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ATC240320: Report of the Standing Committee on Auditor-General on Study Tour to Canada Dated 12 March 2024

Standing Committee on Auditor General

Report of the Standing Committee on Auditor-General on Study Tour to Canada Dated 12 March 2024

 

The Standing Committee on Auditor-General (the SCoAG), having considered the Study Tour to Canada reports as follows:

 

1.Introduction

The Standing Committee on Auditor-General having undertaken the study tour to Canada the delegation comprised of the following Members of Parliament, Mr SS Somyo, (the leader of delegation), Mr. O Mathafa (ANC), Ms P Mpushe (ANC) and Ms C Phillips (DA).  The support staff member accompanied the Committee, Mr. MS Hleikiso (Researcher).

 

The Standing Committee on Auditor-General (SCoAG) is established by the National Assembly in terms of Section 10(3) of the Public Audit Act no. 25 of 2004 (PAA), which complements section 55(2)(b)(ii) of the Constitution empowers the National Assembly to provide for oversight mechanism to maintain oversight of any organ of state.  Therefore, both PAA and the Constitution confer authority to the National Assembly to establish the oversight mechanism to maintain oversight of the Auditor-General of South Africa (AGSA) as an institution to strengthen democracy in the Republic of South Africa and for AGSA’s governance principles.  The PAA sets out the mandate of the SCoAG as to assist and protect the Auditor-General in order to ensure its independence, impartiality, dignity and effectiveness to exercise its power and perform its functions without fear, favour or prejudice.  The PAA among other legislative requirements provides guidelines on reporting relationship between the SCoAG and AGSA.  The AGSA is accountable to the National Assembly through SCoAG.  Among other accountability requirements, AGSA issues a code of conduct after consultation with the SCoAG prescribing the standards of professional conduct for the performance of an audit or auditor’s functions, taking into account the manner in which the accountancy and audit profession is regulated.  Section 12(3)(b) of the PAA provides for the authorization of the auditors, the Auditor-General must determine, after consulting SCoAG, the standards to be applied in performing the audits, nature and scope of audits, and procedures for handling of complaints and disputes when performing audits.

Section 23(1) of the PAA provides that the Auditor-General must determine after consulting SCoAG and National Treasury the basis for the calculation of audit fees to be recovered from the auditees.  The Auditor-General may make regulations pertaining to any matter to facilitate the application of the PAA.  Section 52 of the PAA provides that such regulations after consultation with SCoAG must be submitted to the Speaker for tabling in the National Assembly.

 

  1. Part A:  Background; Objectives of the Study Tour; Overview of the Canadian Economic Outlook; Overview of the Environmentally Sustainable Development; and Overview of the Auditor-General of South Africa and the Auditor-General of Canada

2.1Background

SCoAG confronts with possible key issues on the basis of environmental challenges and problems as follows:

  • Assist and protect AGSA by fulfilling all the functions set out in the PAA.

  • Review the legislative framework e.g., PAA.

  • Enhance the capacity of Committee Members to perform their duties and enhance the capacity of the Committee staff to support the Committee in performing its functions.

  • Address the environmental factors that impact on AGSA to ensure that AGSA is sufficiently capacitated to fulfil its constitutional and legal mandate and ensure AGSA’s financial sustainability.

  • Liaise with international counterparts to benchmark oversight practices of the supreme audit institutions.

 

2.2Objectives of the Study Tour

The SCoAG sought to enhance its efficiency by conducting international study tour to Canada to empower the Members of the Committee by observing and learning from the international best practice and understand audit systems and issues faced by the Auditor-General of Canada in implementing performance audit.  The Committee preferred Canada as a country that has the best practice, mainly in performance audit, and immunities and privileges of the Auditor-General and reporting to the relevant parliamentary Committee of Canada, to which the Auditor-General reports through to the House of Representatives.

 

2.3Overview of the Canadian Economic Outlook

The economy of Canada is one of the stable economies worldwide and is the attractive investment destination.  Investors confidently choose Canada with assurance that their investments will succeed in a stable and open business environment.  The main source of income in Canada includes exports and imports as large component of the country’s economy contributing two thirds of the Gross Domestic Product (GDP).  Canada’s large trading partners are the United States of America (USA), China, and the United Kingdom (UK).  The largest trading partner is the USA trading with goods and services estimated to 908.9 billion USD in 2022.  Exports contributed 427.7 billion USD and imports amounts to 481,2 billion USD, which results to a deficit of 53.5 billion USD or approximately 9 percent between Canada and USA.  This means that Canada competes with the largest economies in the world, as the largest industries in Canada are real estate, mining and manufacturing.

Trade relations between South Africa and Canada is the two-way merchandise trade totaled to 2.77 billion dollars.  South Africa exported goods of 2.3 billion dollars in 2022, Canada exported 473.3 million dollars to South Africa.  Therefore, South Africa does not suffer a trade deficit to Canada as its exports are more that the imported goods from Canada, which signifies trade surplus.  Canada is a crucial trade partner of South Africa, and South Africa is the third largest trade partner of Canada in Sub Sahara Africa and regarded as a gate way into the African continent.

2.4       Overview of the Environmentally Sustainable Development

Canada is one of the leading countries in conservation of the environment as it ranks 10th with a score of 68.5 out of 100, which is above average of 62.9 required by the Organisation for Economic Cooperation and Development (OECD).  The high-density multi-use housing is one example of the sustainable development in Canada, which is one of the projects that make the most out of smaller portions of land to provide homes as well as grocery stores and services.  Social justice and economic fairness are also considered as part of sustainable development.  The other example of the sustainable development in Canada includes reducing poverty and inequality, protecting biodiversity and water resources, building green infrastructure and make production and consumption patterns more sustainable.  Canada seeks to achieve the three goals of sustainable development of the 2030 Agenda for sustainable development goals that balances three pillars, which are economy, society, and the environment.  Canada has taken significant step to address the climate change crisis, by phasing out traditional coal-fired power plants and embracing renewable energy, and self-producing own renewable energy technologies.

 

The primary environmental regulatory statute is the Canadian Environmental Protection Act of 1999 (CEPA), which establishes the federal authority to regulate a broad range of environmental concerns, ranging from toxic substances to environmental emergencies.  Realizing the vision of the 2030 Sustainable Development Agenda, Canada is taking action on climate change, working with international partners to clean up oceans, protect and conserve the land that gives life.  Canada is found to be warming faster doubled the global rate, therefore the rapid warming, sea-ice deterioration and changes in permafrost are expected to put communities and infrastructure at risk.  The sustainability problem with global warming in Canada brings hotter and drier weather, and forests becoming increasingly vulnerable to wildfires.  The Canadians view sustainable development as achieving and maintaining a healthy natural and built environment, a vibrant and just society, as well as the well-functioning economy for both present and future generations.

 

2.5       Overview of the Auditor-General of South Africa and the Auditor-General of Canada

The Auditor-General of South Africa (AGSA) is established by the Constitution Act no. 108 of 1996 and the Public Audit Act no. 25 of 2004 (PAA), which gives effect to the provisions of the Constitution.  Auditor-General is appointed through the parliamentary process, in which the suitable candidate is eventually recommended to the President of the Republic of South Africa for appointment and determination of the employment conditions, remuneration and benefits of the Auditor-General.  The Auditor-General of South Africa is appointed for non-renewable term of seven years and can only be removed or impeached through the parliamentary process, only if is unfit to perform his or her duties and misconduct.

The Auditor-General is established as an external auditor of all national, provincial departments and municipalities and any other institutions or accounting entities required by the national and provincial governments to be audited by the Auditor-General.  The Constitution recognizes the independence of the Auditor-General as subject to only the Constitution and the law, which requires that the Auditor-General to be impartial and perform his or her powers and functions without fear, favour or prejudice.  The Constitution prohibits any person or organ of state from interfering with the functioning of the Auditor-General.  The Auditor-General is required to submit reports to any legislature that has a direct interest in the audit, and to any other authority prescribed by national legislation, and that all reports be tabled in Parliament and made public.

 

The Auditor-General-General of Canada is appointed for a period of 10 years by the Governor in council on consultation with the Senate and House of commons and can also be removed by the Governor in council in consultation with the Senate and House of Commons.  The Access to Information Act provides that the Auditor-General must have access to any government information and has the freedom to appoint his or her staff as well as to table audit reports to Parliament.  The Auditor-General of Canada employs approximately 800 people with four regional offices across the country, with a budget of 120 million dollars in 2023, with audits of more than 100 departments of the federal government and the State-Owned Entities.  The State-Owned Entities are approximately 40, such as the Canadian Broadcasting Corporation and Canada Post Office.

3.         Part B:  Engagement and Observation

3.1       Engagement and Observation with the Office of the Auditor-General of Canada

The Standing Committee on Auditor-General (SCoAG) engaged with the Office of the Auditor-General in Canada and observed the Canadian performance audit and their strategic audit planning.  The strategic audit plan is an action plan that documents procedures that the Auditor-General of Canada follows to validate that an auditee is in conformance compliance regulations when conducts performance auditing.  The Committee began by introducing the purpose of the study tour to Canada and the context of the Auditor General of South Africa in relation to its accountability and responsibilities to the SCoAG and the mandate of the Committee as the oversight mechanism of the Auditor-General of South Africa.

 

The Office of the Auditor-General of Canada serves Parliament by providing it with objective fact-based information and advice on auditees’ programs and activities, gathered through audits.  In accordance with the Auditor General Act, the Canadian Auditor-General and Commissioner of the Environment and Sustainable Development report two times in the first quarter and two times in the fourth quarter of the calendar year (which are known as the spring and fall seasons).  The Auditor-General and the Commissioner can also report on matters of importance as required.  The Canadian Office of the Auditor-General only audits the federal (national) government, the territorial (provincial) governments are audited by the territorial (provincial) Auditor-Generals, which are independent from the federal government, which is accountable for its performance and management of public funds.  The Canadian Auditor-General and the Commissioner of the Environment and Sustainable Development mandates are provided from various legislations, which outline their powers and responsibilities as follows:

  • Auditor-General Act

  • Financial Administration Act

  • Federal Sustainable Development Act

 

The Commissioner of the Environmental and Sustainable Development is mandated to provide Parliament and the Canadian public with objective, independent analysis and recommendations on the actions of the federal government in order to protect the environment to mitigate the effects of climate change and foster the sustainable development.  Therefore, the Commissioner is responsible for reviewing progress in the implementation of the sustainable development agenda as well as providing policy guidance to follow up the plans of implementation at national and international levels.  The Commissioner of the Environment and Sustainable Development is appointed by the auditor-General of Canada for a seven-years term.  The Auditor-General appointed Jerry V. DeMarco to assume the role of the commissioner of the Environment and sustainable development in February 2021.  Jerry has experience over 25 years devoted to his career working in the environmental field as a leading expert in environmental policy and law.  Canada has also the Minister of Environmental and Climate Change, whose authority provided by the Federal Sustainable Development Act.  The Act requires that the Minister of Environment and Climate Change every three years must table a Federal Sustainable Development Strategy that includes goals, targets and implementation strategy for each target and a Minister responsible for achieving the target.  The Mandate of the Minister of the Environment and climate change of Canada is to preserve and enhance the quality of the natural environment, which includes water, air, soil, flora and fauna and conservation of Canada’s renewable resources.  The Commissioner of the Environment and Sustainable Development conducts performance audits and is responsible for monitoring sustainable development strategies of the federal departments and overseeing the environmental petitions process.

The Office of the Auditor-General of Canada conducts three types of audits, namely Performance audits, financial audits and special examinations.  With performance audit the Canadian Auditor-General assesses whether government programs are being managed with due regard to economy, efficiency and the environment, and have measures in place to determine effectiveness.  Therefore, the performance audit conducted by the Office of the Auditor-General in Canada is unique as it does not just include normal triple Es of performance audit objectives, which are economy, efficiency and effectiveness.  The performance audit reports in Canada are presented by the Auditor-General and the Commissioner of the Environment and Sustainable Development, with due regard to audit of the environment and assessment of the sustainable development goals as per the 2030 Agenda.  The special examinations are a type of performance audit in Canada, in which the Office of the Auditor-General provides opinion on the management performance of the auditees.  The Office of the Auditor-General of Canada also conduct financial audits, which merely indicate whether the auditees present its financial information fairly against standards, that is the audit of the financial statements.  The Auditor-General selects the performance audit subject matter based on internal and external risks that the auditees face, significantly focused on defined impact on Canadians’ health, the economy and the environment.  The performance audit subject matter is also selected taking into account the interest of the Members of Parliament, in which input is provided through engagement and due to available resources.  Both the Auditor-General and the Commissioner of the Environment and Sustainable Development present the performance audit reports to Parliament.  The Auditor-General refers the performance audit reports to the Standing Committee on Public Accounts, whereas the reports of the Commissioner of the Environment and Sustainable Development are referred to the Standing Committee on Environment and sustainable Development.  However, any parliamentary Committee may invite the Auditor-General and the Commissioner of the Environment and Sustainable Development to present and discuss their reports, subsequently the tabling in Parliament.  The Canadian parliamentary committees play a critical role by holding public hearings on the audit findings of the Office of the Auditor-General and ensuring that auditees respond to the identified concerns.  The Office of the Auditor-General appears 30 to 40 times on average annually before the parliamentary committees.  The Office of the Auditor-General also conducts outreach and engagement with the Members of Parliament to understand their interests and concerns, in order to obtain feedback on potential audit subject matter and how the Office of the Auditor-General can better serve Parliament by discussing audit findings and recommendations.

 

The Auditor-General of Canada or any person acting on behalf or under the direction of the Auditor-General is absolved from witnessing in respect of any matter coming to the knowledge of the Auditor-General or person as a result of performing audit powers, duties or functions under the Auditor General Act or any other legislation during an examination or enquiry in any proceeding other than a prosecution for an offence under section 131 of the criminal code in respect of a statement made under the Auditor General Act.  However, the testimonial immunity and privilege would not cover knowledge of the Auditor-General that arose before conducting audits.  The Canadian Office of the Auditor-General enjoys protection from prosecution, in which criminal or civil proceedings seeks to convict the Auditor-General or any person acting on behalf or under the direction of the Auditor-General, for anything done, reported or said in good faith in the course of audit.  Nevertheless, immunities and privileges are not taken into account if the Auditor-General acted in bad faith, therefore, they do not prevent the litigation, which alleges that the Auditor-General acted in bad faith.  In case an applicant attempts to challenge the audit before the court of law, the immunities and privileges do not avoid the judicial review proceedings.  Therefore, the Auditor General Act provides that on an application for judicial review, the court can declare it invalid or unlawful, or nullify, set aside, or set aside and refer it back for determination in accordance with directions, which are considered appropriate, prohibit or restrain a decision order, refer it to the proceeding of a federal board, commission or other tribunal.

The effect of immunities and privileges on disclosure of documents do not apply to the Office of the Auditor-General of Canada’s documents, including audit documents.  While the audit documents are exempted from disclosure under the Access to Information Act, however for legal proceedings and on request under the Privacy Act, the audit documents and other records of the Office of the Auditor-General must be disclosed.  The law requires parties to litigation to disclose all relevant documents that have been in their possession, control or power.  For the purpose of any legislation relating to defamation, anything said, information supplied in good faith by or on behalf of the Auditor-General, in the course of audit, powers, duties or functions under the Auditor-General Act or any other legislation, is privileged.  Moreover, any report made in good faith by the Auditor-General in the course of the exercise of audit powers, duties or functions under the Auditor-General Act and any other legislation, and any fair accurate account of the report made in good faith in newspaper or any other periodical publication or in broadcast, is privileged.

 

3.2       Engagement and Observation with the Public Accounts Committee of Canada

The SCoAG also engaged with the Public Accounts Committee of the Canadian Parliament.  The Committee introduced the purpose for the study tour to Canada and narrated on the purpose for existence of the Standing Committee on Auditor-General as the oversight mechanism of the Auditor-General of South Africa.  The Canadian Public Accounts Committee also narrated on its relations with the auditor-General of Canada and on holding the government to account.  The reports of the Auditor-General are tabled in Parliament and then are referred to the Public Accounts Committee.  Similarly, to the Parliament of the Republic of South Africa, the Public Accounts Committee and other parliamentary Committees play a critical role by holding public hearing on audit findings and recommendations of the Office of the Auditor-General of Canada.  The hearings on audit findings and recommendations help to ensure that government departments respond to the concerns.  The Auditor-General conducts follow-up audits where required, which are also studied by the Public Accounts Committee and other parliamentary committees and encourages the parliamentary committee interest in the work of the Auditor-General.  The commissioner of the Environment and Sustainable Development reports to the committee on Environment and Sustainable Development.  The Canadian parliamentary committees cannot compel the government departments to implement their recommendations, as it is the case in the South African Parliament.  Any Committee of the House or Senate can invite the Auditor-General to appear before it as well as the auditees.

The Canadian Public Accounts Committee is chaired by a Member of Parliament of the official opposition, as it is the case in the South African context.  The Public Accounts committee has two deputy chairpersons, one from the governing party and the other one from the other opposition party, which is not represented by the chairperson of the Public Accounts Committee.  The committee membership is constituted by 11 Members of Parliament, representatives from the House of Commons.  Distinctively, a less partisan committee, which has the chairperson from the opposition is to increase public confidence in scrutiny of government.  The Public Accounts Committee is supported by three staff members, one clerk and two researchers.  The Committee dedicates approximately 90 to 95 percent of its time to the reports of the Auditor-General.

At hearings the Auditor-General delivers an opening remark that focuses on main findings of an audit report approximately in five minutes.  Thereafter, the Deputy Minister who is the accounting officer delivers an opening statement that describes actions taken since the audit and provides the departmental perspective.  In Canada, the Deputy Minister is the accounting officer of a department, contrary to the case of South Africa, the Director-General is the accounting officer of the department.  After the hearings, the Public Accounts Committee drafts a report for tabling in Parliament.  The Public Accounts Committee’s report often complements the Auditor-General’s report.  The recommendations contained in the Public Accounts Committee’s report are directed to auditees and government, but rarely directed to Auditor-General for follow-up audits.  The government is required to respond within 120 days from the day of receipt of the recommendations of the Public Accounts Committee.  There are recommendations to the government from the other parliamentary committees.

The relationship between the Canadian Public Accounts Committee and the Office of the Auditor-General is a close and mutually supportive relationship.  The Public Accounts Committee supports and provides public forum through hearings for the audit findings and recommendations of the Office of the Auditor-General.  Public Accounts Committee ensures that the Office of the Auditor-General remains independent and has sufficient resources.  Unlike in South Africa, the Canadian Public Accounts Committee holds the Office of the Auditor-General to account by holding hearings on the strategic plans and priorities and its performance against those plans and priorities.  The Auditor-General appears before the Public Accounts Committee and answers questions and shares the work plan with the Committee.  The hearings with the Office of the Auditor-General on the work plans are almost always public.  The Public Accounts Committee reviews the budget estimates of the Office of the Auditor-General but cannot increase them.  The Office of the Auditor-General is funded from the national fiscus.

Reaching out to Parliament, the Auditor-General continually seeks feedback from the Members of Parliament and Senators on areas of interest to them through the:

  • Briefings.

  • Dinners with the Public Accounts Committee and Environmental and Sustainable Development Committee.

  • Meetings with the Committees’ chairpersons and deputy chairpersons.

  • Audit teams meetings with the parliamentary committees or their staff on specific audit topic.

  • Periodic surveys of Parliamentarians.

 

3,3       Engagement and Observation with the Canadian Audit and Accountability Foundation

The SCoAG also engaged with the Canadian Audit and Accountability Foundation, which provides research and education to the Supreme Audit Institutions, oversight bodies, government departments and public entities by developing and delivering capacity development workshops and learning opportunities, methodology, guidance and toolkits, applied research and information sharing events and community building initiatives.  The Canadian Audit and Accountability Foundation is of the view that the parliamentary oversight committees are key to effective government as they hold government accountable publicly for correcting deficiencies, implementing recommendations, and executing policies and programs in accordance with the legislatures’ intentions.  The Foundation responded to one of the objectives of the study tour to Canada, which is the performance audit.  The Canadian Audit and Accountability Foundation is of the view that the performance audit focuses on implementation of policies, programs and delivery of public services, as well as to pursue the value-for-money.  It believes that performance audit provides the opportunity to improve management, accountability and confidence in governance institutions as it is at all times low.  In this regard performance audit enhances public confidence so that the auditee is well run and help to assess how resources are being spent, and furthermore, the performance audit can identify resource allocation issues to improve service delivery, as it is a credible and non-partisan source of information.   The Foundation attested that the Canadian Office of the Auditor-General follows the Canadian standards for assurance engagement.

4.Part C: Key Findings, Recommendations and Conclusion

4.1       Key Findings

The SCoAG engagement with the Canadian counterparts was to discover important findings through participatory observation on critical developments of the Canadian strategic performance audit planning, immunities and privileges of the Auditor-General and the reporting process to relevant parliamentary committees, to which the Office of the Auditor-General accounts and reports.  Therefore, the Committee participatorily observed and found the following critical developments:

 

4.1.1     The Canadian parliamentary systems

The Committee found that the Canadian parliamentary processes are similar to that of the Parliament of the Republic of South Africa, although Canada is a constitutional monarchy state contrary to South Africa as it is the constitutional state.

 

4.1.2     The Canadian Auditor-General Status

The Committee noted that the Canadian Office of the Auditor-General, similarly to the Auditor-General of South Africa is a Supreme Audit Institution and independent from the executive branch of government, as it is also only subject to the Constitution and the law.

 

4.1.3     Auditor-General Accountability Responsibilities

Contrary to the South African context, the Canadian Auditor-General accounts to the Public Accounts Committee, which is chaired by a member of the official opposition.  Unlike the South African context, the Canadian Public Accounts holds the Office of the Auditor-General accountable, by holding hearings on the Auditor-General’s strategic plans and priorities as well as its performance against those plans and priorities.  The Auditor-General appears before the Public Accounts Committee to answer questions and share the work plan with the Committee.

 

4.1.4     Relations between the Public Accounts Committee and the Auditor-General

The Canadian Public Accounts Committee as an oversight mechanism of the Office of the Auditor-General has a close and mutually supportive relationship.  The Public Accounts Committee supports and provides public forums through hearings for the audit findings and recommendations of the Auditor-General.  Public Accounts Committee also ensures that the Office of the Auditor-General is sufficiently resourced as it reviews the draft budget of the Auditor-General, but it cannot increase the budget of the Auditor-General and the Office of the Auditor-General is funded from the national fiscus.

 

4.1.5     Reaching out to Parliament by the Office of the Auditor-General

The Committee found it interesting that the Auditor-General reaches out to Parliament for feedback, the Auditor-General continually seeks feedback from the Members of Parliament and Senators on areas of interest to them, through the - briefings; dinners with the Public Accounts Committee and the Environmental and Sustainable Development Committee; meetings with other parliamentary Committee Chairpersons and Deputy Chairpersons; audit teams’ meetings with the parliamentary committees or their staff on specific audit topics, and periodic surveys with Members of Parliament.

 

4.1.6     Types of Audits the Canadian Auditor-General conducts

The Office of the Auditor-General of Canada conducts three types of audits, namely performance audit, financial audits (audit of the financial statements) and special examination audits.  With performance audit the Canadian Auditor-General assesses whether government programs are being managed with due regard to economy, efficiency and the environment, and have measures in place to determine effectiveness and value-for-money.

 

4.1.7     Performance Audit Objectives Conducted by the Canadian Office of the Auditor-General

The Committee Observed that the Office of the Auditor-General of Canada established the role of the Commissioner of the Environment and Sustainable Development.  The mandate of the Commissioner is to provide Parliament and the Canadian public with objective, independent analysis and recommendations on the actions of the federal government in order to protect the environment to mitigate the effects of climate change and foster the sustainable development.  Therefore, the Commissioner is responsible for reviewing progress in the implementation of the sustainable development agenda 2030 as well as providing policy guidance to follow-up the plans of implementation at national and international levels.  The Commissioner of the Environment and Sustainable Development has been appointed by the Auditor-General for a seven-year term.

 

4.1.8     The Ministry of the Environment and Climate Change

Canada has the Minister of the Environment and Climate Change, whose authority conferred by the Federal Sustainable Development Act, which requires that the Minister of Environment and Climate Change in every three years must table federal sustainable development strategy that includes goals, targets and implementation strategy for each target and a minister responsible for achieving the target.

 

4.1.9     Mandate of the Minister of the Environment and Climate Change

The mandate of the Minister of the Environment and Climate Change is to preserve and enhance the natural environment, which includes water, air, soil, flora and fauna and the conservation of Canada’s renewable resources.  Thus, the Commissioner of the Environment and Sustainable Development conducts performance audits focusing on environment and sustainable development as well as responsible for monitoring sustainable development strategies of the federal government departments and overseeing the environmental petitions process.

 

4.1.10   The Approach to Conduct of Performance Audit

The Committee observed that despite the audit of the financial statements, the Canadian Auditor General conducts performance audit focused on triple Es, objectives, which are the Economic procurement of goods and services, and efficient use of those resources as well as measures to test the effective use of those goods and services and value-for-money.  The Auditor-General selects the performance audit topics based on internal and external risks that auditees face, significantly focused on defined impact on the economy, social justice and environment.  The performance audit topics are also selected taking into account of the interest of the Members of Parliament, in which input is provided through engagement and due to available resources.

 

4.1.11   Tabling of Performance Audit Reports to Parliament

Both the Auditor-General and the Commissioner of the Environment and Sustainable Development table their performance audit reports in Parliament, thereafter, the performance audit reports of the Auditor-General are referred to the Public Accounts Committee and the performance audit reports of the Commissioner are referred to the Standing Committee on Environment and Sustainable Development.  Nevertheless, any parliamentary committee may invite the Auditor-General and the Commissioner of the Environment and Sustainable Development to present and discuss their reports, subsequent to the tabling in Parliament.

 

4.1.12   Public Hearings on Audit Reports

The Canadian parliamentary committees play a critical role by holding public hearings on the audit findings of the Office of the Auditor-General and ensuring that auditees respond to the identified concerns.  The Office of the Auditor-General appears 30 to 40 times on average annually before the parliamentary committees.  At hearings the Auditor-General delivers an opening remark that focuses on main audit findings of an audit report, approximately in five minutes.  Thereafter, the Deputy Minister as the accounting officer delivers an opening statement that describes actions taken since the audit and provides the departmental perspective.  After the hearings the Public Accounts Committee drafts a report to present it to Parliament.  The Public Accounts Committee’s report often complements the Auditor-General’s report.  The recommendations contained in the Public Accounts Committee’s report are directed to auditees and government, but rarely directed to Auditor-General for follow-up audits.  The government is required to respond within 120 days from the day of receipt of the recommendations of the Public Accounts Committee.  There are also recommendations to the government from the other parliamentary committees.

 

4.1.13   Immunities and Privileges of the Office of the Auditor-General

The Committee found it interesting that the Auditor-General of Canada or any person acting on behalf or under the direction of the Auditor-General is absolved from witnessing in respect of any matter coming to the knowledge of the Auditor-General or person as a result of performing audit powers, duties or functions under the Audit Act, or any other legislation during examination or enquiry in any proceeding other than prosecution for an offence under the criminal code in respect of a statement made under the Auditor General Act.

 

4.1.14   Immunities and Privileges do not Apply in Certain Circumstances

The testimonial immunities and privileges would not cover knowledge of the Auditor-General that came into effect before conducting audits.  The Canadian Office of the Auditor-General only enjoys protection rom prosecution, in which criminal or civil proceeding seek to convict the Auditor-General or any person acting on behalf or under the direction of the Auditor-General, for anything done, reported or said in good faith in the course of audit.  The immunities and privileges are not taken into account if the Auditor-General acted in bad faith, therefore they do not prevent litigation, which alleges that Auditor-General acted in bad faith.

 

4.1.15   In Circumstances, in which the Applicant Attempts to Challenge Audit findings before the Court.

In case an applicant attempts to challenge the audit findings before the court of law, the immunities and privileges do not avoid the judicial review proceedings.  Therefore, the Auditor-General Act provides that on an application for judicial review, the court can declare it valid or unlawful, or nullify, set aside, or set aside and refer it back for determination in accordance with the directions, which are considered appropriate, prohibit or restrain a decision, order, refer it to the proceeding of a federal board, commission or other tribunal.

 

4.1.16   The effect of Immunities and Privileges on Disclosure

The effect of immunities and privileges on disclosure of documents do not apply to the Office of the Auditor-General of Canada’s documents, including audit documents are exempted from disclosure under the Access to Information Act.  Nevertheless, for legal proceedings and on request under the Privacy Act, the audit documents and other records of the Office of the Auditor-General must be disclosed.  The law requires parties to litigation to disclose all relevant documents that have been in their possession, control or power.

 

4.1.17   For Defamation

For the purpose of any legislation relating to defamation, anything said, information supplied in good faith by or on behalf of the Auditor-General, in the course of audit, exercise powers, duties or functions under the Auditor-General Act or any other legislation, is privileged.

 

4.1.18   Alleged Defamation through Media

Any report made in good faith by the Auditor-General in the course of the exercise of audit powers, duties or functions under the Auditor-General Act and any other legislation, and any fair accurate account of the report made in good faith in newspapers or any periodical publication or broadcast, is privileged.

 

4.1.19   Continual Research and Development

The SCoAG noted that the Canadian Office of the Auditor-General and oversight bodies are continually undergoing training and development through the Canadian Audit and Accountability Foundation. The Foundation provides research and education to the Supreme Audit Institutions, oversight bodies, government departments and public entities by developing delivering capacity development workshops and learning opportunities, methodology, guidance and toolkits, applied research and information sharing events and community building initiatives.

 

4.1.20   The Role Played by the Oversight Committees

The Canadian Audit and Accountability Foundation is of the view that the parliamentary oversight committees are key to effective government as they hold government accountable publicly for correcting deficiencies, implementing policies and programs in accordance with the legislatures intentions.

 

4.1.21   Improve Management, Accountability and Confidence

The Committee learned that the performance audit focuses on testing the implementation of policies, programs and delivery of public service as well as to pursue the value-for-money audits.  Therefore, the performance audit provides opportunities to improve management, accountability, and confidence in governance institutions as it is at all times low.  In this regard performance audits enhance public confidence so that the auditees are well run and help to assess how resources are being spent.

 

4.1.22   Address Issues in Allocation of Resources

The Committee observed that performance audit can identify resource allocation issues to improve service delivery, as it isa credible and nonpartisan source of information.

4.1.23   Developing Standards for Assurance Engagement

The Committee observed that the Auditor-General is at liberty to develop own standards for assurance engagement and strictly follow them when conducting performance audit.

 

4.2Recommendations

The following recommendations on this report imply freeloading from the Canadian best practice systems and processes in order to improve approach to our own systems and processes as far as accountability and oversight concerned.  The Standing Committee on Auditor-General having undertaken the international study tour to Canada recommends as follows:

 

4.2.1     Performance Audit

The Standing Committee on Auditor-General recommends that Parliament should consider the performance auditing as to encourage the collection of ideas and tools for the Auditor-General to include policy coherence and the multi-stakeholder approaches into the work of the Auditor-General.  This will advocate auditing sustainable development goals, of which its key principles are policy coherence and multi-stakeholder engagement.

 

4.2.2     Continual Research Development

Research development and training for auditors and the users of the audit reports should be enhanced and improve the visibility of the Auditor-General and communicate the performance environmental audit findings.

4.2.3     Wastewater Auditing

The Committee recommends that Parliament should take into account performance audit in auditing the wastewater, as it will identify issues on wastewater management and treatment, which are a hot topic in South Africa.  Performance auditing may be conducted on specific wastewater programs and projects, in order to improve water resources management and safety drinking water as a component of the sanitation programs and environmental impact.

 

4.2.4     Legal framework to Guide Criteria for Auditing Climate Change

The Committee recommends that Parliament should support the development of legal framework to guide potential criteria for auditing climate change adaptation to strengthen resilience and adaptive capacity to climate-related hazards.  These frameworks will enable the Auditor-General to develop effective measures to assess the government’s preparedness to achieve sustainable development goals, by conducting program performance auditing.  Measuring performance will allow the government to track the progress is making towards the sustainable development goals and give the government critical information on which to base decisions for improving its programs.

 

4.2.5     Auditing Energy Servings

Parliament should consider supporting the Auditor-General in conducting performance audit on sustainable energy, specifically devoted to energy consumption, energy saving and energy efficiency including energy policy tools.  Performance audit will help to identify the cause of loss and waste and recommend accordingly.

 

4.2.6     Environmental Impact Assessment

The Committee recommends that Parliament should advocate performance audit in conducting the environmental impact assessment to promote sustainable development in order to achieve or maintain a healthy environment and healthy economy.

 

4.2.7     Auditing Renewable Energy

The Committee recommends that Parliament should ensure that Auditor-General is capacitated to assess policies on the renewable energy sources.  The performance audit on renewable energy will examine and identify the state input and efficient use of resources as well as measures to test impact and value-for-money, especially through the quality of the credible energy objectives, implementation tasks and tools used to ensure achievement of all its components.

 

4.2.8     Capacity to Conduct Performance Audit

The Committee recommends that Parliament should ensure that Auditor-General is resourceful, have flexible and systemic conducting performance audit, and be at liberty to a good and proper external relation to achieve efficient and effective performance audit.  Thus, the performance audit reports should be objective, convincing and concise as the audit topic permits.

 

4.2.9     Immunities and Privileges of the Auditor-General

The Committee recommends that Parliament should consider starting the process of amending the relevant legislations that can provide immunities and privileges to the Office of the Auditor-General in order to absolve the Auditor-General from witnessing in respect of any matter coming to the knowledge of the Auditor-General or person as a result of performing audit powers, duties or function under the Public Audit Act, no. 25 of 2004, and any other relevant legislation during the examination or enquiry in any proceeding other than prosecution for an offence under criminal law.

4.2.10   Alleged Defamation through Media

The Committee recommends that Parliament take into account the issue of defamation and amend the Public Audit Act and other relevant legislation to give immunities and privileges to the Office of the Auditor-General, in which the Auditor-General may be charged for defamation of character in the course of the exercise of audit powers, duties or functions, where a fair accurate account of the report made in good faith in newspapers or in any periodical publication or broadcast.

 

 

4.3       Conclusion

The Standing Committee on Auditor-General calls for action on certain elements of the South African oversight and accountability, which can be improved based on the key findings and recommendations of this report.  The recommendations convey the message that something different should be done based on the key findings of this report as the evidence based.  Canada although is a unique country but its parliamentary and the supreme audit institution’s systems and processes relate to those of South Africa.  Both countries share the democratic laws that regulate parliamentary and the supreme audit institution’s systems and processes which have the same objectives, namely the Auditor General Act, the Public Finance Act, Environmental Act, Access to Information Act and Privacy Act as well as the willingness to adhere to international agreements.  This suggests that there would be minimal or no hiccups in implementing some of the Canadian best practice as far as the improvement of the accountability and oversight processes and procedures. South Africa already has in place all these legislative frameworks which Canada uses to regulate the audit systems for better accountability.  It is therefore, without any reservations, the findings and recommendations in this report are a valuable asset to the improvement of the South African oversight and accountability.

The Standing Committee on Auditor-General appreciates and would like to thank the Canadian Public Accounts Committee, the Auditor-General of Canda, the Canadian Audit and Accountability Foundation to allow the Committee to undertake the study tour in order to learn from the Canadian best practice and capabilities.  The Committee and herewith also thank the South African High Commissioner in Canada, Mr Rieaz Shaik, and his staff member Tendani Munyai to facilitate the Committee’s study tour, Mr. Munyai took care of the Committee from the first day till the end of study tour.

 

Report to be considered.

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