INTERNAL AUDIT AND FINANCIAL INVESTIGATIONS g CAP. 461.  1
CHAPTER 461
INTERNAL AUDIT AND FINANCIAL 
INVESTIGATIONS 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.
25th July, 2003
ACT VI of 2003.
PART I
PRELIMINARY
Short title.
Financial Investigations Act.
Definitions.
"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;
"conflict of interest" is a situation where any officer of the
Directorate 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
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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 whichever act or omission which unlawfully
diminishes public funds and whatever is not consonant with the
proper management thereof;
"public funds" also includes funds that Government receives,
pays, including funds to local councils, or is required to manage
under Malta’s international obligations, or under any other public
funds arising under any other 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.
PART II
GENERAL PROVISIONS
Separate functions. 3. The Directorate shall have two separate and distinct
functions: internal audit and financial investigations.
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.
5. A financial investigation may be carried out in terms of the
provisions of this Act in any department of Government and in any
other public or private entity which is in any way a beneficiary,
debtor or manager of public funds, for the purpose of protecting
public funds against irregularities and fraud, or otherwise to assess
such public or private entities’ liability to contribute to such funds.
PART III
THE INTERNAL AUDIT AND INVESTIGATIONS BOARD
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.
7. The Board shall be appointed by the Prime Minister for
such period as the Prime Minister may determine, and it shall be
directly responsible to him.
Composition of 
Board.
8. (1) The Board shall be composed of:
( a ) the Secretary to Cabinet as Chairperson;
( b ) the Director;
INTERNAL AUDIT AND FINANCIAL INVESTIGATIONS g CAP. 461.  3
( 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.
(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.
Functions of the 
Board.
9. The Board shall have the following functions:
( 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 methods for the proper
functioning of public internal audit and for the
carrying out of financial investigations.
PART IV
THE INTERNAL AUDIT AND 
INVESTIGATIONS DIRECTORATE
The Directorate.
the body charged with exercising and performing the functions
assigned to it under this Act. The Directorate shall be headed by the
Director.
Public officers.
(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.
Independence.
Director and other officers of the Directorate shall not be subject to
any direct or indirect influence or control by the auditee and shall
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not themselves influence or control the auditee.
PART V
FUNCTIONS OF THE OFFICERS OF THE DIRECTORATE
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.
(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. 
Follow-up reviews. 15. The Director shall conduct such follow-up reviews as may
be necessary after an internal audit and financial investigation.
Suspicion of 
irregularity.
16. If an entity has reason to suspect any irregularity and, or a
suspected case of fraud of public funds, it shall refer the matter
forthwith to the Director, and shall supply to the Director all
information in his possession relating thereto.
Conflict of interest. 17. (1) Where the Director or the Board considers that there
would be a conflict of interest if the Director himself were to
conduct an internal audit or a financial investigation, the Board
may appoint a senior public officer from amongst the officers of the
Directorate to conduct that investigation in his stead.
(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:
S.L. Const. 03
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 also be
subject to disciplinary proceedings as provided for in the Public
Service Commission (Disciplinary Procedures) Regulations.
Suspected cases of 
irregularity or 
fraud.
18. Whenever, and as soon as, the Director firmly establishes
the existence of suspected cases of irregularities and, or suspected
cases of fraud concerning the responsibilities of the auditee under
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.
Annual report. 19. The Director shall, not later than the first three months of
INTERNAL AUDIT AND FINANCIAL INVESTIGATIONS g CAP. 461.  5
each year, compile   and transmit to the Board an Annual Report
dealing generally with the activities of the Directorate during the
previous year and containing such information relating to the
activities of the Directorate as the Board may from time to time
require. The Board shall determine the distribution of such a report
as and when required.
Power of entry.
Director shall, for the purpose of carrying out his functions under
this Act, have the power -
( 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:
Provided further that entry shall take place during
daytime;
( 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.
Assistance.
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.
22. (1) All information furnished by an auditee during the
course of any internal audit or financial investigation shall at all
times be treated as confidential and shall be solely used by the
Directorate for the purpose of carrying out the internal audit and, or
financial investigation.
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(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.
PART VI
MISCELLANEOUS
Co-ordinating 
Committee.
23. For the purposes of article 9(a), the Board shall appoint a
Co-ordinating Committee, to be chaired by the Director, in order to
co-ordinate the activities of, and to facilitate the exchange of
information between, different entities charged with the protection
and safeguarding of public funds; the terms of reference of the Co-
ordinating Committee shall be determined by the Board.
Offences and 
penalties.
24. Any person who wilfully obstructs the Director in the
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.
Review.
Cap. 281.
25. (1) The Board shall, once every three years, appoint
auditors or firms of auditors, duly certified under the provisions of
the Accountancy Professions Act, to conduct reviews of the
Directorate’s operations.
(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.
Regulations. 26. The Prime Minister may from time to time make
regulations for the better giving effect to any of the provisions of
this Act.
INTERNAL AUDIT AND FINANCIAL INVESTIGATIONS g CAP. 461.  7
SCHEDULE
(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
