Public Audit Excess Bill: adoption

Standing Committee on Appropriations

13 March 2019
Chairperson: Mr N Gcwabaza (ANC) (Acting)
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Meeting Summary

Documents handed out: Draft committee report on the Public Audit Excess Fee Bill.

The Committee agreed unanimously to a Bill which aims to overcome difficulties the Auditor General has in securing payment for audits of some government entities which are financially distressed.

While national and provincial government departments have to pay their audit fees in full, the Public Audit Excess bill provides relief for smaller entities such as museums and trusts or financially distressed municipalities. Where the audit fee exceeds one per cent of their current and capital expenditure, the excess must be paid from the National Treasury budget vote.

Treasury told the Committee during its briefing on the Bill that funds from its budget vote could only be appropriated by an Act of Parliament. Because of the difficulty in calculating what these charges would amount to, the provisions for payments to the Auditor General were often insufficient. These shortfalls threatened the financial viability and independence of that office.

The new Bill provides that fees owed by these bodies should in future be a direct charge against the National Revenue fund and be paid by the Accountant General.

Meeting report

The Acting Chairperson informed the Committee that the Chairperson had sent her apologies as she was running late.

He indicated that as there was no response to advertisements inviting public comment on the Bill, the public hearings that were scheduled for 13 March had been cancelled.

Committee members agreed to proceed with the adoption of a report on the Bill without further deliberations.

Committee Report on Bill
The Acting chairperson invited comment on the report on a page-by-page basis. Apart from minor grammatical changes, members were satisfied with the report.

The committee then adopted the report stating that it had agreed to the Section 77 Bill without amendments.

In its report, the Committee said the Constitution provided that money could be withdrawn from the National Revenue Fund (NRF) only in terms of an appropriation by an Act of Parliament.

Fees charged by the Auditor General (AG) were used to finance the work of that office. However the National Treasury reported that 10 per cent of the AG’s client base fell in the financially distressed category. These were mainly low capacity municipalities and small auditees such as museums, trusts and boards.

The Public Audit Act provided that, if the audit fee was more than one per cent of the auditee’s current and capital expenditure, that excess should be defrayed from the National Treasury’s budget vote.

These amounts were invariably substantially higher than the amount appropriated because of the difficulty in accurately estimating the required funding. The resultant shortfalls put the financial viability of the AG’s office at risk and threatened its constitutional independence. The shortfalls totalled R441 million over the past five year

A direct charge against the NRF would mean that payments to the AG would be made by the Office of the Accountant General directly from the NRF and not form part of the normal appropriated funds of the National Treasury. .

The committee’s report noted that there were no public hearings on the Bill because there were no responses to advertisements inviting public inputs.

The meeting was adjourned.

 

Documents

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