act, Local Council (Financial) Regulations, and the Local Government (Financial) Procedures. The Executive Secretary is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. ....................................... Local Council Appendix P2.I (continued) Annual Audit Report 24 [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) -----------------------------------------------------------------------------------------------------------Financial Statements for the year ended 31 March 2006 Report of the Local Government Auditor to the Auditor General ....................................... Local Council Appendix P2.I (continued) Annual Audit Report [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) 25 -----------------------------------------------------------------------------------------------------------Statement of Income and Expenditure for the year ended 31 March 2006 Notes 2005/2006 € Income Funds received from central government Income raised under Local Council Bye-Laws Income raised under Local Enforcement System Investment Income General Income Expenditure Personal emoluments Operations and maintenance Administration and other expenditure Finance Cost Surplus for the year ....................................... Local Council 3 4 5 6 7 8 9 10 11 € 2004/2005 € 211,549.03 163,482.41 14,174.24 3,717.68 1,395.29 182,769.62 (156,047.05) 55,501.98 33,410.20 73,943.63 51,085.49 (158,439.32) 24,330.31 179,275.56 361.05 15.760.54 5,003.49 11,148.38 33,803.87 68,590.73 50,833.92 2,818.54 Appendix P2.I (continued) Annual Audit Report 26 [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) -----------------------------------------------------------------------------------------------------------Statement of Affairs as at 31 March 2006 Notes 2005/2006 € € 2004/2005 € 131,597.95 103,545.31 Assets Non-current Assets Property, plant and equipment 12 Current Assets Inventories 13 291.17 978.34 Receivables 14 6,988.12 7,453.99 Cash and cash equivalents 15 233,475.43 Total assets 99,969.72 240.754.72 108,402.05 372,352.67 211,947 170,668.53 115,166.55 43,496.39 - Reserves and Liabilities Reserves Retained funds Non-current liabilities Long term borrowings 16 Current Liabilities Payables 17 149,885.86 Current portion of long-term borrowings 16 8,301.89 Total equity and liabilities 96,780.81 158,187.75 96,780.81 372,352.67 211,947.36 These financial statements were approved by the Local Council on .................... and signed on its behalf by: Mayor Executive Secretary ....................................... Local Council Appendix P2.I (continued) Annual Audit Report [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) 27 -----------------------------------------------------------------------------------------------------------Statement of Changes in Equity for the year ended 31 March 2006 Revaluation Reserve Retained Funds € Balance at 31 March 2004 - Restated balance € 90,836.25 - Changes in accounting policy - Total 90,836.25 - 90,836.25 90,836.25 Changes in equity - Gain/(Loss) on property revaluation - Net income recognised directly in equity - Surplus for the period - 24,330.31 24,330.31 Balance at 31 March 2005 - 115,166.55 115,166.55 - - 55,501.98 55,501.98 170,668.53 170,668.53 Changes in equity Gain/(Loss) on property revaluation - Net income recognised directly in equity Surplus for the year Balance at 31 March 2006 ....................................... Local Council - Appendix P2.I (continued) Annual Audit Report 28 [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) -----------------------------------------------------------------------------------------------------------Cash flow statement for the year ended 31 March 2006 2005/2006 € € 2004/2005 € Note Cash flow from operating activities Surplus for the year Adjustments for: Depreciation Increase / (Decrease) in Provision for Bad Debts Interest receivable Interest payable (Profit) / Loss on disposal of asset Increase / (Decrease) in payables Decrease / (Increase) in receivables Decrease / (Increase) in inventories Cash generated from operations Interest paid Net cash from operating activities 55,501.98 24,330.31 14,556.25 (5,003.49) 2,818.54 65.22 67,938.50 53,105.05 465.87 687.17 122,196.60 (2,818.54) 13,810.85 (3,717.68) 34,423.48 (7,628.70) (7,712.56) 19,082.23 19,082.23 119,378.06 Cash flows from investing activities Purchase of property, plant and equipment Proceeds from sale of equipment Interest received Net cash used in investing activities (43,023.53) 349.41 5,003.49 (25,998.14) 4,963.89 (37,670.63) (21,034.24) Cash flows from financing activities Proceeds from long-term borrowings Loan Repayments Net cash from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year ....................................... Local Council 55,206.15 (3,407.87) 15 51,798.28 - 133,505.71 (1,952.01) 99,969.72 233,475.43 101,921.73 99,969.72 Appendix P2.I (continued) Annual Audit Report [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) 29 -----------------------------------------------------------------------------------------------------------Schedule of Special Needs Funds at 31 March 2006 Funds Received and Expended Brought Forward Carried Forward € Received € Expended € - - Brought Forward € Contracted this year € Invoices received € Carried Forward € Special Program 1 - Special Program 3 - Total - - - Special Program 2 - Brought Forward € Contracted this year € Invoices received € Carried Forward € - - € Special Program 1 14,442.12 Special Program 2 27,952.48 Special Program 3 40,204.98 Total 82,599.58 14,442.12 27,952.48 40,204.98 82,599.58 Capital Creditors - Commitments Special Program 1 14,442.12 Special Program 2 27,952.48 Special Program 3 40,204.98 Total 82,599.58 ....................................... Local Council 14,442.12 27,952.48 40,204.98 82,599.58 Appendix P2.I (continued) Annual Audit Report 30 [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) -----------------------------------------------------------------------------------------------------------Notes to the Financial Statements for the year ended 31 March 2006 1. General Information .......................................... Local Council is the local authority of ............................ set up in accordance with the Local Government Act. The office of the Local Council is situated at .............................................................................................................................................. . 2. Accounting Policies and Reporting Procedures These financial statements have been drawn up in accordance with the accounting policies and reporting procedures prescribed for Local Councils in the Financial Regulations issued by the Minister of Finance in conjunction with the Minister responsible for Local Government in terms of article 67 of the Local Government Act (Cap. 363). The financial statements are prepared under the historical cost convention as modified to include fair values stated in the accounting policies below. These Financial Statements are prepared in accordance to the requirements of International Financial Reporting Standards and comply with the Local Government Act Cap. 363, the Financial Regulations issued in terms of this Act and the Local Councils (Financial) Procedures 1996. The principal accounting policies and reporting procedures used by the Local Councils are as follows: a. Revenue recognition Revenue is recognised when there are no significant uncertainties concerning the derivation of consideration or associated costs. Interest income is recognised in the income statement as it accrues. b. Local Enforcement System ........................................ Local Council forms part of ...................... Joint Committee. The amount disclosed in the financial statements under Local Enforcement Income represents the share of profit derived from the Joint Committee after deducting the related expenses. c. Property, Plant and Equipment Property, plant and equipment is stated at cost less accumulated depreciation and impairment loss to date. Depreciation is calculated on a monthly basis using the reducing balance method at rates calculated to write off the cost less residual value of each asset over its expected useful life as follows: % Land Trees Buildings Office Furniture and Fittings Construction Works Urban Improvements (Street Furniture) Special Projects Office Equipment Motor Vehicles Plant and Machinery Computer Equipment Plants Litter Bins Playground furniture Traffic Signs Road Signs Street Mirrors Street Lights 0 0 1 7.5 10 10 10 20 20 20 25 100 100 100 100 100 100 100 LOCAL GOVERNMENT (PROCEDURES) [ S.L.363.12 31 d. Government Grants Government grants are accounted for on a systematic basis in the Income and Expenditure Account over the periods necessary to match them with the related costs which they are intended to compensate. If such costs have already been incurred when the grant is made, or if there are no related cost, then the grant is accounted for when it becomes receivable. e. Impairment of Assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of the fair value of the asset less cost to sell and the value in use. Impairment losses are immediately recognised as an expense in the Statement of Income and Expenditure. f. Amounts Receivable Amounts receivable are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less provision for impairment. A provision for impairment of amounts receivable is established when there is objective evidence that the Council will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the carrying amount of the asset in the present value of the estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the Statement of Income and Expenditure. g. Foreign Currencies Items included in the Financial Statements are measured using the currency of the primary economic environment in which the Local Council operates. These Financial Statements are presented in €, which is the Council’s functional and present currency. Transaction denominated in foreign currencies are translated into € at rates of exchange in operation on the dates of transactions. Monetary assets and liabilities expressed in foreign currencies are translated into Lm at the rates of exchange prevailing at the date of the Statement of Affairs. h. Profit and Losses Only profits that were realised at the date of the Statement of Affairs are recognised in these Financial Statements. All foreseeable liabilities and potential losses arising up to the said date are accounted for even if they become apparent between the said date and the date on which the Financial Statements are approved. i. Cash and Equivalents Cash and Cash Equivalents are carried in the Statement of Affairs at face value. For the purposes of the Cash Flow Statement, cash and cash equivalents comprise cash in hand and balances held with banks. 2005/2006 2004/2005 € € 3. Funds received from central government In terms of article 55 of the Local Government Act (Cap. 363) 179,275.56 163,482.41 In terms of article 58 of the Local Government Act (Cap. 363) - - 179,275.56 163,482.41 2005/2006 2004/2005 € Other Government Income (Specify) € 4. Income raised from Bye-Laws Income raised under Local Council Bye-Laws - 361.05 2005/2006 2004/2005 32 [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) € € 5. Local Enforcement Income Share of Profit from Joint Committee/Fines and Penalties* 15,760.54 14,174.24 *Applicable only when Local Council does not form part of a Joint Committee. 2005/2006 € 2004/2005 € 6. Investment Income Income received from Government Securities Bank interest 773.35 - 4,230.14 3,717.68 5,003.49 3,717.68 2005/2006 2004/2005 € € 7. General Income Income from permits 1,979.97 - Sponsorships 1,460.52 188.68 Income from tender documents Contributions and donations 2,329.37 5,378.52 1,206.62 11,148.38 1,395.29 2005/2006 2004/2005 € € 8. Personal Emoluments Mayor’s allowance 4,817,14 4,171.91 Executive Secretary salary and allowances 17,645.00 17,703.24 Employees’ salaries 8,441.65 8,385.74 Social Security Contributions 2,900.07 3,149.31 33,803.87 33,410.20 2005/2006 2004/2005 € € 9. Operations and Maintenance Repairs and upkeep: Road and street pavements (Patching works) 6,997.44 3,610.53 Walkways 3,126.02 715.12 Street signs Road markings 172.37 2,068.48 2,061.50 7,628.70 12,357.33 14,022.83 16,356.86 17,053.34 Contractual Services: Refuse collection (including bins on wheels) LOCAL GOVERNMENT (PROCEDURES) [ S.L.363.12 33 Bulky refuse collection (including open skips) 3,857.44 2,841.84 Road and Street Cleaning (mechanical and manual) 11,982.30 14,779.87 Cleaning and Maintenance of Non-Urban Roads 861.87 3,878.41 Cleaning and Maintenance of Public Conveniences 1,164.69 1,178.66 Cleaning and Maintenance of Parks and Gardens 1,234.57 1,299.79 Cleaning and Maintenance of Verges 6,170.51 7,686.93 Cleaning and Maintenance of Beaches and Coastal Areas 9,198.70 5,147.92 Cleaning and Maintenance of country non-urban Areas 5,406.48 6,054.04 - - 56,233.40 59,920.80 68,590.73 73,943.63 Local Enforcement Expenses** **Applicable only when Local Council does not form part of a Joint Committee. 2005/2006 2004/2005 € € 10. Administration and other expenditure Utilities 3,535.99 5,380.85 Other repairs and upkeep 624.27 747.73 Rent 698.81 7,505.24 National and International Memberships Office Services 265.55 - 3,696.72 4,691.36 Travel 524.11 - Transport 1,737.71 764.03 Information Services 4,509.67 2,748.66 Other contractual services 2,003.26 1,467.51 Professional services 6,671.33 5,772.19 349.41 - Training Community and hospitality 6,044.72 8,197.06 Social events 204.98 Cultural events 4,891.68 - - 14,556.25 13,810.85 50,833.92 51,085.49 2005/2006 2004/2005 € Donations 454.23 Loss on disposal of asset 65.22 Increase in provision for bad debts Depreciation € 11. Finance Costs [ S.L.363.12 34 LOCAL GOVERNMENT (PROCEDURES) Interest on Bank Loan - 2,818.54 - Interest charged by creditors 2,818.54 12a. Property, Plant and Equipment Asset Property Office furniture & fittings New Street Signs Office Equipment Motor Vehicles Computer Equipment Special Program -mes Total € € € € € € € € 67,551.83 6,988.12 87,353.83 Cost As at 01 April 2005 61,500.12 Additions 37,197.76 635.92 76.87 - 5,112.97 - - 43,023.53 Disposals - - - - - (2,212.90) - (2,212.90) 340.49 22,273.47 65,338.92 As at 31 March 2006 98,697.88 18,397.39 15,415.79 19,033.31 15,492.66 340.09 17,160.49 6,988.12 228,164.45 Grants and other reimbursements As at 1 April 2005 - - - - - - 6,988.12 6,988.12 Additions - - - - - - - - As at 31 March 2006 - - - - - - 6,988.12 6,988.12 177.03 15,199.16 19,142.79 - 76,820.41 Accumulated Depreciation As at 1 April 2005 20,985.32 Charge for the year 684.84 971.35 76.87 32.61 791.99 11,998.60 - 14,556.25 Released on disposal - - - - - (1,798.28) - (1,798.28) As at 31 March 2006 21,670.16 6,871.65 15,492.66 209.64 15,991.15 29,343.12 - 89,578.38 77,027.72 12,161.66 130.44 6,282.32 35,995.81 - 131,597.95 Net Value 5,900.30 15,415.79 Book As at 31 March 2006 - 12b. Property, Plant and Equipment Asset Property Office furniture & fittings New Street Signs Office Equipment Motor Vehicles Computer Equipment Special Program -mes Total € € € € € € € € Cost As at 01 April 2004 61,500.12 18,397.39 15,415.79 340.09 17,160.40 41,786.63 6,988.12 161,355.70 Additions - - 232.94 - - 25,765.20 - 25,998.14 Disposals - - - - - - - - 340.09 17,160.49 67,551.83 As at 31 March 2005 61,500.12 18,397.39 15,415.79 6,988.12 187,353.83 [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) 35 Grants and other reimbursements As at 1 April 2004 - - - - - - 6,988.12 6,988.12 Additions - - - - - - - - As at 31 March 2005 - - - - - - 6,988.12 6,988.12 4,887.03 15,182.86 135.10 14,709.99 7,519.22 - 63,009.55 Accumulated Depreciation As at 1 April 2004 20,575.36 Charge for the year 409.97 1,013.28 232.94 41.93 489.17 11,623.57 - 13,810.85 Released on disposal - - - - - - - - As at 31 March 2005 20,985.32 5,900.30 15,415.79 177.03 15,199.16 19,142.79 - 76,820.41 40,514.79 12,497.09 163.06 48,409.04 - 103,545.31 2005/2006 2004/2005 € Net Value Book As at 31 March 2005 - 1,961.33 € 13. Inventories Stationery 93.17 372.70 Consumables 46.59 326.11 Books for resale 151.41 279.52 291.17 978.34 2005/2006 2004/2005 € € 14. Receivables Receivables 489.17 349.41 LES debtors 6,033.08 5,264.38 232.94 116.47 Prepayments and accrued income Other receivables 232.94 1,723.74 6,988.12 7,453.99 15. Cash and Equivalents Cash and cash equivalents included in the cash flow statement comprise the following amounts in the Local Council Statement of Affairs: 2005/2006 2004/2005 € € Bank balances: - ordinary funds 150,843.23 17,337.53 [ S.L.363.12 36 - LOCAL GOVERNMENT (PROCEDURES) special needs funds 82,599.58 82,599.58 32.61 32.61 233,475.43 99,969.72 Cash in Hand 16. Long Term Borrowings (
  2. i)Long term borrowings consist of a loan borrowed by the council with the approval of the Minister responsible from Local Government. This amount is to be repaid by 30 June 2014. Interest is being charged at 7% per annum. (
  3. ii)The loan repayment for the current year amounts to €8,301.89. This consists of 12 monthly instalments of €691.82. 2005/2006 € 2004/2005 € 17. Payables Payables 49,447.94 6,179.83 Accruals 17,621.71 7,761.47 Special needs funds - unutilised 82,599.58 82,599.58 216.63 239.93 149,885.86 96,780.81 2005/2006 2004/2005 € Other payables 18. Capital Commitments € (
  4. i)Details of capital commitments are as follows: Approved but not yet contracted for (
  5. ii)14,558.58 4,658.75 Contracted for but not provided in Financial Statements (iii) 11,646.87 2,329.37 26,205.45 6,988.12 2,329.37 These could be analysed as follows: (
  6. ii)Approved but not yet contracted for: Office Furniture and Fittings 2,911.72 - Motor Vehicles 9,317.49 4,658.75 14,558.58 4,658.75 11,646.87 2,29.37 New Street Signs (iii)Contracted for but not provided in Financial Statements: Walkways 19. Contingent Liabilities The Council has been drawn into a court case. The outcome and liability of the Council is estimated to be €46,587.47. Appendix P2.II P2.II Specimen of the Local Government Auditors' Report on the Local Council’s Indicators to Measure Performance LOCAL GOVERNMENT (PROCEDURES) [ S.L.363.12 37 ........................................... Local Council -----------------------------------------------------------------------------------------------------------Indicators to Measure Performance Audit Report - Year Prepared by: ABC & Co Certified Public Accountants Appendix P2.II (continued) .................... Local Council Indicators to Measure Performance Audit Report - Year 38 [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) ------------------------------------------------------------------------------------------------------------ Section Executive Summary 1.0 Introduction 2.0 Scope 3.0 Methodology 4.0 Findings and Recommendations 4.1 General Observations 4.2 Repair and Upkeep (Works) Functions 4.2.1 Road / Street Pavements 4.2.2 Walkways 4.2.3 Signs 4.2.4 Road Markings 4.2.5 .............................. 4.3 Contractual Services Functions 4.3.1 Street Sweeping 4.3.2 Refuse Collection 4.3.3 Bulky Refuse Collection 4.3.4 Cleaning and Maintenance of Public Conveniences 4.3.5 Cleaning and Maintenance of Gardens and Verges 4.3.6 .......................................... 5.0 Conclusion Appendices Table of Contents Page 01 02 02 02 03 03 04 04 05 06 07 08 09 09 10 11 12 13 14 15 16 Appendix P2.II (continued) .................... Local Council Indicators to Measure Performance Audit Report - Year LOCAL GOVERNMENT (PROCEDURES) [ S.L.363.12 39 -----------------------------------------------------------------------------------------------------------Executive Summary Executive Summary Appendix P2.II (continued) .................... Local Council Indicators to Measure Performance Audit Report - Year [ S.L.363.12 40 LOCAL GOVERNMENT (PROCEDURES) ------------------------------------------------------------------------------------------------------------ 1.0 Introduction 2.0 Scope 3.0 Methodology 4.0 Findings and Recommendations 4.1 General Observations 4.2 Repair and Upkeep (Works) Functions 4.2.x (Function) a. Findings Comparative Graphs/Charts of Indicators to Measure Performance b. Recommendations c. Local Council Response d. Action Plan e. Signatures Local Government Auditors Mayor Executive Secretary Appendix P2.II (continued) .................... Local Council Indicators to Measure Performance Audit Report - Year LOCAL GOVERNMENT (PROCEDURES) [ S.L.363.12 41 -----------------------------------------------------------------------------------------------------------4.3 Contractual Services Functions 4.3.x (Function) a. Findings Comparative Graphs/Charts of Indicators to Measure Performance b. Recommendations c. Local Council Response d. Action Plan e. Signatures Local Government Auditors 5.0 Mayor Executive Secretary Conclusion Appendix P2.II (continued) .................... Local Council Indicators to Measure Performance Audit Report - Year 42 [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) ------------------------------------------------------------------------------------------------------------ Appendices ------------------------------------------------------------------------------------------------------------ Appendix P2.III P2.III Specimen Local Government Auditors' Report on Value for Money LOCAL GOVERNMENT (PROCEDURES) [ S.L.363.12 43 ........................... Local Council -----------------------------------------------------------------------------------------------------------Value for Money Audit Report - Year 1 to Year 3 Prepared by: ABC & Co Certified Public Accountants Appendix P2.III (continued) .................... Local Council Value for Money Audit Report - Year 1 to Year 3 44 [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) ------------------------------------------------------------------------------------------------------------ Section Executive Summary 1.0 Introduction 2.0 Scope 3.0 Methodology 4.0 Findings and Recommendations 4.01 Organisational Structure 4.02 Policies and Practices 4.03 Planning and Budgeting 4.04 Monitoring and Control 4.05 Decision Making 4.06 Documentation Control 4.07 Human Resources Management 4.08 Operation Management 4.09 Quality 4.10 Financial Management 4.11 Procurement and Tendering 4.12 Office Practices 4.13 Laws and Prosecution 4.14 Cost Control and Economics of Scale 4.15 Complaints Handling and Customer Service 4.16 Indicators to Measure Performance 5.0 Conclusion Appendices Table of Contents Page 01 02 02 02 03 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Appendix P2.III (continued) .................... Local Council Value for Money Audit Report - Year 1 to Year 3 LOCAL GOVERNMENT (PROCEDURES) [ S.L.363.12 45 -----------------------------------------------------------------------------------------------------------Executive Summary Executive Summary Appendix P2.III (continued) .................... Local Council Value for Money Audit Report - Year 1 to Year 3 [ S.L.363.12 46 LOCAL GOVERNMENT (PROCEDURES) ------------------------------------------------------------------------------------------------------------ 1.0 Introduction 2.0 Scope 3.0 Methodology 4.0 Findings and Recommendations 4.x Subject etc. 4.x1 Findings 4.x2 Recommendations a. a. b. b. c. c. 4.x3 Local Council Response 4.x4 Action Plan Signatures Local Government Auditor 5.0 Mayor Executive Secretary Conclusion Appendix P2.III (continued) .................... Local Council Value for Money Audit Report - Year 1 to Year 3 LOCAL GOVERNMENT (PROCEDURES) [ S.L.363.12 47 ------------------------------------------------------------------------------------------------------------ Appendices ------------------------------------------------------------------------------------------------------------ L.C.P. 3/96 - Local 1. In P3.03, a, for the words from "The Secretary" to Councils (Tendering) "of the tender submitted." there shall be substituted the Procedures, 1996. following: 48 [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) "The Secretary is to ensure that bid bonds submitted by Tenderers are in conformity with the following table: Estimate Value of Contract Bidbond requested Up to €4,658.75 Nil from €4,661.08 to €11,646.87 €465.87 from €11,649.20 to €34,940.60 €1,164.69 from €34,942.93 to €58,234.33 €2,329.37 from €58,236.66 to €16,468.67 €4,658.753 €116,471.00 and over €5,823.43. 2. Immediately at the end of Appendix P3.V, there shall be added the following: "BID BOND - SPECIAL CONDITIONS This Tender must be accompanied by a valid and original Bid Bond issued by a Maltese Bank to the amount of ................ euro (€ .........) in the form of the attached specimen Bid-Bond. This Bid Bond must be valid for a period of ................ calendar months from the date set for submission of tenders. This Bid Bond is intended as a pledge that the Tenderer will enter into a contract with the Local Council on the terms stated in his Tender and will furnish a Performance Bond (as per specimen attached to the Tender Documents) covering the faithful performance of the Contract and the payment of all obligations arising hereunder. The Bid Bond shall be forfeited if the Tenderer withdraws his tender before the stipulated period of ................ months or if Tenderer fails to provide the Performance Bond within seven
(7)days of the receipt of the Letter of Acceptance. The Local Council shall have the right to retain the Bid Bond of Tenderers until, either (
  1. a)the Contract has been placed and Performance Bond has been furnished, or (
  2. b)the specified time has elapsed so that Tenders may be withdrawn, or (
  3. c)Tenders have been rejected. Offers which on the closing time and date fixed for the submission of the Tender are not accompanied by the mandatory Bid Bond, will be disqualified.". 3. Appendix P3.IX, A (Services), clause 47 shall be amended as follows: (
  4. a)in the third paragraph thereof, immediately after the words "performance of the service." there shall be added the following sentence: LOCAL GOVERNMENT (PROCEDURES) [ S.L.363.12 49 "Where the Local Council requires an increase in the service which varies the Contract Sum by more than 20%, the Local Council shall either definitely terminate the contract awarded to the Contractor and issue a fresh call for tenders, or shall only issue a call for tenders for that part of the variation, provided that if the part of variation is less than €4,658.75 or 5% of the financial ordinary allocation, the limitations for direct orders or quotations shall apply."; and (
  5. b)in the fourth paragraph thereof, the words from "When the method variation" to the words "performance of the service." shall be deleted. P3. IX General Conditions of Contract shall be amended as follows: 1. In A. Services, for item 41 there shall be substituted the following: "41. Settlement of Disputes Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the rules of the Malta Arbitration Centre as at present in force. (
  6. a)The appointing authority and administrator shall be the Malta Arbitration Centre; (
  7. b)The number of arbitrators shall be one; (
  8. c)The place of arbitration shall be Malta; (
  9. d)The language to be used in the arbitral proceedings shall be Maltese, unless otherwise stated; and (
  10. e)The applicable substantive law shall be the Laws of Malta.". 2. In B. Goods, in item 28 for the words "Notwithstanding any other agreement or condition to the contrary in case of any dispute the Maltese Courts shall have exclusive jurisdiction to hear and decide on the merits of the matter in dispute." there shall be substituted the following: "Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the rules of the Malta Arbitration Centre as at present in force. (
  11. a)The appointing authority and administrator shall be the Malta Arbitration Centre; (
  12. b)The number of arbitrators shall be one; (
  13. c)The place of arbitration shall be Malta; 50 [ S.L.363.12 LOCAL GOVERNMENT (PROCEDURES) (
  14. d)The language to be used in the arbitral proceedings shall be Maltese, unless otherwise stated; and (
  15. e)The applicable substantive law shall be the Laws of Malta.". 3. In C. Leasing of Immovable Property, immediately after item 20 there shall be added the following new item 21: "21. Settlement of Disputes. Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the rules of the Malta Arbitration Centre as at present in force. (
  16. a)The appointing authority and administrator shall be the Malta Arbitration Centre; (
  17. b)The number of arbitrators shall be one; (
  18. c)The place of arbitration shall be Malta; (
  19. d)The language to be used in the arbitral proceedings shall be Maltese, unless otherwise stated; and (
  20. e)The applicable substantive law shall be the Laws of Malta.". 4. In D. Management of Immovable Property, immediately after item 18 there shall be added the following new item 19: "19. Settlement of Disputes. Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the rules of the Malta Arbitration Centre as at present in force. (
  21. a)The appointing authority and administrator shall be the Malta Arbitration Centre; (
  22. b)The number of arbitrators shall be one; (
  23. c)The place of arbitration shall be Malta; (
  24. d)The language to be used in the arbitral proceedings shall be Maltese, unless otherwise stated; and (
  25. e)The applicable substantive law shall be the Laws of Malta.".

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