NAO flags governance and payroll failures at RSSL Malta

The National Audit Office has identified serious governance, payroll control and record keeping weaknesses at Resource Support and Services Limited, a government owned company that falls under the responsibility of the Office of the Prime Minister. The audit concludes that these shortcomings resulted in incorrect salary payments, including substantial overpayments and exposed public funds to avoidable financial risk.

The findings raise broader concerns about internal controls, accountability and operational resilience at an entity that plays a central role in the public sector employment framework. RSSL is responsible for employing surplus workers from government controlled entities and redeploying them across ministries, public bodies and local councils. As such, the company manages a large workforce whose salaries are ultimately funded by taxpayers.

While the audit does not allege criminal conduct, it highlights systemic weaknesses that, if left unaddressed, could continue to undermine financial discipline and public trust.

Background and mandate of RSSL

Resource Support and Services Limited was established in 2003 following the restructuring of Malta Shipyards Limited. Its primary purpose was to absorb surplus workers from government controlled entities and facilitate their redeployment across the public sector. Over time, its remit expanded as successive administrations relied on the company as a labour pool to support staffing needs in different departments and agencies.

By 2024, RSSL employed 629 individuals. The majority of these employees were deployed to government departments, public entities and local councils while remaining on RSSL payroll. This structure places RSSL in a unique position, as it is responsible for employment contracts, payroll processing and personnel records while day to day supervision often occurs within host entities.

The NAO audit also examined the integration of former Air Malta employees under voluntary transfer schemes introduced in 2022 and later expanded in 2024. These schemes significantly increased RSSL’s workforce within a short period and added complexity to its payroll and human resources functions.

Absence of a formal governance framework

One of the most significant concerns raised by the NAO relates to the absence of a clearly defined governance and operational framework at RSSL. According to the audit, the company operates without a formal mission statement and lacks documented policies and procedures governing its core activities.

Auditors noted that there are no structured agreements regulating the relationship between RSSL and the entities where its employees are deployed. This absence of formal arrangements creates uncertainty regarding responsibilities, reporting obligations and accountability.

The NAO warned that such weaknesses increase the risk of inconsistent decision making, weaken internal accountability and could disrupt business continuity if key personnel leave or operational pressures intensify. In a public sector context, the lack of formal governance structures also complicates oversight by central authorities.

Board composition and concentration of roles

The audit report highlights governance concerns related to the composition and operation of RSSL’s board of directors. During the year under review, the board increased from four to five members.

The chairperson, Lawrence Mizzi, aged 73, also served as chief executive officer throughout the period examined. The NAO noted that this concentration of roles is not prohibited by law but carries inherent governance risks, particularly in the absence of strong internal controls and independent oversight mechanisms.

Of particular concern to auditors was the treatment of remuneration. Financial statements did not distinguish between payments made for the chairperson role and those related to the chief executive function. Instead, the entire amount of €36,291 was classified under directors’ remuneration.

The NAO recommended that remuneration for senior officials be clearly classified and transparently disclosed to reflect the nature of each role and to support effective oversight.

Budget allocation and financial performance

For 2024, RSSL was allocated an approved estimate of €17.5 million under a budget line administered by the Office of the Prime Minister. This allocation was intended to cover payroll costs and operational expenses associated with the company’s workforce.

Actual direct payroll costs for the year reached €19.63 million, exceeding the approved estimate. Of this amount, €15.94 million was charged directly to the government vote. The remaining costs were financed through recharges to host entities for overtime and allowances as well as accumulated surpluses from previous financial years.

After accounting for administrative overheads, RSSL recorded a surplus of €553,009 for the year. This brought the balance due back to the government to €1.47 million as at the end of December 2024.

While the existence of a surplus suggests a degree of financial stability, the NAO cautioned that weaknesses in payroll controls undermine confidence in the accuracy of reported figures.

Payroll processing and reliance on manual systems

A major area of concern identified by the audit relates to payroll processing. RSSL outsources payroll operations to an external contractor. However, the system relies heavily on manual spreadsheets prepared by RSSL staff and submitted to the contractor for processing.

The NAO found that there were no internal verification procedures to confirm the accuracy of payroll adjustments before they were transmitted. In addition, there were no systematic checks to validate the output received from the contractor.

Auditors concluded that this process creates a heightened risk of error, particularly given the size of the workforce and the frequent changes in deployment, allowances and overtime arrangements.

The reliance on manual spreadsheets rather than integrated payroll systems was identified as a key vulnerability that should be addressed as a matter of priority.

Identified payroll errors and overpayments

Based on a review of a sample of 30 employees, the NAO identified multiple payroll errors. These included an employee who continued to receive full allowances despite working reduced hours. This resulted in an overpayment of €12,971 during 2024 alone.

Other cases identified during the audit included duplicated allowance payments, sick leave deductions that were processed twice and a recovery amount of €2,411 that was never effected. In another instance, a statutory cost of living adjustment was omitted from an employee’s salary.

The NAO emphasised that these cases were not exhaustive. Given the weaknesses identified in payroll controls, auditors warned that further errors could not be ruled out.

Reliance on external data and Air Malta transfers

The audit also examined how RSSL handled salary data related to former Air Malta employees transferred under voluntary schemes. While certain salary figures provided by Air Malta were independently verified by private audit firms, the NAO noted that RSSL generally relied on external data without performing its own validations.

In one case, RSSL paid €93,278 to cover salary differentials for former Air Malta employees after the airline ceased operations. Auditors noted inconsistencies in the supporting documentation for these payments.

The NAO did not conclude that the payments were unlawful but highlighted the absence of internal verification as a significant control weakness.

Deficiencies in personnel record keeping

Beyond payroll processing, the NAO raised concerns about the state of personnel records maintained by RSSL. In more than half of the employee files reviewed, there was no documentation confirming applicable grades or salary scales.

This made independent verification of salary entitlements difficult and in some cases impossible. In one instance, an employee’s salary did not correspond to any scale within the relevant collective agreement.

Auditors stressed that proper record keeping is a fundamental requirement for effective human resources management and financial control.

Weak oversight of overtime and allowances

The audit further criticised RSSL’s passive approach to collecting information on overtime and allowances from host entities. According to the report, RSSL does not take proactive steps to ensure timely submission of this data.

There is also no standardised reporting format used by host entities. This lack of consistency further weakens oversight and increases the risk of inaccurate or incomplete payroll information.

The NAO recommended that RSSL introduce standardised reporting templates and enforce clear deadlines to improve data quality and accountability.

Recommendations for reform and recovery of funds

In its recommendations, the NAO urged RSSL’s board of directors to define and communicate a clear strategic vision for the company. It called for the formalisation of policies and procedures covering governance, payroll processing and human resources management.

The audit also recommended strengthening payroll controls, introducing automated systems to replace manual spreadsheets and improving personnel record keeping practices. Auditors stressed the importance of recovering overpaid amounts where possible and ensuring that senior officials’ remuneration is precisely classified and transparently disclosed.

RSSL response and planned corrective measures

In its formal response, RSSL acknowledged the weaknesses identified by the NAO. Management attributed many of the shortcomings to the sudden influx of more than 300 employees over a short period following the Air Malta transfer schemes. This rapid expansion placed significant strain on administrative capacity.

RSSL stated that steps are being taken to strengthen internal controls, widen payroll testing and automate systems. The company also confirmed plans to introduce personal record sheets for all employees by January 2026.

Agreements have already been reached to recover certain overpayments identified during the audit process.

NAO conclusion and broader implications

While noting RSSL’s cooperation during the audit, the NAO concluded that inaccuracies in information provided slowed the audit process and highlighted the need for stronger internal controls.

The findings underline the importance of robust governance and financial management within state owned entities, particularly those responsible for large workforces and significant public expenditure. Addressing these weaknesses will be essential to safeguarding public funds and maintaining confidence in public sector administration.

Conclusion

The National Audit Office findings on Resource Support and Services Limited highlight the practical risks that arise when governance structures, payroll controls and record keeping systems are not sufficiently formalised within a state owned entity. While RSSL performs an important function in supporting workforce deployment across the public sector, the audit demonstrates that operational scale and urgency cannot substitute for clear policies, reliable systems and effective internal oversight.

The issues identified do not rest on isolated errors but point to structural weaknesses that require sustained corrective action by the board and management. The reliance on manual processes, limited internal verification and incomplete personnel documentation collectively undermine financial certainty and accountability. In a context where public funds are involved, even unintentional inaccuracies can erode confidence and expose the administration to reputational and fiscal risk.

RSSL’s stated commitment to automation, stronger controls and improved record keeping represents a necessary step toward restoring assurance. The effectiveness of these measures will depend on timely implementation, consistent enforcement and transparent reporting. Ultimately, the audit serves as a reminder that public sector entities entrusted with employment and payroll responsibilities must operate within robust governance frameworks that protect both employees’ rights and the public interest.

Frequently asked questions

What is Resource Support and Services Limited?
Resource Support and Services Limited is a government owned company responsible for employing and redeploying surplus workers across the public sector.

Why did the NAO audit RSSL?
The NAO audited RSSL as part of its mandate to examine the use of public funds and assess governance and financial controls within state owned entities.

What were the main weaknesses identified?
The audit identified weaknesses in governance structures, payroll processing, record keeping and internal verification procedures.

Did the audit find evidence of criminal activity?
The audit did not allege criminal conduct but highlighted systemic weaknesses that increased the risk of financial errors.

How many employees does RSSL manage?
As of 2024, RSSL employed 629 people deployed across government departments and public entities.

What issues were found in payroll processing?
The NAO identified overpayments, duplicated allowances, missed deductions and reliance on manual spreadsheets without adequate checks.

Were former Air Malta employees affected?
Yes, the audit examined the integration of former Air Malta employees and identified weaknesses in the validation of transferred salary data.

What financial impact did the errors have?
The audit identified specific overpayments and warned that additional errors could exist due to weak controls.

How did RSSL respond to the findings?
RSSL acknowledged the weaknesses and outlined plans to strengthen controls, automate systems and recover overpaid amounts.

What did the NAO recommend?
The NAO recommended formalising governance frameworks, improving payroll systems, strengthening oversight and enhancing record keeping practices.