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AN ACT to provide for the regulation of the internal audit and financial investigative functions, including the power to carry out effective independent internal audits and financial investigations, providing for the necessary safeguards to ensure the protection of the financial interests of Government including the funds it may receive or be required to manage under Malta’s international obligations.
BE IT ENACTED by the President, by and with the advice and consent of the House of Representatives, in this present Parliament assembled, and by the authority of the same, as follows:-
Short title. 1. The short title of this Act is Internal Audit and Financial
Investigations Act, 2003.
Definitions. 2. In this Act unless the context otherwise requires -
"auditee" means any entity which is or may be the subject of an internal audit and, or a financial investigation
performed by the Director as provided for in this Act;
"Board" means the Internal Audit and Investigations Board; "compliance and assurance functions" means those functions
within a Government department or ministry that ensure that financial
and other related controls, systems, policies and procedures necessary for the proper functioning of that Government department or
ministry are adhered to;
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"conflict of interest" is a situation where any officer of the Directorate sufficiently has a private or personal interest
to influence, or appear to influence that which is effectively expected of him in the performance of his duties;
"Director" means the Director, Internal Audit and Investigations Directorate and includes, to the extent of the authority
given, any person authorised in that behalf by the Director;
"Directorate" means the Internal Audit and Investigations
Directorate referred to in Part IV of this Act;
"entity" includes both natural and legal persons, including any body or association of persons, whether corporate or unincorporate;
"financial investigation" means the in-depth examination of all circumstances relative to irregularities and cases of suspected
fraud, including the corruption of public officers, and, in that regard, the acquiring of records and, or, information and the
carrying out of related assessments, analysis and recommendations, such financial investigation being limited in scope to the financial
implications that could arise out of such an irregularity or suspected fraud;
"functions" includes powers and duties;
"internal audit" means an independent, objective assurance and consulting activity designed to add value and improve the
operations of auditees, helping the auditee to accomplish its objectives by bringing a systematic, disciplined approach to evaluate
and improve the effectiveness of risk management, control, and governance processes;
"irregularity" means an act or omission which unlawfully diminishes public funds or is not consonant with the proper management
thereof;
"public funds" also includes funds that Government receives, pays, or is required to manage under Malta’s international
obligations or under any law;
''public officers'' shall have the same meaning as is assigned to it in the Constitution of Malta, and includes
officials of international organizations with whom Malta has international obligations, whilst performing their duties on Maltese
territory.
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Separate functions.
Internal audit. 4. An internal audit in the manner as may be prescribed by regulations may be carried out in any department of Government or any entity falling under the supervision of Permanent Secretaries, for the purpose of assisting them in the effective discharge of their duties.
Financial investigation.
The Board. 6. There shall be a Board, to be known as the Internal Audit and Investigations Board, which shall exercise the functions assigned to it by this Act.
Appointment of
Board.
Composition of
Board.
(a) the Secretary to Cabinet as Chairperson; (b) the Director;
(c) the Permanent Secretary in the Ministry of Finance;
(d) a person of a recognised standing in the accounting and, or, auditing profession, who is not a public officer; and
(e) one other member:
Provided that at least two members shall have expertise in disciplines related to public sector financial management.
(2) The Board shall meet at least quarterly and shall otherwise regulate its own procedure.
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(3) The decisions of the Board shall be taken by a majority of votes and the Chairperson shall have both an original and a casting
vote in case of an equality of votes.
(a) to serve as an independent and objective body to monitor the public internal financial control function in Malta;
(b) to oversee the work of the Directorate;
(c) to safeguard the continued independence of the
Director and officers of the Directorate;
(d) to endorse or otherwise plans, budgets and schedules as proposed by the Director for the proper administration of the Directorate;
(e) to require the Directorate to carry out specific tasks as provided under this Act, as and when necessary;
(f) to set policies, procedures and methodologies for the proper functioning of public internal audit and for the carrying out
of financial investigations.
Functions of the
Board.
(2) The Director and the other officers of the Directorate shall, before entering upon their duties, take an oath in the form as set out in the Schedule to this Act, in the hands of the Attorney General, that they will faithfully and impartially perform the duties of their office, and that they will not divulge any information acquired by them under this Act, except in those circumstances specified in this Act.
The Directorate.
Public officers.
Independence.
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Management. 13. The Director shall be responsible for the day-to-day management of the Directorate.
Report. 14. (1) The Director shall, as soon as may be, after concluding a financial investigation or an internal audit, transmit a report thereof to the Permanent Secretary under whose supervision the auditee falls. The Director may also transmit a copy of such report to the auditee.
Follow-up reviews.
Suspicion of irregularity.
Conflict of interest.
Suspected cases of irregularity or fraud.
(2) Within one month of receipt of such report, the Permanent Secretary shall give such instructions to the auditee as may be necessary to remedy any shortcomings, and shall inform the Director accordingly.
(2) It shall be the duty of every officer of the Directorate who has any form of a conflict of interest in any internal audit or
financial investigation, he is assigned to work upon, whether such conflict is direct or indirect, to immediately disclose to the
Director his interest and refrain completely from involving himself in that particular case:
Provided that any officer of the Directorate who knowingly acts in contravention of this subarticle shall be guilty of an offence
against this Act and shall, on conviction, be liable to a fine (multa) of not more than one thousand liri (Lm 1,000), and shall be also subject to any other administrative disciplinary proceedings as
the Board, on the recommendation of the Director, deems fit.
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review, the Director shall, if he is of the opinion that the irregularity, if proved, would constitute a criminal offence, immediately
inform the Attorney General; otherwise, if the Director is of the opinion that the irregularity is of an administrative nature, he
shall inform the Permanent Secretary of the auditee.
(a) to enter and inspect any premises of an auditee in order to conduct an internal audit and, where he has reason to suspect
that irregularities and, or fraud, have occurred or are occurring, to enter any premises of an auditee for the purpose of conducting
a financial investigation:
Provided that, if access is required to any premises occupied in whole or in part for the purpose of habitation, such access shall
require the prior issue of a warrant signed by a Magistrate:
Annual report.
Power of entry.
daytime;
Provided further that entry shall take place during
(b) to require the auditee to produce any books, records, files, accounts, documents or information including any computer data
in any form and or part thereof, including contracts, bills, vouchers and receipts relating to them, and if deemed necessary by the
Director, for the latter to retain such documents in the original, and to ensure that copies or extracts are made thereof without
paying any fee therefor notwithstanding any law or regulations to the contrary.
(2) Without prejudice to subarticle (1)(b), and for the purpose of his functions under this Act, the Director may rely on any of
the records kept or made by any audit or investigative unit of any entity including the person or unit discharging the
compliance and assurance functions within the Government department or ministry concerned.
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Assistance. 21. When conducting an internal audit or a financial investigation concerning funds managed by Malta in terms of its international obligations, the Director may be assisted by representatives of the international organisation concerned, who may participate jointly with the Director in the audit or investigation, as the case may be, and for such purpose such representatives shall be considered to be under the same obligations as officers of the Directorate and shall, before entering upon their duties, take the oath specified in the Schedule to this Act.
Information furnished by auditee.
(2) The Director shall treat internal audit reports and reports of financial investigations as strictly confidential and shall,
except for the purpose of any criminal investigation or prosecution, only disclose their contents to the Permanent Secretary
and, if necessary, to the Board, or to the Auditor General.
(3) Without prejudice to the rights of the Auditor General under any law, no information obtained in any way under this
Act shall be disclosed except:
(a) for the purposes of the financial investigation and the prosecution of a criminal offence;
(b) to officers of the Directorate in the course of their duties under this Act; and
(c) in matters which under this Act arise out of Malta’s international obligations, to the relevant foreign audit and
control authorities.
Co-ordinating
Committee.
Offences and penalties.
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performance of his functions under this Act, or who fails, when requested, to grant access to any premises or to produce any records
to the Director, or who fails to comply with the provisions of article
16, shall, without prejudice to any other liability under any other law,
be guilty of an offence against this Act and shall, on conviction, be liable to a fine (multa) of not more than one thousand liri (Lm 1,000) or to imprisonment for a term of not more than three months, or to both such fine
and imprisonment.
(2) The auditors or firms of auditors appointed under subarticle (1) shall be independent of the Director and the work of the Directorate and, on completion of the review, shall submit a written report to the Board.
Review. Cap. 281.
Regulations.
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(Articles 11 and 21)
Oath of Officers of the Internal Audit and
Investigations Directorate
''I …………………………………………………….., solemnly swear/affirm that I will honestly and diligently
fulfil my duties as an officer of the Internal Audit and Investigations Directorate in conformity with the requirements of the Internal
Audit and Financial Investigations Act, and that I will not, except as provided by law, at any time disclose or make known any matter
which comes to my knowledge by reason of my service as such.
So help me God.
_______________________________ Signature of person taking oath
Sworn and signed before me this .............. day of ....................... of the year ............... at ............................................................................
_______________________________ Attorney General
The objects of this Bill are to provide the machinery for the carrying out of effective independent internal audits and financial investigations.
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URL: http://www.worldlii.org/mt/legis/laws/tiaafia2003n2489