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

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Finance Standing Committee

09 September 2008
Chairperson: Mr N Nene (ANC)
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Meeting Summary

The Parliamentary Legal Adviser briefed the Committee on the amendments to the draft Financial Management of Parliament Bill, resulting from earlier deliberations on the Bill.  Amendments to Clauses 6, 9, 16, 34, 47, 48, 50 and 56 were presented.  References to the Public Finance Management Act were omitted, the role of the Secretary to Parliament as the Accounting Officer and provisions concerning an acting Accounting Officer were clarified, the need for standards to be set that were consistent with the standards applicable to organs of state was accommodated, the requirements for the Chairperson of the internal audit unit and the determination of remuneration for the members of the audit committee were included.

Members were concerned that Parliament was unlike any other organ of state and that the concept may be too wide to apply to Parliament.  Clarity on the standards applicable to the management of Parliament’s financial affairs was requested.

The proposed amendments were to be included in the Bill.  Confirmation on whether consultation with the Joint Rules Committee needed to take place was required before the Committee proceeded further with the Bill.

Meeting report

Draft Financial Management of Parliament Bill
The Chairperson noted that extensive work had been done on the Bill to date.  Comments received from the Minister of Finance on the Bill were accepted by the Committee.  The Bill was re-drafted to accommodate the Minister’s comments.

Adv Frank Jenkins (Parliamentary Legal Advisor) confirmed that the consultation with the Minister of Finance required by the Public Finance Management Act (PFMA) had been concluded.  His memorandum dated 11 August 2008 was distributed to the Members of the Committee.  The Minister’s comments resulted in amendments to Clauses 23 and 72.  Clause 23 (1) was redrafted to give effect to the provision that Parliament was not required to return any money appropriated or approved but not spent to National Treasury.  Clause 72 was amended to remove any duplication, in the interests of good legislative practice.  Clause 13 (1) (a) of the PFMA was repealed and Clause 13 was further amended to remove any reference to Parliament.

Adv Jenkins referred to the concerns raised by the Committee during earlier deliberations on the Bill. Clause 6 made provision for the Secretary to Parliament to administer the Act, under the control of the Executive Authority.  The Secretary was also the Accounting Officer and Members had expressed concern that the Act was administered by the Accounting Officer.  He said that the responsibilities of the Secretary were clearly defined and the issue was therefore not a major concern.  He conceded that the wording of the clause could create confusion and suggested that Clause 6 (1) was amended to simply read “The Secretary to Parliament is the Accounting Officer”.

Clause 9 made provision for an acting Accounting Officer to carry out the duties of the Secretary in his absence.  Concerns were raised that the provision created a Deputy Secretary position that may result in a problem for Parliament in future.  Adv Jenkins suggested that Clause 9 (a) was omitted and Clause 9 (b) was elevated and amended to remove explicit reference to the role of the Deputy Secretary.  He pointed out that the PFMA did not include such explicit details either.

Clause 16 (2) (h) made provision for the format of Parliament’s annual budget.  Parliament’s budget was drawn up in accordance with regulations and National Treasury circulars and instructions.  The intention of the provision was not for the PFMA to be prescri to Parliament, but to provide for consistency with other organs of state.  Adv Jenkins conceded that the concept of “organs of state” was very wide and suggested that Clause 16 (2) (h) was amended to allow for the drafting of regulations by the Executive Authority in accordance with Section 65 of the Bill.  When read in conjunction with Clause 2, it was clear that the intention of the provision was to promote uniformity and consistency in the crafting of the budget.

Discussion
Dr D George (DA) agreed that clear standards needed to be applicable.  However, Parliament could not be compared to other organs of State.  He asked if it was possible for the provision to be narrowed down to apply specifically to Parliament.  The suggested wording of the clause was acceptable if it was possible to narrow down the reference to “other organs of state”.

The Chairperson suggested that alternative wording was considered and that the issue was flagged for future discussion.

Adv Jenkins explained that Clause 34 made provision for Parliament to provide details of funds transferred to political parties and the application of the funds in the annual financial statements.  The provision required each political party to submit financial reports to Parliament.  The Bill was not intended to govern the financial statements of political parties and he suggested that sub-clauses (h) and (1) were omitted from Clause 34.

Clause 47 (5) made provision for the remuneration of members of the audit committee.  Adv Jenkins suggested that reference to the PFMA was omitted and the clause re-phrased to allow Parliament to determine the remuneration of members of audit committees by taking the tariffs determined by the South African Institute of Chartered Accountants and National Treasury into account.

Adv Jenkins suggested that Clause 47 (4) was amended to include details of the requirements for the Chairperson of the audit committee.

Clause 50 made provision for the establishment of an internal audit unit.  Clause 48 provided for a charter for the internal audit unit.  Adv Jenkins suggested that the wording of Clause 48 was amended to make provision for the charter to be drafted in consultation with the internal audit unit.  The amendments to Clause 50 omitted reference to the PFMA and made provision for standards to be in accordance with the standards set by the Institute of Internal Auditors.

Clause 56 made provision for annual financial statements.  The suggested amendments removed reference to the PFMA and allowed for the Executive Authority to determine the applicable standards.  Adv Jenkins explained that both “generally recognised accounting practice” and the Accounting Standards Board were defined in the Bill.

Adv Jenkins said that “organ of state” was defined in the Constitution.  He agreed that Parliament differed from other Government Departments and did not quite fit into the constitutional definition.  He suggested that further research was undertaken to clarify the definition of the institution of Parliament in the Bill.

Dr George said that Parliament managed its finances in a particular manner.  He wanted a clear statement of the applicable standards.  Standards must be consistently applied and there must be no confusion over which standard was applicable.

The Chairperson pointed out that the Executive Authority was tasked with setting the standards.  Section 2 of the Bill specified the requirements that had to be met in the setting of standards.

Adv Jenkins said that the process of making the regulations was set out in Clause 65.  The regulations may not undermine the purpose of the legislation.  Schedule 4 made provision for transitional arrangements and until the regulations were promulgated, Parliament remained bound by the existing legal requirements in the PFMA.  He advised that the regulations were in the process of being drafted by Treasury and needed to be in force by the beginning of the next financial year.

In conclusion, Adv Jenkins suggested that the proposed amendments were included in the draft Bill.  Because the Bill came from Parliament itself, he was not sure if consultation with the Joint Rules Committee was required.  He was aware that a letter from the Chairperson had been sent to the Speaker.  He understood that the intention was to suspend the rule but required confirmation.

The Chairperson requested that the further passage of the Bill was clarified with the Joint Rules Committee and with the Speaker before the clauses in the Bill was accepted by the Committee.

Mr K Moloto (ANC) asked why the Bill could not be approved by the Committee, on the assumption that the amendments will be included in the final version.

The Chairperson explained that procedure required all the amendments to be included in the Bill before the Committee adopted the clauses.  He thanked Adv Jenkins and the Members for their participation.

The meeting was adjourned.

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