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This chapter is based on the Annual Report on Public Accounts prepared by the Maltese National Audit Office (NAO), Malta’s Supreme Audit Institution. Its objectives are to analyse and classify the reported issues, evaluate their significance and how the findings are reflected in the Public Sector, and assess the adequacy of the communication of these findings through the Annual Report. The research consisted of a qualitative analysis of the Annual Reports for the three years 2007, 2009 and 2011. This analysis was supplemented by unstructured interviews conducted with both NAO and Government officials. Findings report a significant number of issues emerging from different factors. The highest incidence of weaknesses was related to record-keeping and compliance with policies and procedures. Moreover, the interviews with NAO officials showed that the departments were not always taking on board the recommendations made through the Annual Reports, thus indicating a passive attitude towards the reported findings. The results also show that while the Government has its own structures of checks-and-balances to prevent and detect errors, and no internal control system is completely effective, there is still much room for improvement within the Public Sector to ensure that public funds are appropriately utilised. The detection of various issues by the NAO is therefore inevitable, particularly given the complexity and size of the Public Sector. In conclusion, the NAO findings should be more thoroughly examined to reduce the incidence of issues. Furthermore, the way forward should be directed at enhancing the current systems and promoting a more positive relationship between the NAO and auditees.

This paper investigates the audit report lag (ARL) in statutory audits. It tests a number of factors that may influence the ARL in 375 Maltese companies in the years 2006–2010. A mixed-methods research methodology is adopted, whereby company financial statements over the period are examined. Extracted information, including the ARL, is subjected to statistical tests on the relationship between such ARL and six independent variables: company size, audit firm size, audit opinion, profitability, the presence of an extraordinary item, and type of industry. This is then complemented by the analysis of 12 semistructured interviews with statutory auditors. The ARL is found to be shorter in large companies, when profit figures are positive, in financial service companies, and when the audit firms are large. A longer ARL is found when the audit report is qualified and in the absence of an extraordinary item. Interviewee response is generally consistent with these results except for the relationship to ARL of the absence of an extraordinary item. ARL is also seen to vary according to the users’ perceptions of the relevance and usefulness of the financial statements. Besides confirming or otherwise the relationship of the ARL to the stated major factors, the study also brings to light the need for cooperation by both audit firms and client companies to reduce such ARL.

Historically, as a former British colony, Malta has had its accounting and auditing practices highly influenced by UK regulation. However, in the last decade, departures have steadily been occurring from a UK‐based regulatory framework to one increasingly influenced both by international standards and European Union requirements. One such departure relates to the retention of the statutory audit requirement for all Maltese companies, despite its earlier abolishment for small companies in the UK. This study evaluates the relevance of a mandatory annual statutory audit requirement for owner‐managed companies as perceived by two interest groups: the owner‐manager and the auditor. It also considers possible alternatives to such a requirement. Results indicate that for Maltese owner‐managed companies, the statutory audit fulfils two important roles: it bears relevance to outside third parties, and it has a positive effect on the owner‐manager and staff.