Public Audit Bill: briefing

Public Audit Function

09 September 2003
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Meeting report

AD HOC COMMITTEE ON PUBLIC AUDITING

AD HOC COMMITTEE ON PUBLIC AUDITING
10 September 2003
PUBLIC AUDIT BILL: BRIEFING BY AUDITOR GENERAL

Chairperson:
Mr V Smith

Documents handed out:
Auditor General's Briefing on the Public Audit Bill
"Public Audit Bill Comment Process" flow chart
Draft Public Audit Bill: Part 1
Draft Public Audit Bill: Part 2
Draft Public Audit Bill: Part 3
Committee membership (Appendix 1)

SUMMARY
The Auditor General briefed the Committee on the Public Audit Bill, the Committee discussed its forthcoming programme, and responded to some questions put to it by the Speaker. The Public Audit Bill is aimed at giving effect to Section 181 and 188 of the Constitution, as enabling legislation. The briefing covered reasons for the new Bill, the guiding principles used in preparing the Bill; the consultation process followed in preparing the Bill; some feedback received thus far, some of the main changes and enhancements that are being made to the current version of the Bill, and some suggestions on the way forward, both for the Office of the Auditor General, and for the Committee to consider.

Note: The Committee sought an extension of the 19 September deadline to finalise the Public Audit Bill. However this has been turned down by the Speaker. Public hearings will take place on 17 September and it is hoped to finalise the Bill on 23 September.

MINUTES
In explaining the reason for the new Bill, the Auditor General, Mr Shauket Fakie, said that the current legislation through which the Office of the Auditor General works (the Auditor General Act and the Audit Arrangements Act) is dated. The Bill aims to consolidate these Acts, and to align them with the Constitution, the Public Finance Management Act (PFMA), the Labour Relations Act, and other legislation such as the Municipal Finance Management Bill (MFMB).

To ensure the legal correctness of the Bill, the Office of the Auditor General had made use of the Constitution and other legislation, including international legislation.

Through the consultation process, invitations for comment were invited and received from the South African Institute of Chartered Accountants, South African Institute of Government Auditors, the Institute of Public Finance and Administration, the Audit Commission, the Speaker and Deputy Speaker, the Audit Commission's Sub-committee (8 MPs and 3 external members), the Minister of Finance, Treasury and IDASA amongst others. The Office of the Auditor General has established a task team to assess the comments offered. He sought the Committee's guidance as to how to feed the comments received, to the Committee, while ensuring that members are not cluttered with too much detail.

Some views received by the Office of the Auditor General:
- The importance of the independence of the Auditor General, versus the accountability of the Auditor General.
- There was some debate around whether the Audit Commission is an effective oversight mechanism to oversee the operations of the Auditor General.
- The structural alignment of the Office of the Auditor General, and the Auditor General himself.

Some enhancements that have been effected to the Bill:
- The functions of the Auditor General have been aligned with the Constitution.
- The alignment with the PFMA and the MFMB, specifically relating to public entities.
- Clarification of the relationships amongst the Auditor General, Audit Commission and Audit Office.

The Auditor General outlined the way forward:
- His Office would like to "workshop" the Committee through the Bill on a clause by clause basis.
- The public hearing process would be conducted.
- The subsequent presentation of proposed refinements to the Bill arising out of public comment.
- The parliamentary process that must occur when the Committee has completed their part.
- Implementation of the Bill.

Discussion
Ms K Mothoagae (ANC) noted that IDASA's submission had not yet been received by the Committee members. She asked what the process was for the receipt of submissions.

The Auditor General responded that he had received comments well before this Committee meeting. His Office had informed commentators that there would be a public hearing phase, in which they were free to participate. They had also assisted the commentators around issues where they lacked understanding - so as to protect his Office and the Committee from being inundated with commentary. It was possible that some commentators who had contacted the Office of the Auditor General, would also provide the Committee with their comments. He said it was important for the two structures to ensure there was not any duplication of work. The Office of the Auditor General was willing to restructure their process if necessary, since it was the Committee that had been tasked with this function of consultation.

Referring to the "Public Audit Bill Comment Process" flow chart, Mr N Nene (ANC) asked if the Office of the Auditor General would also host public hearings. He supported the Auditor General's suggestion of a workshop. However, would it not be advisable to have all workshops before the public hearings.

The Auditor General replied that the Office would not engage in its own public hearing process. Rather, a representative or representatives from the Office would sit in on the Committee's public hearings and note the comments coming through from the public.

Mr D Gumede (ANC) noted that one particular comment which had been received, was that the "financial independence of the Auditor General must be provided, but must be reasonable". He asked what particular concerns had motivated that comment.

The Auditor General explained that his Office enjoys financial independence, in that they operate on a commercialised basis. Audit fees are charged for each audit that is performed. The provision aims to ensure that the charges to departments for the auditing services, are not unreasonable. The Audit Commission plays a significant role in providing checks and balances in that regard.

Mr G Woods (IFP) expressed his concern that the processing of the Bill was somewhat unusual, in that this particular draft had not yet been tabled, thereby necessitating an "awkward process" of helping to accommodate other views, in preparing the Bill.

The Auditor General stated that this is a Bill of Parliament (not proceeding from any department). A conscious decision had been taken at the Audit Commission not to process the Bill through the Treasury, since the Auditor General as a Chapter 9 institution, reports directly to Parliament.

Mr C Botes (Office of the Auditor General) explained that the normal process for such a Bill, generated by Parliament, had not been possible in this case. The present Committee must take the Bill, and continue with the processing thereof. It was for that reason that the Auditor General had already started technically working through some of the comments received.

The Chairperson felt that Mr Woods' concern was a valid one. At some stage, the Bill had to be handed over to Parliament, and it would not be advisable for the Auditor General to be involved with it at that point. The Chairperson suggested that the Auditor General would be free to make changes and enhancements to the Bill up to the workshop stage, after which it should be handed over to the Committee to work on. All public comments and inputs should also be handed over to the Committee at that stage, for discussion. At a later stage, they would inform the Auditor General of the Committee's amendments to the Bill.

Considering the coming 2004 elections, Mr Woods felt that if a new Parliament came into being, any progress made by this Committee on the Bill would be jeopardised if a different committee was subsequently chosen.

Mr Smith pointed out that the Speaker had given the Committee until 19 September to finalise the Bill. The Committee should decide if that was indeed a feasible deadline. Otherwise, a new deadline could be set for 20 November of the next term. This would mean that if a different Committee came into being after the 2004 elections, they would have a "ready-made" document.

He invited the Committee to make suggestions for the programme ahead. Ms Mothogae and Mr B Nair (ANC) felt that the workshop should be held before the public hearings. This would give them a better understanding of the relevant issues, and help them to engage more efficiently with commentators at the public hearings. The rest of the Committee felt that the workshop should be held after the public hearings. Mr C Aucump (NA) suggested a compromise with an introductory workshop held prior to the public hearings, and another one subsequent to it. All the members were in agreement with this suggestion. Dates and times were set as follows:

Introductory Workshop: Friday, 16 September, 09h00 - 13h00
Public Hearings: Wednesday, 17 September, 09h00 - 13h00
Final Workshop: Tuesday, 23 September, in the afternoon

It was decided that those commentators who had made written submissions, would be informed of the above dates and times.

Questions from the Speaker
The Chairperson informed the Committee that the Speaker had requested to be informed of the alternative language into which the Bill should be translated. Mr Aucump proposed Afrikaans, and all agreed.

He said that The Speaker also wished to know if it would be possible for the Committee to report on the Bill by 19 September 2003. The Committee agreed that it would not be possible to meet this deadline. Correspondence would be entered into with Mr G Doidge (Chair of Chairpersons), for consideration by the Whips, that the Bill be finalised in the last session of Parliament ending in November.

The meeting was adjourned.


Appendix 1
Ad Hoc Committee on Auditing Function

Chairperson:
Mr Smith, V G (ANC)


African National Congress:
Baloyi, M R
Daniels, N
Gumede, D M
Hogan, B A (Alt)
Jordan, Z P
Mabe, L L
Maloney, L
Mothoagae, P K
Mthembu, B
Nair, B (Alt)
Ndou, R S
Nene, N M (Alt)
Tarr, M A

Democratic Alliance:
Bell, B G
Steele, M H

New National Party:
Beukman, F

Inkatha Freedom Party:
Woods, G G

African Christian Democratic Party:
Southgate, R M

Independent African Movement:
Millin, T E (Alt)

Alliance for Democracy and Prosperity:
Ramodike, M N (Alt)

United Christian Democratic Party:
Ditshetelo, P H K

United Democratic Movement:
Madikiza, G T (Alt)

Minority Front:
Rajbally, S

National Action:
Aucamp, C (Alt)

Federal Alliance:
Blanché, J P I

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