Financial Management of Parliament Bill [B74-2008]: deliberations

Meeting report

FINANCE PORTFOLIO COMMITTEE
10 MAY 2006
FINANCIAL MANAGEMENT OF PARLIAMENT BILL: DELIBERATIONS

Chairperson: Mr N Nene (ANC)

Documents handed out:
Overview of the Financial Management of Parliament Bill: PowerPoint presentation
Response to comments on the draft Financial Management of Parliament Bill

SUMMARY
The Committee went through submissions from National Treasury and gave the Treasury to respond to the response given by the drafting team. There was agreement that the issue of transfer payments to constitutional institutions should be dealt with in a separate process. The Committee should not be stopped from its work by the fact that Treasury was in the process of amending the Public Finance Management Act. Some amendments to the Act would have some impact on the Bill. The drafters of amendments to the Act should be sensitive to the contents of this Bill. The accounting officer of Parliament would be expected to report all instances of unauthorised expenditure.

The Committee also considered submissions from Parliament. Members agreed that Parliament was autonomous but felt that there was no need to treat Parliament differently to other government Departments. There would be an extra code of ethics that would apply to the executive authority of Parliament. The Committee would have to consider the policy on party funding before it could make a decision on how to regulate this matter.

MINUTES
Mr N du Plessis (Treasury Chief Director: PFMA Implementation), Prof C Murray (Legal drafter), Mr C Barberton (Legal drafter), Mr P Benjamin (Legal Drafter) and Adv F Jenkins (Parliament: Legal Adviser) attended the meeting. Mr C Barberton summarised yesterday’s discussions on Treasury's submissions and Mr du Plessis commented on the Committee's views on the submissions.

Mr Barberton said that Treasury had recommended that the Bill should provide for transfer payments to constitutional institutions on the Vote of Parliament. The Committee had indicated that a process was underway to review the governance structures of these institutions. Whilst the Committee supported the proposal, it was felt that the issue should be left to a separate process.

Mr du Plessis agreed that the issue should be addressed at a later stage.

Mr Y Bhamjee (ANC) asked how the amendments to the Public Finance Management Act (PFMA) would impact on the Committee’s work.

Mr du Plessis replied that Treasury was in the process of drafting amendments to the PFMA and the amendment Bill might be tabled towards the end of year. The issue under discussion could be accommodated in the amendment Bill.

Mr Bhamjee asked how the conflict, if any, between this Bill and the PFMA Amendment Bill (once introduced in Parliament) would be resolved. The current arrangement was that constitutional institutions were funded from Votes of various departments. The proposal was that they should be funded from Parliament and there seemed to be general agreement with this. One could allow for transfer payments in the PFMA Amendment Bill. It was obvious that Treasury would focus on this issue only when drafting the amendments to the PFMA.  The drafters PFMA should be sensitive to this Bill when drafting the amendments to the PFMA and note that it was a special kind of legislation. 

The Chairperson said that Mr Bhamjee had raised a valid point. It was important to sensitise the drafters of amendments to the PFMA to the contents of this legislation.

Mr Barberton said that in terms of clause 64(1) and (2) of the Bill, the executive authority had the power to make regulations or issue instructions not inconsistent with the Bill.  Regulations and instructions could prescribe that the prior approval of the executive authority should be obtained.  Treasury submitted that provisions should be included in the Bill to allow for approval by the executive authority of departures from regulations and condonation of non compliance with regulations on good grounds. The Committee’s response was that it wanted to discuss the issue further in order ensure that it did not create an opportunity to override the regulations willy nilly.

The Chairperson said that the Committee was concerned that the submission, if accepted, might have unintended consequences.

Mr du Plessis said that the submission was a very practical proposal and was one of the issues identified following the implementation of PFMA. Irregular expenditure could arise as a result of non-compliance with legislation and regulations. One of the current regulations provided that a Department could not increase its personnel expenditure without approaching Treasury. This was a good principle but in practice departments had increased personnel expenditure and this was regarded as an irregular expenditure. It was then left to Treasury to condone what it should have approved upfront. The expenditure would be classified as irregular expenditure and referred to Parliament for it to deal with.

The Chairperson asked how this was taken care of in the PFMA.

Mr du Plessis replied that there was a provision that dealt with the matter. Treasury would include a condonation clause in the PFMA Amendment Bill. 

Mr Barberton said that Treasury submitted that the definition of unauthorized expenditure should be reconsidered.  It included expenditure from donor funding.  Donor Funding should be dealt with in accordance with the Reconstruction and Development Programme Fund Act, 1998 (Act no. 79 of 1998). The drafting team had looked at the provision of the RDP Fund Act and it applied to donor funds for use by the Executive and not the Legislative. It could be argued that it was not relevant to donor funds applicable to Parliament. The Committee was of the view that the intention of the clause was correct. The problem was its application to unauthorised expenditure. He wondered if the definition could be worded differently. 

Mr du Plessis said that donor funds did not form part of the Votes of national Departments.

Mr Barberton proposed to extract donor funding from the definition and include it as separate issue not linked to unauthorised expenditure.

Dr van Dyk (DA) asked what was the procedure for dealing with this issue in the PFMA.

Mr A Moloto (ANC) said that the Committee wanted Parliament to account for donor funding. Donor funding could be extracted from the definition as long as Parliament would still be required to account.

Mr du Plessis said that although the expenditure was from two sources, donor funds were included in the financial statements of the departments. The Auditor General (AG) audited statements of donor funding. There would be no harm done to accountability should donor funding be taken out of the definition. 

The Chairperson told the drafter to move the donor funds and put them somewhere else.

Mr Barberton said that Treasury had also submitted that any revision of an appropriation should be made by a national adjustments budget subject to the criteria (purposes) for which the Minister of Finance might provide for funds in an adjustments budget. The Committee had suggested that to facilitate the consultation process clause 15(2) should be repeated in clause 16.

Mr du Plessis said that the problem was with the wording of the clause. He agreed that the suggestion by the Committee would solve the problem.

Mr Barberton said that clause 19(3) dealt with virements and whether the accounting officer could approve virements from funds appropriated for specific purposes. Treasury had indicated that a similar provision in the PFMA had proved impractical. The Committee should consider the redrafting of the clause so that there could be transfers of money from one programme to another. The concern was that to allow the accounting officer to transfer funds from one programme to another would amount to the dilution of the initial intention of Strategic Plan and the appropriation of funds.

Mr du Plessis said that a similar provision had caused problems with implementation of PFMA. The intention was good but in the case of capital expenditure and transfer payments, the PFMA was very specific. One could budget a certain amount of money for capital projects but end up with some savings as a result of prices dropping. He gave an example of transfers to the Aids Trust. The Trust had done what it was supposed to do but still ended up with huge savings. The Department of Health wanted to use the saving for other purposes related to HIV but Treasury could not approve the use of the funds because the Act was very specific. He appealed to the Committee to give more flexibility to departments. An independent person would have to approve the use of the savings. 

Mr Barberton said that one way of dealing with the dual roles of the accounting officer was to require that, when acting as the Treasury, all decisions should be reported to the Joint Committee. This would provide transparency with regard to decisions of the accounting officer.

Mr Bhamjee said that the Committee should look at the clause closely because it could be abused.

Dr van Dyk said that clause 19(1) and 19(3) (a) were contradictory.

Mr Benjamin said that it seemed that there was agreement on the concept but the question was whether it was adequately covered in the Bill.

Mr Bhamjee asked what role would the Joint or any Committee play. How would the Committee support or endorse the suggestion by the executive authority.

Mr du Plessis said that one would like to see unspent funds being taken into account when compiling the next budget.

Mr Barberton said that there was a submission that clauses 20 and 21 should be deleted as Parliament was currently not required to surrender surplus voted funds.  Savings could not realize from a direct charge against the National Revenue Fund.  Only actual expenditure could be withdrawn from the National Revenue Fund as a direct charge. He suggested that the clauses should be redrafted to ensure that the current situation regarding unspent appropriated funds was fixed in legislation. The provision should also require that Parliament would have to approve the use of such unspent funds going forward. He also suggested that clause 21 should be deleted and clause 20 be redrafted. The new clause 20 would formalise the existing informal arrangement in terms of which Parliament did not have to return unspent funds. The funds would no longer be called appropriated funds but own funds. The Committee had agreed with the revised clause 20.

Adv Jenkins said that asked if Parliament was not required to return unspent funds in terms of the Powers and Privileges Act, 1963. He was of the view that the Powers and Privileges Act did not contradict section 13 of the PFMA.  Parliament only kept unspent funds that were part of its own revenue or donor funds. Unspent money from money that was received from the National Revenue Fund (appropriated funds and not direct charges) should be returned in terms of legislation. This had been an issue since 1998. Parliament could keep unspent funds only with the consent of National Treasury. The current position was more or less similar to the one provided in the Bill. There was a need for clarity on this matter.

Mr Barberton said that the discussion in relation to clause 55(2) (d) was whether financial statement should include particulars of all unauthorised or “material” unauthorised expenditure. The accounting officer would be forced to give details of even minor expenditure should the Bill refer to all unauthorised expenditure. The word “material” would require the accounting officer to focus on unauthorised expenditure that involved large amounts of money. The PFMA, in the case of irregular expenditure, referred to material expenditure.

Mr du Plessis said that the Bill should refer to all unauthorised expenditure. Even an overspending of R1 should be reported and be left to Parliament to approve.

Mr Moloto said that the views of Treasury were valid. The accounting officer should account for every single cent. 

Mr Barberton said that the issue was not that certain amounts should not be reported but whether the accounting officer should give details of transaction that gave rise to the expenditure. There was a need to provide a new wording that would provide for the reporting of all unauthorised expenditure. Transaction that had given rise to the unauthorised expenditure should be reported separately.

Mr du Plessis agreed with Mr Barberton. Departments should be allowed to group same categories of irregular expenditure. Each instance of unauthorised expenditure should be listed separately so that Parliament could look at independently.

Mr Barberton said that another submission provided that the approval of regulations issued by the Executive Authority by Parliament might be impractical.  Draft regulations should be published for public comment in the National Government Gazette before their enactment. This submission was in relation tot clause 63. The Committee was of the view that Parliament should approve the Regulations and that they should be published in the gazette and tabled in Parliament before their enactment. 

Mr Moloto said that the Regulations should be tabled in Parliament if they were minor in nature.

Mr Bhamjee said that Members of Parliament would generally insist that they should have oversight on legislation before it was passed. There was no culture of actually studying Regulations and departments were well aware of this. Regulations were often passed without Portfolio Committees making any input on them.  It was important to create such a culture.  The Committee should ensure that the Regulations that would be passed got their necessary attention.

Dr van Dyk wondered if the Bill should not provide that the Regulations should be published for public comments to be considered by the Committee.

Mr Barberton replied that there was publication for public comment and for promulgation. The Joint Committee would recommend whether or not to approve regulations. The Committee could even decide to have the Regulations published for comment. This could be appropriate in certain instance. 

Professor Murray focussed on instructions versus Regulations. She said that Parliament sat only part of the year. It might be inappropriate to have instructions (issued on an ad hoc basis to respond to certain issues) approved by Parliament.

Dr van Dyk said that the intention of the clause was that Regulations should come to Parliament.

Mr Barberton said that the drafting team had not yet drafted the clause but the intention was to draft a clause that would require that the Regulations should be referred to the Joint Committee and tabled in Parliament.

Mr B Mnguni (ANC) said that the Committee should be careful not to encroach on administrative issues that the administrative section of Parliament could do. Committees should do their oversight work.

Mr Bhamjee said that the Joint Committee should be consider the Regulations in time and should be sent a reminder should it not attend to the Regulations timeously. Some departments did not follow up on Regulations and the Regulations were published without any response from the Committee. In the event of no response from the Committee, the Chairperson and the Secretary of the Committee should be held accountable.

The Chairperson said that it was up to Committees to understand the importance of doing their work.

Mr du Plessis said that there were differences in the PFMA and the Municipal Finance Management Act with regard to this issue. The PFMA required publication for public comment and the MFMA required that the Regulations should be submitted to Parliament for its scrutiny.

Prof Murray was a little bit confused by Regulations and instructions. She said that an Act contained the skeleton and Regulations provided the meat. Regulations had the force of law once promulgated whereas instructions were not legally binding as regulations were. Instructions could be given to an employee by any superior official in the workplace. The effect of instruction could be slightly different in the context of National Treasury in that the instructions could be directed to people in another government Department to do certain things. In the context of Parliament, one would have the executive authority or the accounting officer issuing instructions to their own staff. Failure to comply with the instructions would not constitute a breach of law but a simple disciplinary matter. It would be inappropriate to require that instructions should be sent to Parliament for approval. Only Regulations should be approved by Parliament.

The Committee agreed with Prof Murray's views. 

Mr Benjamin said that maybe the Bill should allow for the issuing of instruction in any topic where there could be Regulations.

Dr van Dyk said that Regulations would be issued by a specific Minister and instructions would come from the accounting officer of the specific Department. The difference with Treasury was that over and above the Regulations there might be instructions that applied to other Departments.

Mr du Plessis said that Dr van Dyk was correct.

Mr Moloto asked the drafters come with proposal on how to address the matter.

Mr Barberton said that there was also a proposal that norms and standards should be included in Schedule one of the Bill. The Committee felt that there was a need to cognisance of fact that the Committee did not want to infringe on the independence of provincial legislatures by over prescribing to them.

Submission by Parliament
The Chairperson invited Adv Jenkins to take the Committee through Parliament's submissions. 

Adv Jenkins said that the submission reflected views of the different section managers in Parliament. The structure of the long title and preamble of the Bill was inconsistent with the usual structure of legislation of this nature. Whereas the preamble preceded the long title and the arrangements of sections, the usual structure was that the long title was followed by the arrangement of sections and then, if at all, the preamble. Such structure appeared more logical than the one followed in the Bill. The preamble was also not a necessary accessory to the Bill as it merely reiterated what was already contained in the long title and the objects clause. Traditionally, preambles were found in noteworthy legislation, for example, the Constitution. He agreed that it was normal practice to include preambles in legislation required by the Constitution.

He said that since the Bill made provision for norms and standards applicable to provincial legislatures in Schedule 1, the long title should include a specific reference to this. Section 216 of the Constitution required national legislation to provide for financial management and good governance. Section 116 of the Constitution provided that provincial legislatures could determine their internal proceedings and procedures. There was no intention to overstep the boundary. He indicated that he had had a meeting with the Chairperson of the National Council of Provinces (NCOP) who indicated that provinces were in favour of having a chapter in this Bill that would set out the provincial legislatures' financial management obligations. He suggested that the Committee should try to get some input from the legislatures. The Powers, Privileges and Immunities of Parliament and Provincial Legislatures Bill contained a separate chapter that indicated provisions that applied to provincial legislatures. It was not desirable to have nine pieces of legislation that might not even be uniform coming from provinces.

Mr Moloto said that the Committee had a long discussion on this issue when it started processing the Bill. He asked the drafters and Adv Jenkins to resolve the matter together and bring a proposal to the Committee.

Mr Bhamjee asked if the political heads of Parliament had made any input on the Bill.

Adv Jenkins replied that a submission had been given to the Secretary to Parliament who had intended to discuss it with the Speaker and the Chairperson. He could not say if the discussion had taken place. The political office bearers where not part of the meetings in which the submissions were drafted.

He said that the Bill provided a definition for “official”, which referred to “employee of Parliament”. He proposed that the word "official" should be replaced by "employee" throughout the Bill for the sake of consistency. He agreed with the response of the drafting team on this matter. The Bill required the accounting officer to discipline employees. The question was whether the word "employee" included contractors. This was not legally possible at that point in time. There was a need to look at the definition carefully and to exclude those who could not be subjected to discipline in terms other provisions of the Bill.

Adv Jenkins said that the submission on the definition for “standards of generally recognised accounting practice” was based on an erroneous provision of the PFMA. He withdrew the submission. He noted that the Bill contained no definition of "this Act". He proposed that "this Act" should be defined and should include the regulations. He also said that the finance section of Parliament had problems understanding the definition of unauthorised expenditure. It seemed that any expenditure that was not in accordance with the Vote would be called unauthorised expenditure. It looked like one could never have any virement or apply savings to any other purpose even if related to the purpose for which the funds were appropriated.

He said that Parliament was of the view that there were instances were the Bill had over-regulated things especially in relation to the establishment of Committees and membership of the Committees. The Constitution provided for Joint Committees to do legislative work for Parliament. It was not imperative to have Joint Committee that would conduct oversight on Parliament. Parliament had adopted certain structures for oversight: the Joint Budget Committee, The Budget Forum and the Oversight Authority. All of these were joint structures. The concern was that the Joint Committee referred to in the Bill would operate in terms of the Bill and all other rules that applied to Committees. Could Parliament create an alternative structure should it decide to do so at a later stage? Since this was a possibility, it was felt that providing for a specific Committee in the Bill might remove some of the elasticity that Parliament wanted to have in the management of its financial affairs without compromising accountability, transparency and good governance.

Whilst reference in clause 2 to oversight through Joint Committees could not be as problematic, clause 15 could prove to be very problematic. It would be problematic to say that the executive authority should be held accountable for the budget in which they had no say. The Committee referred to in clause 15 had zero accountability. Committees were merely extensions of the House and providing for Committees in the legislation cemented the position of the Committee. He conceded that Regulations could be approved by a Joint Committee. There would be questions asked should Parliament decide that the Budget Forum or the Oversight authority should approve the budget. One of the questions would be that 'this is not the joint Committee referred to in the Bill". Parliament would then be forced to stick to the legislation until it was amended. The Secretary was very much uneasy about this kind of regulation in the Bill.

Dr van Dyk said that it was not totally correct to say that the Speaker and the Chairperson had no say in the final budget yet they had to be accountable. The responsibility referred more to the management of the budget.

Mr Moloto said that the Bill referred to a Joint Committee. There was nothing in the Bill that prohibited Parliament from calling the Committee in a different name. It could be called the Oversight Authority or the Budget Forum should Parliament decide to use any one these names. The point was that the accounting authority could not be part of the Committee because they could not account to themselves. The Minister of Finance did not sit of the Portfolio Committee on Finance. He had to come and account to it. In the case of the accounting officer forming part of the structure, they would have to excuse themselves when the Committee discussed issues that had to do with Parliament.

Prof Murray understood that Committees did not make decisions and that decisions were made by Parliament. She asked if there was any reason why the Bill could not allow the Committee to make decisions.

Adv Jenkins said that it was true that there was a role for the executive authority to play in relation to the budget. The executive authority was required to draft the budget and send it to the Joint Committee for approval. The Bill did not make it clear if the Committee could reject part of or the whole budget or even amend it. It did not seem that the Committee could take over the role of the executive authority and redraft the budget. The Committee could approve the budget should the legislation empower it to do so but it would be strange not to allow Parliament to approve the budget because it was its budget. It would be immaterial whether Parliament used the Budget Forum or the Oversight Authority as long as Parliament would approve the budget at the end.

He said that he was not bothered that much about the name of the Committee. The problem was that there no participation of the executive authority in the forum. It was inappropriate to have the executive authority sitting on the oversight body when the oversight body was conducting oversight on it. The approval of the budget was a decision making power that, although closely related, was different from oversight.

Mr Bhamjee said that the oversight role was crucial. This was the role of Members of Parliament. The Strategic Plan was crucial and gave direction on how much money would be spent. It also ensured that officials were spending money effectively. Politically, it revealed if the Minister had delivered in terms of policy objectives. Any Committee had the right to reject a specific Budget Vote. The Minister would then have to go back and re-submit the budget. The Minister also have to determine how to adjust figures and this was a separate issue to the right of Parliament to adjust the figures. Parliament was involved in the Medium Term Expenditure Framework process. The suggestion put forward by Parliament was weak because Parliament was not different from other departments. He accepted Parliament's autonomy and sovereignty. Parliament should come up with something different to motivate for a different treatment.

Mr Mnguni said that the Joint Committee should function that like any other parliamentary Committee.

Mr Moloto said that the Committee should also consider that final the budget would be approved by Parliament collectively. This was simply a process to submit the budget to the Minister of Finance. Members of Parliament should be able to contribute to the budget process.

Adv Jenkins had issues with the approval part. There were various ways of doing it. It was not desirable to create extra bureaucracy for Parliament by writing roles for Committees in legislation. 

Mr Barberton said that the drafting team had discussed the need to include an explicit clause setting out the composition and the role of the Joint Committee.

Prof Murray said that the decision was not to specify the Committee in too much detail. The decision was taken in a meeting that Mr Barberton had not attended. The Committee was referred to in causes 2 and 15 but not introduced upfront.

Adv Jenkins said that the repetition of definition of "executive authority" in clause 3 was unnecessary. He felt that clause 3(3) should be deleted. Clause 3(3) dealt with the code of ethics of the executive authority. The issue was why should there be an extra code of conduct for the executive authority. The clause was not properly developed and Parliament was concerned that about introducing an extra code of ethics. The issue of conflict of interest and having a bias when drafting the budget would be solved by the code of ethics of Members of Parliament. It might be the case that there was a need for extra rules that would apply to the executive authority.

Mr Moloto disagreed with the view. The executive authority’s responsibilities were different from those of ordinary Members of Parliament. There was a need for the extra code of conduct. He said that he did not know any piece of legislation that prohibited any Member of Parliament to tender with Parliament. This Bill would prohibit such kind of conduct.

Mr Barberton said that in this case the executive authority was analogous to Ministers. The code of conduct should speak to the roles of the executive authority.

Adv Jenkins said that political authority and responsibility in terms of this Bill lied with the executive authority. Although they had certain administrative functions, the bulk of the administration of this legislation would lie with the Secretary as the accounting officer.

Mr Bhamjee said that the Secretary was the administrative head and took guidance from the Strategic Plan. It would be the political head who would determine if the administrative head had discharged his or her obligations.

Adv Jenkins said that clause 7, which provided for an Acting Accounting Officer, was restrictive. The clause did not allow the Executive Authority discretion to designate a person other than the Deputy Secretary to perform the duties of the Accounting Officer. The Executive Authority still remained accountable for the implementation of the legislation. Where it allowed another person to be designated, it was subject to conditions. It should furthermore refer to an Acting Accounting Officer in the clause, and not just in the heading, in order to be consistent with the definition of Accounting Officer.

Dr van Dyk said that the executive authority had the power and knowledge to appoint a person who would perform the functions properly.

Mr du Plessis said that the principle in drafting the PFMA was that the head of the Department should be the accounting officer. If the head was not there, the acting head became the accounting officer.

Adv Jenkins Clause 14 provided that the Accounting Officer should prepare a draft budget for Parliament and present it to the Executive Authority at least 10 months prior to the start of the financial year. Due to the short period in which to prepare such a draft budget, Parliament was of the view that it made more sense to submit the draft budget six months prior to the start of the financial year. From a purely practical perspective such period was more realistic. There was a need to think about staggered implementation of the legislation in case there could be problems during its implementation. He said that Parliament had a smaller administration section compared to other government Departments but had special challenges at times. The Bill should try and accommodate cases wherein Parliament could find it difficult to meet the deadline for valid reasons.

Mr Moloto said that the administration part of Parliament small and this meant that even its administrative functions were small compared to government Departments. This meant that it should not be difficult for it to comply with the deadlines.

Mr Barberton said that Parliament was working in an environment where there were multi year budgets. This meant that it would not have to work from the scratch when preparing a budget for the next financial year. The idea was that discussion should begin between the administration and members of Parliament as to what should go into budget and the Strategic Plan. The Bill did not envisage that this would be the final document.

Adv Jenkins said that clause 15 was inconsistent with the decisions of Parliament in regard to its budget process. As the Constitution authorised Parliament to control its internal arrangements, proceedings and procedures (sections 57(1) and 70(1)), the Bill should allow Parliament to determine its internal procedures. 

Adv Jenkins said that there were two basic support systems for political parties. One of them was the constituency funding that was given to political parties represented in the National assembly. The second one was for members of the Members of the National Assembly. A distinction should be drawn between the two especially when it came to reporting because they were from different sources. He agreed with the proposal made by the drafting team on this issue because it was very broad and could include any kind of support that Parliament might want to give at a later stage.

Mr Mnguni said that the Committee should go through the policy on party funding before endorsing any provision on party funding.

Mr Moloto wondered if the policy had any authority in Parliament and if all political parties had adopted it. 

Adv Jenkins was not aware of the policy. He knew that a policy being developed in terms of constituency funds and political parties were usually afforded an opportunity to make their input.

Mr Moloto said that the AG should audit funds in accordance to the policy adopted or agreed upon by Parliament. He assumed that there would be consultation with political parties on the policy.

Mr Bhamjee said that the policy should be linked to the Strategic Plan because it cost money and should be reflected in the plan. He wondered what would happen if the policy was not reflected in the Strategic Plan and a Department or Parliament informed the National Assembly that it would introduce a policy in the middle of the year. The question would be where would the money needed for the introduction of the policy come from.

Mr Barberton said that the reality was that sometimes the Executive developed policies mid year or during the course of speeches and wanted them implemented. There could be some difficulties if the policies were not accommodated in plans for that particular year. The implementation would then have to be postponed until the following year. One was working in a very strict environment of enforcing plans. Some plans could be accommodated within existing budgets and the administration would then be required to massage the numbers to accommodate the policy imperatives.

Adv Jenkins replied that ideally a Strategic Plan should give a five-year programme. This posed problems in programming and budgeting because unforeseen events could always arise during the five-year term.

Adv Jenkins was of the view that the provision in clause 33(6) dealing with penalties for late submission of financial statements was a matter that might be inconsistent with section 57(2)(c) of the Constitution insofar as it applied to parties in the Assembly forfeiting funds. The Constitution did not allow for the forfeiture of funds for failure to comply with accounting responsibility. The withholding of the funds would be acceptable for a reasonable time limit should the party not comply with the accounting requirements. Furthermore, the issue of enforcing compliance with audit requirements was a matter of policy that should be left for Parliament to decide.

He said that clause 42 created the impression that the Accounting Officer should notify the Auditor-General and the Executive Authority if a contract was concluded not in accordance with the supply chain management policy. He proposed that the clause should be redrafted to provide that the Accounting Officer should notify the Auditor-General and the Executive Authority in writing if a contract was concluded in respect of a tender, quotation, or other bid other than the one recommended.

Mr Moloto agreed that an explanation should be given for choosing a tender that was not recommended.

Adv Jenkins said that Clause 49(2) created the impression that the internal audit unit, which was part of the parliamentary service, was accountable to the audit committee, which was not part of the parliamentary service. The correct position was that the internal audit unit was accountable to the Accounting Officer. He understood that the clause reflected best practise in accounting. There were also concerns about the requirement that the audit committee should approve the audit procedures of the unit. The requirement in clause 47(2)(b) that the audit committee should meet at least four times a year was not practical as a minimum requirement. He proposed that the committee should meet at least three times a year.

The Committee was of the view that the audit committee should meet four times a year.

Adv Jenkins said that Clause 59(3) provided that the audited financial statements of Parliament should be referred to the Standing Committee on Public Accounts. He felt that this was inappropriate because SCOPA was a Committee of the National Assembly. Parliament should be allowed to create its own body to review its financial statements. Clause 64(3) provided for the coming into effect of regulations made by the Executive Authority. The draft Bill required the prior approval of these by Parliament. He was of the opinion that it was not necessary to require that the regulations made by the Executive Authority in terms of section 64(1) be approved by Parliament. Furthermore, the requirement that the Accounting Officer should publish the regulations was an internal matter that was regulated by the instructions from the Executive Authority to the Accounting Officer. The Bill could achieve the required objective by being more prescriptive in regard to where the regulations should be published and that these would become operative after such publishing.

The meeting was adjourned.