Public Audit Act (2008) Amendment

Jim HallidayCCO/PFM DPG Chair

PAA 2008

Some KEY excerpts:

• Section 10 ( l) The CAG shall, on behalf of the National Assembly, examine,

inquire into and audit the accounts submitted to him as required under

the Public Finance Act, Local Government Finances Act and any other

written laws and perform any other functions which he is authorized to

perform by or under this Act.

• Section 11 (8) ….in determining whether to carry out any such

examination he shall take into account any directives made by the PAC,

the LAAC and POAC and any of the Committees of the National Assembly.

PAA 2008

o Section 12. The CAG may for the purpose of (a) preventing or minimizing unproductive

expenditure of public monies; (b) maximizing the collection of public revenues; (c) averting

loss by negligence, carelessness, theft, dishonesty, fraud, corruption relating to public

monies and resources, make such recommendations and submit such proposals to the

Minister or appropriate Minister as he considers necessary for better management of

public monies and resources including the revision of any regulations, directives or

instructions issued under relevant laws.

o Section 27. Where, in the course of forensic audit or any other type of audit, the officer of

the National Audit Office suspect frauds, they shall immediately notify the matter to the

Controller and Auditor-General who shall determine if and how the audit shall proceed as

the matter may have to be reported to law enforcement organs.

The FUNDAMENTAL AUDIT PROCESS has not changed, BUT the process for PARLIAMENTARY

SCRUTINY OF CAG REPORTS has been altered….

Amendments - Objective and purpose

• The objective of the Bill is to provide for an orderly chronological response by Government

on the Controller and Auditor General’s report (the CAG Report) to be laid before the

National Assembly.

• The purpose was therefore to revise the existing chronological response by government on

the CAG Report by making sure that CAG Report is not discussed in the National Assembly in

the absence of (a) POC’s report, (b) Government’s consolidated responses to CAG Report, and

(c) Government’s action plan on CAG’s Report.

• The justification presented to support the revising of the chronological order is that the CAG

presents findings which expose the government to negative publicity because they are not

well understood by the public for reason that the national assembly discusses CAG report in

the absence of Government’s consolidated responses and action plans thereto.

Amendment to PAA (2008) - revisions

Sections 38 and 39 of the Bill were generally revised and section 40 is to be replaced. Interpretation of

amendments is as follows:

o Section 38, ss (3). The CAG report will not be tabled before the National Assembly until such time as the consolidated

response of the Paymaster General is available for concurrent tabling.

o Section 38 ss(5) and Section 39 ss (2) The National Assembly will not be able to discuss the CAG reports until the PAC

has concluded its’ discussion and hearing of the CAG report together with the consolidated response of the Paymaster

General. The time by which the Paymaster General must submit the consolidated report to the National Assembly has

not been stipulated in the amendment

o Section 40 The consolidated report of the Paymaster General no longer has to take into account the comments and

recommendations of the PAC. The CAG currently receives the action plans of individual accounting officers but based on

interpretation of the current wording he may no longer receive the action plans prepared by the individual accounting

officers.

The Act and all amendments are subordinate to the Constitution!

Potential Issues1. The process for tabling the CAG report in the National Assembly has been changed

which could potentially delay the time at which CAG reports become “Public

Documents.”

“ The Constitution requires that the Minister submits the CAG report to the Parliament

within seven days in the first sitting of the National Assembly after receiving the report.

The Amendment plainly states that the Minister shall submit the CAG Report together

with the consolidated report before the National Assembly. If the consolidated report is

not available for tabling within the stipulated 7 day time frame then the constitution

indicates that the CAG submit the report to the Speaker of the National Assembly who

shall submit the report to the National Assembly within 14 days from the start of the

next session of the national assembly”.

Potential Issues2. The PAC will only be able to deliberate on the CAG report after it has

been tabled with the consolidated report of the Paymaster General.

It appears that the procedures to be followed in the analysis of the

CAG and consolidated report have to be put in place by Parliament

but no time limit is stipulated for the establishment of these

procedures

3. The National Assembly is now prevented from discussing or referring

to the CAG reports until the POCs’ deliberations are concluded even

though the CAG reports may be public documents by that time.

Potential Issues

4. Will the PAC’s capacity be increased sufficiently and will the

Terms of Reference be amended to include t the performance

oversight mandate of the PAOBs formerly managed by the

POAC.

5. The Paymaster General no longer has an obligation to respond

to the committees’ observations and recommendations in his

consolidated response. It is not clear how this will impact on

the committees ability to enforce accountability.

Conclusions

• The lack of clarity in the Audit Act may create scope for “abuse

of process” but it would be incorrect to assume intent at this

time.

• It will be necessary to observe the process and timing through

which the CAG 2012-13 reports are presented, tabled and

become public documents in the next April session of Parliament

in order to assess degree of change in practice and the impacts.

Conclusions

• It is also important to observe developments with the newly

constituted PAC and reformulated LAAC in terms of their

ability to exercise their oversight role following this

amendment.

Quietly communicate that DPs are collectively watching these developments and that the continued strengthening of

PFM and accountability systems are fundamentally important to us.

Proposed next steps

Discussion with DPs to agree on an appropriate

message, its addresses and its timing with a view to: • Note the changes in the Audit act and that DPs

will follow the developments with great interest and how it impacts on national systems for accountability and oversight;

• Reafffirm ongoing commitment of DPs to strengthening systems of accountability;

• Look for clarification on unclear elements such as the timeframe and TORs for the reformulated PAC.

Proposed next steps

Agree on common position to encourage consistency if these

issues are raised in high level dialogue (bilateral or joint)

Relevant DPG leads continue to closely monitor the impact

of the changes and to consult with stakeholders (e.g. CSOs)

to determine if further action is required and to define this

action.