A summary of this committee meeting is not yet available.
AD HOC COMMITTEE ON AUDITING FUNCTION
12 November 2003
PUBLIC AUDIT BILL: DELIBERATIONS
Documents handed out:
Public Audit Bill - draft of 23 September 2003
Clause 22: Special Defence and the Joint Standing Committee on Intelligence
Amendments proposed by Adv Grové
The Committee continued deliberations surrounding the Public Audit Bill. Matters for broad discussion were: a two-line statement proposed by the ANC, to replace Chapter 5 in its entirety; the Auditor General's view on how the Special Defence Account might coincide with matters of intelligence; a legal opinion on the need for obtaining a date for implementation of the Act from the President; and possible tightening up of auditing provisions for public entities. The Chairperson wanted to attempt to get the Chairpersons for Justice and Constitutional Affairs, and for the Joint Standing Committee on Intelligence (JSCI), to give input on Section 16 and Section 22 of the Bill, respectively. When the abovementioned matters had been dealt with, the Committee went through the Bill clause-by-clause, to make improvements, with the assistance of a document by Adv. Grové, in which he proposed various amendments.
The Chairperson informed the Committee that the Chairperson of the Justice and Constitutional Affairs Portfolio Committee might be able to address them for a few minutes later on in the day. He had not managed thus far to contact the Chair of the Joint Standing Committee on Intelligence (JSCI), but would continue to try.
The proposed agenda for the day's proceedings were:
- feedback from the ANC on the Auditor General's accountability
- the Auditor General's report on the Special Defence Account
- a legal opinion from Legal Services on the President's decision for the Bill's commencement date
- possible tightening of auditing of provisions for public entities
- possible reports by Mr J de Lange, and the Chair of the JSCI
Feedback from the ANC on the Auditor General's accountability
The Chairperson recapped that the Committee had agreed on the previous day, on a proposal for the establishment of one Committee charged specifically with the oversight of the Auditor General, as well as to a proposal for a "two-liner", to include time frames. The Chairperson had spoken both the whippery, and to the Speaker, and presented a two-liner which had been prepared by the ANC. The Chairperson said he had informed the ANC component of the Committee's displeasure with the fact that in give years, nothing had been done about the issue. The Speaker had been uncomfortable with the suggestion to include time frames with the two-liner, saying she was not aware of any legislation that included time-frames. However, to overcome that, she suggested that the Committee, in its Committee report, urge National Assembly to implement the structure, with a time frame. In adopting the Committee report, the National Assembly would then be almost "duty-bound" to do it. There was also concern that replacing the audit arrangements in the Bill, would get rid of the Audit Committee in its current form. The Committee report would urge the National Assembly to implement an appropriate structure, and the National Assembly would be duty-bound to do it. The Speaker had said the National Assembly would act immediately upon Parliament's adoption of the Committee Report.
Mr M Tarr (ANC) was happy that the Committee's requirements for the two-liner voiced on the previous day, was accommodated in the two-liner. Additionally, if the Committee report, including the suggested time frames, were to be adopted by the National Assembly, there would be an obligation upon them to respond. Their failure to do so, would create a vacuum in the accountability process of the Auditor General.
Although Dr G Woods (IFP) was prepared to accept the majority decision he nevertheless expressed his disappointment at the majority decision not to accept the solution put forward to fulfil the requirements of the Constitution, but to rather leave things as they were. He said that what was being done by the acceptance of the two-liner, was merely to rewrite a provision from the Constitution into the Bill. The Constitution required the Auditor General to report to the National Assembly, and charged Parliament with the responsibility to set up the mechanisms for the Auditor General's accountability. He thanked the Ad Hoc Committee for having entertained the discussions and arguments presented by himself, and accepted the decision, as disappointing as it was to him.
Mr B Bell (DA) felt the statement was a "ridiculous cop-out". It was already contained in the Constitution. He objected to the use of the word "Parliament" as the body to which the Auditor General should report, instead of "National Assembly", and echoed Dr Woods' disappointment.
The Chairperson agreed that "Parliament" should be replaced by "National Assembly". He considered Mr Bell's argument that the statement was not taking the Committee forward, as a valid one.
Mr M Tarr (DA) understood Dr Woods' and Mr Bell's fears that if the statement was referred to the Rules Committee after it was passed in Parliament, they believed that nothing would be done. Mr Tarr, however, felt that the credibility of the Committee was at stake. The Committee should therefore ensure that the Rules Committee acted in response to the statement.
The Auditor General's Report on the Special Defence Account (SDA)
On whether the Auditor General would consult with the JSCI on possible exclusions from the audit report as envisaged by Clause 22(1) of the Bill, the Auditor General responded in the affirmative. The Auditor General was obliged, in terms of Section 22, to consult with the JSCI on all possible matters of national interest, when reporting on any aspects of the audit of any of the three accounts mentioned in the Section. The final discretion rested with the Auditor General in determining the extent of the exclusion, based on national interest. In terms of Clause 22(2), the Auditor General could not be prevented from reporting on any unauthorised, fruitless, wasteful, or irregular expenditure, relating to the three accounts. This meant that the consultation process could not limit the Auditor General, and the Auditor General did not possess discretion in the event of unauthorised, fruitless, wasteful, or irregular expenditure.
To the second question, the Auditor General responded that if Clause 22 became law, the JSCI would be consulted by the Auditor General, and therefore the JSCI would be obliged to fulfil the role envisaged by Clause 22 on behalf of Parliament.
The Auditor General confirmed that portions of the SDA included military intelligence issues. In addition, certain elements of procurement contained inherent intelligence issues.
The Chairperson informed the Committee that the Chairperson of Intelligence would arrive too late to address the Committee. He might be able to address the Committee on the following day.
Dr Woods felt that the Auditor General's submission took the Committee halfway forward. His interpretation of the issue had not to be "married up" with the view of the Chairperson of the JSCI, and with the Parliamentary law advisers' opinion. He asked if, in the event of an audit which related to procurement, where he suspected unauthorised expenditure, and where there might be considerations of national interest, he would disregard the request of the President and the Minister of Finance not to make the necessary public disclosure in his report. He asked this question, because there seemed to be a contradiction in Points 1 and 2 of Section 22. In (2), the Auditor General could be obligated to make disclosure, while in (1), he could be obligated to defer the matter, as a matter of national interest.
The Auditor General responded that Section 22 (1) and (2) was very similar to the current Section 4(6) / provisions. He explained the Auditor General's procedure for reports, was that when the final draft report was ready, they would submit it to the role-players identified in the current Bill's provisions, as well as to the JSCI. In their findings, they would make no discretionary call based on what was of national interest. The responsibility was put onto the role-players to inform the Auditor General if there were any matters of national interest in the report. Such information must be strongly motivated, in order to pursuade the Auditor General of the credulity of the argument. The Office of the Auditor General would evaluate the information provided, and clarify any matters that needed clarification. On the strength of all this, the Auditor General would then make a decision. When the matter was linked to unauthorised expenditure, it would be difficult to remove it completely from the report completely. The Auditor General was obliged to report on unauthorised expenditure, in terms of Section 22(2). Discretion would determine to what extent disclosure is made with regard to the unauthorised expenditure, when taking into consideration national interest.
The Auditor General informed the Committee that in his experience, in every respect, his office had never, in terms of the old Section 4(6), not had to make a report on the basis of national interest.
In passing on reports to the JSCI, Mr Bell said that the JSCI was not "geared up" towards understanding tender procedures. He asked if they would be helped to assess documents of that nature, and with reporting back to Parliament.
The Chairperson felt that problem could be overcome, if the various parties delegated people onto that Committee who understood the dynamics of tender procedures.
Input from Legal Services Office
Ms D Lenzie (Parliamentary Legal Adviser) informed the Committee that she had not found anything in the law that provided that the Special Defence Account fell within the ambit of the JSCI scope of functions. However, consultations seemed to show that in practice, the opposite was true. She did not think exclusions from reports on the basis of national interest would undermine Parliament's powers, because Section 22 made provision for the report to go to the JSCI, before the decision to exclude or not to exclude was made by the Auditor General. In that way, Parliament was being kept "in the loop" of things. There had been concerns that exclusions would amount to a lack of transparency. However, Section 22(2) obliged the Auditor General to report on unauthorised or fruitless expenditure, which would ensure transparency. She was happy with the provision.
Dr Woods, however, was not happy. Since the Act which governs the intelligence agency did not include, in their mandate, them having to look at procurement issues from the SDA, then it was not desirable to impose additional functions upon them, which would require specialised understanding and expertise, as pointed out by Mr Bell. There should be some consultation with the Committee, to determine what their own opinion was of their mandate, and whether the laws that governed them should be amended to include additional functions.
The legal adviser stated that as parliamentary committees were part of Parliament, if any institution was required to report to Parliament, and does so through one particular Committee of Parliament, that would be regarded as sufficient. The rules could make provision for functions not covered yet covered in legislation. The legal advisers were not making pronouncements as to whether the additional functions should stay, or not, but were merely informing the Committee on what could be done in terms of the rules, if legislation did not make provision for certain things.
Tightening up of provisions for Public Entities
Mr P Gerber (ANC) suggested that the fears that had been expressed on the previous day, could be sufficiently dealt with, if Part 1, which dealt with audits by the Auditor General, and Part 2 of Chapter 3, which dealt with audits by auditors in private practice, could be merged, so that all the audits could be done by the Auditor General. The option to choose not to audit would be removed, but he would have the right to appoint external auditors to perform audits.
Dr Woods stated that Parts 1 and 2 should be seen in conjunction with Section 55 of the PFMA, wherein the Auditor General could perform every audit. However, it was understood that would be practically impossible. Some work would have to be delegated. External auditors would have to be reputable, and must possess the necessary expertise. On completing the audit, they must submit the financial statements to the Auditor General, who would "glance" through them, but not redo the audit. The only unresolved issue, was that various public entities in which the state had significant shareholding, were not submitting their audit reports to the Auditor General. Dr Woods felt that the law was quite comprehensive on the matter, however. The fact that external auditors were being appointed without the input of the Auditor General, and that audit reports were not being submitted to his office, showed that better communication was desirable between the Auditor General and Parliament. Parliament should support the Auditor General in getting public entities to follow adhere to the law.
The Auditor General explained that Part 1 of Chapter related to where the Auditor General performed the audit himself, or where he appointed external auditors, although he signed the completed audit report, taking ultimate responsibility for the audit report. Part 2 provided that where the Auditor General opted not to perform an audit, and the public entity had a right to appoint external auditors, the external auditors would sign the report upon completion of the audit. The provision sought to ensure that the audit would be performed to the same standards as the Office of the Auditor General would have met, had they performed the audit.
The Auditor General further reported that his office had started to "chase up" those public entities which were not consulting with his office in appointing external auditors. In addition, his office included information on those public entities which did not submit audit reports according to stipulations in the PFMA, in the Auditor General's general report to Parliament. It would then be Parliament's prerogative to decide how to deal with those entities.
Ms Lenzie suggested that the Committee members should decide if they wanted to empower the Auditor General, or to give him the authority to audit private companies in which the state owned more than 50% shares, in the instances where the provisions of the Act do not apply. Once members decided on that, there would be a need to include it in legislation. However, should they feel that the current practice was sufficient to cover those instances, then there would be no need to amend the Bill.
The Chairperson asked Mr Gerber to identify very clearly exactly what the problem was, that he was grappling with.
He responded that taxpayers regarded the Auditor General as the highest accounting authority, or watchdog of bookkeeping for departments. He felt it was not fair to tax-payers that large companies were not being audited, by the Auditor General, or that he was not at least somehow involved in their auditing. Justice was not being done to a massive amount of tax-payers' assets and monies. He added that the excuse that the Office of the Auditor General was not capacitated to perform all the auditing, was not good enough. He felt if the Office of the Auditor General was insufficiently resourced to deal with performing all audits, then the Office should be extended.
The Chairperson commented that attempting to give people extra assurance by providing that the Auditor General should perform all audits himself, would give the impression that he was a "super-auditor". If the ability of external auditors were being called into question, then the standards of auditing should be re-considered. He also observed that the suggestion that the Auditor General should "beef up" his organisation in order to be capacitated to perform all audits, would require increasing audit fees, amongst other things. Personally, he felt that the provisions sufficiently covered all concerns.
Mr Gerber responded that the Auditor General was the auditor of the taxpayers' money, investments, and assets. The other firms who were appointed to perform audits were not elected by the people. Only government, and not private companies, was accountable to taxpayers.
Mr D Gumede (ANC) understood by Mr Gerber's view that private auditors might have interests other than those of the tax-payers, such as the desire to be contracted for more work by the auditee, which might influence the thoroughness with which they audit, as happened with international companies in the USA recently.
Dr Woods agreed with the Chairperson that all concerns were adequately covered in the proposed provisions. He asked the Chairperson to invite the Auditor General to offer some reassurance on: (1) why it would be impractical to expect the Auditor General to audit everything, and (2) that work was being outsourced in a responsible manner.
Mr Tarr said that Section 25(1) and (2) adequately covered the situation where the Auditor General decided not to audit. He could not envisage a situation wherein the Auditor General actually audited the hundreds of public entities that existed.
The Auditor General informed the Committee that he served on the Public Accounts and Auditors' Board personally, to ensure that his office had an input into the rules and conditions under which private practices normally operated. He said it was not entirely correct to say that private auditors did not have the public interest at heart, because auditors were essentially required as independent bodies, to give assurance to the public.
Public entities were required, in terms of Section 25(2), to give notification to the Auditor General, of the external auditors which were being appointed. The Office of the Auditor General had standard requirements, which included information on the extent to which the auditor would provide services other than auditing, before giving approval for such appointment. They would also determine if there were any family connections with regard to appointment. Section 28 required the auditor to report on matters which the Auditor General would have reported on, had he performed the audit himself. Previously, he said, private sector auditors would have reported in a much more limited manner. Lastly, the PFMA complements the Bill, in making it obligatory for public entities, in terms of Section 55, to submit a copy of the annual report to the Auditor General. Where that did not happen, the Auditor General would notify Parliament.
Search and Seizure (Section 16)
Although the Auditor General and his staff would not be allowed to participate in discussions on this section, the members agreed that it would be worthwhile for them to remain in the meeting, as observers.
Section 16 provided powers of search and seizure to the Auditor General, under the authorisation of a warrant, and with the assistance of law enforcement agencies. The Committee considered why, with all the other powers which the Auditor General possessed, he required those additional powers.
The Chairperson once again informed the Committee of the view held by Mr J De Lange, Chairperson of the Committee for Justice and Constitutional Development. He felt that the Auditor General should not be given powers of search and seizure. His role was to audit, and if he, in the pursuit of performing an audit, was restricted in his work, he should approach Parliament, who would be obliged to support him. Mr De Lange also feared that if the Auditor General did receive those powers, it was possible he might be used as a political football.
Mr M Steele (DA) felt that giving the Auditor General the proposed powers in conducting forensic audits, would assist him to perform his task effectively and competently.
Mr Bell asked if Section 16(1) gave permission to the Auditor General to instruct external auditors to perform search and seizure operations.
The Chairperson responded that this applied to cases where the Auditor General performed the audit himself, and where the Auditor General chose to appoint an external auditor, only.
Mr Bell felt the provision was somewhat vague, and should be qualified, to show that it did not apply to all audits. However, he agreed to the provision in principle.
Mr Tarr observed that Section 15 gave extensive powers to the Auditor General. Anyone who failed to comply with those provisions, would be guilty of an offence, and should be dealt with in terms of Section 63, on offences and penalties. He felt this sufficiently covered the requirements of the Auditor General, and that Section 16 was therefore not necessary at all.
At this stage, the Committee decided to allow the Auditor General to participate in the discussion.
Mr Tarr asked the Auditor General whether the powers conferred upon him in Section 15, together with the penalties for anyone who did not comply, in Section 63, were not sufficient for his purposes.
The Auditor General responded that those powers were not adequate. Powers of search and seizure, in addition to the normal powers to perform audits, were necessary. There might be some circumstances, even in normal audits, where powers of search and seizure would be required. The powers proposed in Section 16 would only be possible with the granting of a warrant from a magistrate. A magistrate would not grant a warrant application unless the reasons given were sufficiently compelling. Furthermore, in the course of exercising normal powers in terms of Section 15, search and seizure operations might become necessary to obtain evidence which would make an individual accountable. In forensic audits, the need for search and seizure powers became much more compelling. As previously indicated, most auditors involved in forensic work found it difficult to operate effectively without search and seizure powers. He furthermore confirmed that those powers were being requested only for the Auditor General and his staff, and for external, authorised auditors acting under the control of the Auditor General. Sometimes, forensic audits involved chasing up ex-employees and ex-CEO's of the institution under investigation. Search and seizure powers would be required against their records, and what they might have taken from the institution.
Mr Gerber mentioned that Clause 62 in the PFMA did not limit the powers of the Auditor General to only when an audit was being performed, whereas the Bill mentioned the powers of the Auditor General as limited to only when an audit was being performed, and asked for the reasons for those discrepancies.
Notwithstanding the broader powers available to the Auditor General under Section 15, which were fine for a normal audit, in terms of forensic audits, the issue of documentary evidence, where statements were only made when criminality could be proven beyond a reasonable doubt, sufficient evidence was necessary to support findings. For that reason, many of the forensic audits for which the Auditor General received criticism, could not make any firm statements, because they were unable to secure evidence to support their findings.
The Chairperson asked how other auditors overcame the difficulties they claimed to experience, in the absence of search and seizure powers. Additionally, he asked if the co-operation of other law enforcement agencies was insufficient. He felt the speed with which the Auditor General could act would not be compromised by such co-operation, adding that obtaining a warrant from a magistrate might consume valuable time, anyhow. It would be undesirable to create a situation where various bodies possessing extensive intrusive powers, were competing against each other, all wanting to be "super-investigators".
The Auditor General responded that in the absence of search and seizure powers, external auditors were not as effective as was desired in performing audits, although they might not be prepared to admit to that publicly. Situations in which they had been mostly effective, were when the heads of institutions called them in, and gave them all powers within the organisation to do search and seizure operations, to effectively perform forensic investigations. In other instances, where investigative agencies like the Scorpions, or the South African Police's Commercial Crime Unit experienced capacity problems, they would source in forensic experts from private firms, to investigate on their behalf, delegating certain of their powers to them.
The Auditor General continued that the requirement for a warrant from a magistrate had been written into the provisions, to ensure checks and balances in the system, so that the Auditor General did not have absolute discretion to decide to use powers of search and seizure. He conceded that it might slow down the process of the investigation, although not too much. He added that only the Auditor General could authorise an application for a warrant, after the completion of an internal process.
Mr A Kamedien (Auditor General's Office) explained the process of obtaining a warrant, saying that warrants were obtained under oath. The magistrate would consider the reasons given as a basis for the application. If the reasons would later be found to be wrong, they could be challenged, and the Auditor General would then be forced to give full and valid reasons as to why the warrant had been sought. Should those reasons prove insufficient, the Auditor General could be found to be in contempt of court, or guilty of perjury.
Additionally, he explained that there were magistrates and judges who could be approached after hours, if necessary, so that that it would not be necessary to wait for days for a warrant to be issued. The matter could be expedited within a few hours.
Clause by clause Deliberations
The Committee went through the Bill on a clause-by-clause basis. Mr Kamedien informed the Committee that Adv. Grove had proposed the removal of "in terms of the Constitution" in the long title.
It was agreed that in Chapter 1(2)(c), the term 'Audit Commission" should be deleted and replaced with "oversight mechanism".
Dr Woods observed that the scrapping of Chapter 5 would discontinue the existing Audit Commission. He wondered when the Act would come into force, and if there would be an ensuing "accountability vacuum".
The Chairperson inquired of Mr Kamedien if the Committee could, in its Committee report, could legally provide that the Audit Commission would terminate when the new structure was implemented, also providing time frames.
Mr Kamedien said the Act stated that the Audit Commission would continue until the expiration of its term, in 2004. In addition, any acts that might have been entered into in terms of the Audit Arrangements Act, would still be in effect until the expiration of the Audit Commission. Should Parliament act quickly enough, then the vacuum would be covered.
Mr Gerber asked why the stipulation in Section 4(4) that draft legislation amending that section could be introduced into Parliament only after consultation with the Auditor General, still remained in the Bill.
The Auditor General explained that this stipulation ensured that anybody bringing new legislation into effect which determined that the Auditor General would not be the external auditors, would have to consult with the Auditor General.
The Chairperson stated the Committee was concerned the wording of the provision made it seem that the Auditor General's permission was required to bring in new legislation. He thought members would feel more comfortable if ".. has been consulted" were replaced by, "has been kept abreast of".
Mr Kamedien stated that the term, "consulted" did not mean that permission had to be given. Adv. Grove had proposed the following amendment: "Draft legislation which proposes to amend this section may be introduced in Parliament only after ..."
Mr Gerber felt it was unwise to introduce that type of legislation, since it infringed upon the rights of members of Parliament.
Ms Lenzie stated that the Legal Dept also had problems with that piece of legislation, for the following reasons: (1) although legislation was introduced by departments, and there was provision for special laws to be introduced by members of Parliament, it was Parliament's prerogative, at the end of the day, to pass legislation, including restrictions. The provision proposed would interfere with Parliament's powers to pass legislation; (2) in the legislative process, there was room for draft legislation to be published for comment. At that stage, the Auditor-General would also have the opportunity to comment on the legislation, if he felt it was going to cause interference.
Mr Mofokeng agreed with Mr Kamedien's statement, that the word "consulting" was not binding. It required a simple telephone call, and whether a party agreed or disagreed, that would be immaterial to the provision.
The Chairperson agreed with Mr Mofokeng. However, the members were objecting to the very need to consult, and had a problem with the fact that if they failed to consult, they would be legally in breach. Notwithstanding that, they understood the Auditor General's predicament that law-makers often passed laws without informing his office about it, making it difficult for the Office of the Auditor General to track legislation.
Mr Gumede proposed the deletion of the entire sentence, saying that parliamentary due process allowed for consultations and interactions, of which hearings were an important component. This would ensure that the Auditor General would therefore be able to keep track of the legislation.
Mr Kamedien was instructed to remove the sentence from the Bill.
Mr Gerber informed the Chairperson that in subclause 5(d), the Committee had previously agreed to remove the word "credible".
In Part 2, Section 7, the term "Audit Commission would be replaced with "National Assembly".
In the light of the fact that Chapter 5 would be replaced, Mr C Botes (Office of the Auditor General), suggested that Clause 10(1) provided the opportunity to try to structure the reporting obligation of the Auditor General, as Clause 10 was aimed at making the Auditor General very accountable to Parliament. He proposed that the Committee consider prompting the National Assembly to create a Committee by inserting a new subclause (3) in Clause 10, to read something like, "the National Assembly must designate/ appoint/ create a Committee of Parliament to oversee the Auditor General in terms of Section 55(2) of the Constitution. If the provisions were to be inserted in Clause 10, it would link up appropriately with the accountability flow of the Auditor General in subclauses (1) and (2). That would also make it possible to completely delete Chapter 5. With regard to the ANC's proposed two-liner, he stated that (a) was already covered in 10(1). Point (b)(1) could possibly be contained in the rules, while (b)(2) could be contained in the new subclause (3), which he had proposed.
Mr Bell thought that Mr Botes' suggestion was a good one. However, Chapter 5 had included accountability functions. He asked if Mr Botes was suggesting that those functions would disappear completely, or that the Rules Committee would be relied upon to decide the functions which the oversight body should have, or if a list of functions would be contained under 10(3).
Although Dr Woods had an objection to Mr Botes' usage of the word "oversight", he noted that Adv. Grové had cautioned against it, saying that the Constitution did not use the word.
In response, Ms Lenzie stated that the Constitution did give Parliament the power to exercise oversight over any organ of state.
On the need to stipulate the frequency with which the oversight body would meet, the members agreed that when the body was set up, it could make its own determinations on the frequency with which it would meet. It was also agreed that Chapter 5 would be removed in its entirety.
Mr Botes noted that once the Bill was adopted, an ATC report would be published, saying that the Ad Hoc Committee had approved the Bill for consideration by the National Assembly. The Committee might state in that report that the oversight process, functions and details had not been incorporated into the Bill, and would be left to the Rules Committee. They might even consider listing some of the issues which had been omitted from the Bill.
The Chairperson agreed that the Speaker had made a similar suggestion.
The Committee agreed that wherever the term "Audit Commission" appeared, it would be replaced by "National Assembly".
The Committee agreed to Adv. Grové's proposed technical amendments to Clause 13(1)(c).
Mr Gerber suggested the insertion of "the" before "Auditor General" in Section 15(2).
Dr Woods cautioned that the use of the term "National Assembly", especially as it was now being used to replace "Audit Commission" was becoming ambiguous, as at certain places, the term denoted the plenary of the National Assembly. In that case, the term could not be interpreted as speaking of the future oversight committee.
The Committee agreed, therefore, to replace "Audit Commission" with "appropriate oversight structure", instead.
The Committee agreed to replace Section 16(1)(a) and other clauses, where the Bill referred to "premises or vehicle", with "premises, vehicle or property".
Mr Tarr asked if this meant that Section 16 was being retained, which he was in favour of.
The Committee agreed to make a decision on that matter on the following day. However, for the sake of tidying up the document, they agreed for the moment to leave Section 16 as agreed.
Mr Gerber suggested the insertion of "or any" before "other law enforcement agency ..." in Section 16(3).
Mr Kamedien suggested that Section 14(2) should include:
"(a) by any legislation applicable to that auditee; or
(b) in the absence of such legislation"
On Clause 20, Mr Gerber said it related to Clause 61 if the PFMA. There were some differences between the two, and he suggested that Mr Kamedien consider "marrying" the two together.
Regarding Clause 22, and bearing in mind that some Committee members would speak to the JSCI Chairperson that afternoon on his view of the JSCI's mandate, and whether legislation with regard to the Committee should be amended, no changes were proposed to the Clause.
Ms Lenzie informed the Committee that legislation did exist which made accounts mentioned in Section 22(1) the responsibility of the JSCI. Her Department requested time for further research into the matter.
The Chairperson asked if the results of the research could be made available by the following morning, which would obviate the need to request the presence of Mr Cwele, the Chairperson of the JSCI.
Dr Woods stated that there was a question mark over Section 23(5), insofar as it suggested that National Treasury was able to overrule Parliament.
Ms Lenzie concurred with Dr Woods, that the provision in Section 23(5) was too broad.
The matter was marked for future consideration.
Mr Gerber thought that Section 25(1)(c) was somewhat incomplete. It was agreed that this provision would be clarified.
The Committee was told that the Office of the Auditor General deemed Adv. Grové's proposed amendment to Section 25(3) as unnecessary.
Mr Gerber suggested adding the number and date of the Act mentioned in Section 27(1).
The Committee agreed to the changes as proposed by Adv. Grové, to Sections 28(3)(b), and 28(4)(a).
Mr Gerber suggested marrying Section 28 with Clause 61 of the PFMA.
Mr Gerber noted that Section 37(3) made it appear that the Deputy Auditor General was able to authorise other people to withdraw funds, and that those people in turn could authorise others.
Mr Bell suggested the removal of the second "authorise" in the provision.
The Auditor General agreed that the second part of the provision would be withdrawn, adding that it had been inserted as an operational issue.
Dr Woods suggested that the provision made it appear as though the Deputy Auditor General would have total authority, as a single person, to sign cheques.
The Auditor General informed the Committee that the organisation required two signatories for the signing of cheques.
Since it appeared, though, that the provision in Section 37(3) overrode the requirement for two signatories, the Auditor General requested an opportunity to consider the wording in order to make improvements.
The Committee agreed with the amendment proposed to Section 38(1) by Adv. Grové.
Dr Woods requested the replacement of the word "consultation" with "agreement" in Section 38(4).
Mr Bell suggested the following amendment to the provision: "The Auditor General may, after consultation with the National Treasury and agreement with the oversight body ...". The Committee would consider the provision further.
On Section 39, Dr Woods established that the National Assembly would appoint the auditors of the Auditor General.
The Committee agreed to the restructuring and deletions of Section 38(1), as proposed by Adv. Grové.
Mr Gerber noted that "AG" in Section 40(4)(b) should be written in full. He further suggested inserting the word "from" before "1 April" in Section 41.
The Committee agreed to the amendment to Section 39(2)(c), as proposed by Adv. Grové.
Mr Bell had assumed as a result of Section 37 that only the Auditor General was allowed to open bank accounts. Since Section 60 provided that the Auditor General could delegate any power, it appeared as though the Auditor General could delegate somebody to open a banking account.
The Auditor General responded that the Auditor General was allowed to delegate somebody, in writing, to open a banking account, on his behalf.
On Section 60(1), Dr Woods asked if it was possible for the Auditor General, in exercising search and seizure powers, to wrongly search somebody's home, possibly with negative consequences for that individual, and to excuse himself afterwards by saying that he was acting in good faith.
Mr Botes responded that "good faith" would have to be proven by the Auditor General.
Ms Lenzie concurred with Mr Botes, saying this burden of proof upon the Auditor General provided for a limitation of his powers.
Mr Gerber referred to Section 66(1), which provides that the Auditor General must submit regulations to the Speaker for tabling in the National Assembly. He wondered if something should be built into the provision, stipulating that those regulations should be referred to the oversight mechanism for the accountability of the Auditor General.
The Chairperson said that Mr Gerber was assuming, by his statement, that the Speaker would not inform the oversight body of the regulations.
The Auditor General suggested, in order to accommodate Mr Gerber's point, that under Section 66(2), they provide that "the Auditor General must, after consultation with the oversight structure, submit the regulations.
Dr Woods observed that by virtue of Section 60(4), there would no longer be an Audit Commission. Since the Committee had made a decision to keep the Audit Commission running until it was replaced by an oversight structure, they had to ensure that they were not in breach of Section 60(4).
Mr Kamedien drew the Committee's attention to Section 65(3) of the Bill, which effectively ensured that the Committee would not be in breach.
Mr Gumede asked if the auditing of traditional leaders, who received finances from the state, was incorporated into the Bill.
Mr Tarr asked if the monies received were simply in the form of grants to the traditional leaders, in which case there should be no audits. If auditing was necessary, it would probably be because the traditional leaders were an institution of the state, or a department.
The Auditor General referred the Committee to Section 4(1) of the Bill, which said that the Auditor General must audit and report on the accounts, financial statements and financial management, of all municipal entities. He could not tell if traditional leaders fell within municipalities, or municipal entities. Subsection (3) provides that the Auditor General must audit the accounts, financial statements and financial management of public entities, and (b) provides the same for any other institution not mentioned in Subsection (1), and which is funded from the national or provincial revenue fund, or by a municipality authorised in terms of legislation. For that reason, he felt that traditional leaders were covered in the ambit of those institutions which must be audited.
With regard to the proposed oversight structure, Mr Tarr commented that the only body which Parliament could create, would be a standing committee of audit. He wondered if that should not be the name given to the committee in the Bill.
There was some discussion surrounding the nature of the oversight structure, specifically whether it should be a specialist body, overseeing solely the Auditor General, or other issues, as well. No decisions were made, and the matter was dropped.
Mr Botes asked that the Ad Hoc Committee consider changing Clause 67, providing for the commencement of the Act, to "and takes effect on 1 April 2004". The provision had previously been left over for proclamation, because the Committee had no clarity on Chapter 5. It would probably mean that the Audit Commission would come to an end on 31 March 2004.
The Chairperson asked if it was viable for the Committee to include the commencement date of the Act into Section 67, or if that was the prerogative of the President.
Mr Botes explained that there were two options. If it were left to the President to decide when the Act would come into effect, he would consult with the Minister concerned. Otherwise, Parliament was able to legislate commencement. He said the Office of the Auditor General preferred to have certainty regarding the Act's commencement, in order to get their own processes in gear.
The Chairperson asked for responses to Mr Botes' proposal.
Dr Woods offered that if the elections were only held in May or June, there could be a three-month period without an oversight body. However, on the election of a new parliament, one of the first actions would be to set up a Rules Committee, which would begin to set up various other committees, of which the oversight structure should be one.
The Office of the Auditor General would draft a statement to the effect that the Audit Commission would cease to exist at the end of the existing term of Parliament, to be formally put before the Committee at its next sitting.
The meeting was adjourned.
No related documents
- We don't have attendance info for this committee meeting
Download as PDF
You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.
See detailed instructions for your browser here.