ATC130415: Report of Standing Committee on the Auditor–General on the study tour to Austria, dated 19 March 2013

Standing Committee on Auditor General

Report of the Committee on the Auditor–General on the study tour to Austria, dated 19 March 2013

Report of the Committee on the Auditor–General on the study tour to Austria , dated 19 March 2013

The Committee on the Auditor–General, having conducted a study tour to Austria from 6 – 13 October 2012, reports as follows:

1.Background and Introduction

The Committee on the Auditor–General (the Committee) undertook a study tour to Austria from 6-13 October 2012. The purpose of the study tour was to assess and learn more about Austria ’s performance in policy implementation and accountability. In addition, the Committee intended to get an understanding of how the Austrian Auditor-General is positioned within the state system of Austria . The motive behind this is to determine whether or not it is dependent or independent to the government as it is the case in South Africa, and if it is independent (as it was found),to what extent and how it relates to the Austrian Parliament.

Flowing from the above, one of the committee’s interest was to find out the process that Austria is following in appointing of the Auditor-General, which could be an important lesson or experience to the committee since it is expected to play a pivotal role in the appointment of the next Auditor-General of South Africa whose contract is due to expire by the end of 2013.

In order to fulfill its planned objectives, as highlighted in the above, the committee has met and interacted with the following individuals and institutions: South African Ambassador to Austria; UniCredit /Bank Austria; International Anti-Corruption Academy (IACA) of Austria; Austrian Parliament Committee on Auditor-General; Austrian Parliamentary Investigation Committee on Corruption; Austrian Auditor-General; International Chamber of Commerce; Provincial Court of Audit of Province of Lower Austria and Provincial Court of Audit of Province of Upper Austria.

In line with the above explanation, thus, this report considers and summarizes the critical issues/points emanating from the meetings held with the afore-said individuals and institutions. As such this report has grouped into one heading all the similar issues emanating from its interaction with the above-mentioned individuals and organizations and deals precisely with exceptional issues.

2. Delegation

The Committee delegation consisted of: Adv T M Masutha (ANC) – Chairperson and leader of delegation; Mr. A Moloto (ANC); Prof LBG Ndabandaba (ANC); Ms S Shope -Sithole (ANC); Mr. N Singh (IFP); Mr. J H Steenhuisen (DA) and Mr. N Koornhof (COPE).

The delegation was accompanied by the following parliamentary officials: Mr J Ramrock (Committee Secretary) and Ms Y Sili (Assistant to the Chairperson).

3. Political and Economic profile of Austria in brief

It is worth noting that this section is derived from the briefing made by the South African Ambassador in Austria to the committee and meetings held with the officials of the UniCredit /Bank Austria on the day 1(8 October 2012); and Austrian Parliamentary Committee on the Court of Audit (Auditor-General) and the Investigation Committee on Corruption on the 8 th of October 2012 and 10 th of October 2012 respectively. As transpired from these briefings and meetings, the following key political and economic issues are considered and unpacked accordingly.

Austria has a population of around 8.2 million people. It also has a federal parliamentary republic with a bicameral legislature; the Federal Assembly is composed of the Nationalrat (lower house), comprising 183 members (5 political parties) which are elected on a four-year term through proportional representation, and the Bundesrat (upper house), comprising 64 members, which are indirectly elected by the provincial assembly ( Landtage ) of Austria’s 9 federal states. The president is elected every six years and presently, Austria is under a coalition government; of which the next national elections are expected to be held in the autumn (September-November) of 2013.

According to the constitution , the National Council and the complementary Federal Council are peers. As a practical matter, the National Council is decidedly more powerful, though it is frequently described as the lower house.


The National Council is where Austria 's federal legislative authority is concentrated; for a bill to become federal law, it must be resolved upon by this chamber. Bills passed by the National Council are sent to the Federal Council for corroboration. If the Federal Council approves the bill or simply does nothing for eight weeks, the bill has succeeded. If the Federal Council vetoes the bill, the National Council may still force it into law by essentially just passing it again; a National Council resolution overruling a Federal Council objection merely has to meet a higher quorum than a regular resolution. In other words, the Federal Council does not have any real power to prevent adoption of legislation, the National Council being trivially able to override it. There are three exceptions to this rule: bills amending constitutional law , bills curtailing the rights of Austria 's member states , and bills pertaining to the organization of the legislature itself cannot be forced into law against Federal Council opposition. The approval of the National Council is also required for most of the prerogatives of the Federal Assembly to be exercised. For example, motions to call for a referendum aimed at having the President removed from office by the electorate, and motions to declare war all need a two-thirds majority in the National Council. Only motions to impeach the President can be introduced and considered by the Federal Council.


The 183 members of the National Council are elected by nation-wide popular vote for a term of five years; each Austrian sixteen years or older on the day the election takes place is entitled to one vote. National Council elections are general elections . The voting system aims at party-list proportional representation ; uses partially open lists , and are relatively straightforward.

In addition to voting for a party list, voters may express preference for one individual candidate. A candidate receiving sufficiently many personal votes can rise in rank on his or her district party list; voters thus have a certain degree of influence as to which particular individual wins which particular seat. It is not possible, however, to simultaneously vote for party X but exert influence on the candidate rankings on the party list of party Y.


Austria 's federal constitution defines Austria to be a presidential democracy : the executive branch of government is supposed to be headed by the president and not to be answerable to the legislative branch. In practice, however, Austria 's federal administration as such has comparatively little scope and would be almost totally paralyzed should the National Council fail to support it. While the executive branch has the theoretical authority to dissolve a hostile National Council, constitutional convention prevents this power from being exercised. Austria accordingly functions as a parliamentary democracy : for all intents and purposes, the cabinet is subject to approval by the National Council, the president being little more than a figurehead.

A related discrepancy between Austrian constitutional theory and Austrian political practice is that the constitution defines the President of the National Council to be Austria's second highest public official, junior only to the president of the executive. As a practical matter, the President of the National Council is a representative of rather moderate significance: wielding less power than the head of cabinet or even most federal ministers. The President of the National Council thus serves mostly as a more or less nonpartisan moderator of parliamentary debate. The ability of a legislature to serve an effective oversight role depends not only on its internal structure, but also on powers enabling it to compel the production of information or testimony necessary to its review.

As the complexity of the issues facing government has increased, so too has the importance of committees to the parliament’s work. After a bill reaches the

Nationalrat , it is assigned to a committee and frequently also to a subcommittee. Legislators typically spent twice as much time in committee hearings as in plenary sessions. The subcommittees hold even more hours of hearings than the full committees. Because of the unwieldy nature of plenary sessions, 80 percent of changes to government legislation occur in committees.

In 1975 the Nationalrat amended its procedures to give the opposition and smaller parties a greater role in the legislative process. Under the 1975 amendments, one third of the legislators can request the Constitutional Court to review a law for constitutionality. Further, legislators can request the government’s accounting agency to conduct an audit of a government agency. These changes reflect the intensification of political competition that occurs in the Nationalrat .

At the time of the committee visit, it was reported that Austria has an unemployment rate of about 4.4%, which remained substantially lower than the average unemployment rate for the 27 European Union (EU) members, which was at about 9.6%. The economy grew at 3.1% in 2011 up from 2.3% in 2010, which remains higher than the estimated 0.1% average growth of the Euro area in 2011. Austria , with its well-developed market economy and high standard of living, is closely tied to other European Union (EU) economies, especially Germany ’s economy.

Following several years of solid foreign demand for Austrian exports and record employment growth, the financial crisis and global economic downturn in 2008 led to a sharp decrease in economy and employment. Subsequently, Austrian economy contracted to 3.9% in 2009 but recorded a growth rate of about 2% in 2010. However, Unemployment has not risen as steeply in Austria as elsewhere in Europe , partly because its government has subsidized reduced working hours schemes to allow companies to retain employee.

The international financial crises caused difficulties for Austria ’s largest banks whose extensive operations in central, eastern, and south eastern Europe faced large losses. The government provided bank support-including in some instances, nationalization-to prevent insolvency and possible contagion.

Even after the global economic outlook improves, Austria will need to continue restructuring, emphasize knowledge-based sectors of the economy, and encourage greater labour flexibility and labour participation to offset growing unemployment and Austria ’s aging population and low fertility rate.

Government of Austria ’s response to the EU Economic Crisis

The current Government of Austria has been working towards a closer collaboration among European states in the debt crisis, and has on many occasions warned of the far-reaching implications it would have on the lives of Austrians and Europeans if the Euro-zone is allowed to disintegrate. The Austrian parliament in September 2011 approved the Euro rescue deal, which includes the expansion of the European financial stability facility.

Parties to the far right of the political spectrum, have openly ridiculed the government for “continuing to pay the debts of foreign countries” with state resources.

Economic and Trade relations

Since 1994 bilateral relations between South Africa and Austria have been actively conducted on all three spheres of South African government. Despite to the strong hegemonies of the Austrian Government at national level in support of development programmes and increased economic involvement, there is an existence of provincial and local government partnerships with key Austrian provinces and local government, notable, City Council of Vienna which has subsequently culminated to Gauteng receiving a consistent material support for educational programmes. Furthermore, South Africa and Austria are not major trading partners; however, South Africa ranks sixth among Austria ’s overseas trading partners, and is by far Austria ’s major trading partner in Africa . The balance of trade between the two countries has remained in South Africa ’s favour (by Euro 61 million) over the last two years, which has gone against SA-EU trading trends.

The EU, of course, remains Austria ’s most significant market. As an EU member state, Austria has ratified the SA-EU Trade Development and Co-operation Agreement (TDCA). This also means that Austria contributes to the EU as a donor, which in turn benefits South Africa .

4. Meeting with officials of the UniCredit /Bank Austria on: “ Austria and the European Financial Crisis”.

4.1 Summary of Findings

The UniCredit /Bank Austria better known as Bank Austria is a leading European commercial bank with an international network spanning 50 markets. The bank maintains an extensive network in Austria , employs about 7,700 employees servicing customers in some 300 branches in Austria . Bank Austria serves as UniCredit’s hub for the banking network in Central and Eastern Europe , a region where the Group is a clear market leader operating about 9,400 branches and employs more than 157,000 employees. The group operates in 22 European countries and nearly 85% of the bank’s total workforce is employed out of Austria . Thus, UniCredit bank benefits from a strong European identity, extensive international presence and broad customer base. Due to its dominance, its total assets as at 31 December 2011 were EUR 199.2 billion.

When the Senior Vice-President of UniCredit Bank Austria , addressed the delegation, he maintained that the crisis was over and that fiscal discipline had started. International financial institutions were actively supporting the market to help facing the crisis. The International Monetary Fund (IMF), the World Bank and others were jointly acting, together with the EU. The bank has contended that significant improvement would be seen by next year. It should be recalled that challenges of disunity in addressing the crisis, have been dealt with. Unlike the previous situation where each Minister of Finance concentrated only on improving his/her country’s financial predicament, Ministers presently were actively speaking in one voice from one central place.

Hard lessons were learned from the Greece debacle. International investors were concerned and astonished at how other European countries allowed the situation in Greece to deteriorate to such an extent. Could other countries similar to Greece also become bankrupt, what would prevent other debt ridden countries from leaving the Euro zone?

Many investors panicked and started withdrawing funds and deposited money in German banks instead. Germany thereby increased its economical and political stronghold in the region and continues to play a vital role to contributing in Europe’s recovery and according to the UniCredit Bank, recovery for most of Europe , was on the horizon.

5. Meeting with International Anti-corruption Academy (IACA)

5.1 Summary of Findings

A complex offence like corruption, which is often linked to organised crime, cannot be effectively addressed with traditional methods alone. The International Anti-Corruption Academy (IACA), the first of its kind, aims to overcome the current shortcomings of knowledge and practice in the field of anti-corruption. The Academy’s mission is to deliver and facilitate anti-corruption education and training for practitioners from all sections of society and provide technical support and assistance to a wide variety of stakeholders.

IACA was originally initiated by the United Nations Office on Drugs and Crime (UNODC), the Republic of Austria and the European Anti-Fraud Office as well as an overgrowing family of major stakeholders from all corners of the globe. With 53 founding members, IACA became an international organisation, representing one of the most successful international initiatives ever. The Academy as a centre of excellence-provides a new, holistic approach to professionalising anti-corruption education and research. It observes geographical and cultural diversity, and seeks broad partnerships with public and private sector institutions, including academia, civil society and NGO’s.

The United Nations Convention Against Corruption (UNCAC) forms the global legal framework for governments in their fight against corruption. The education and training offered by the Academy will largely be based on this UNCAC objective and other comprehensive international instruments. To this end, IACA also envisages to assist States Parties in translating the provisions of the UNCAC into reality. Consequently, IACA urged South Africa joined other African countries like, Zambia , Benin , Burkina Faso , Kenya , Uganda , Cape Verde , Democratic Republic of Congo, Mozambique , Togo , Senegal and Nigeria , in becoming a member of the anti-corruption international organisation.

6. Meeting with the Austrian Parliamentary Committee on the Court of Audit (Auditor-General) and the Investigation Committee on Corruption.

6.1 Committee on Court of Audit

6.1.1 Summary of Findings

The Austrian Committee on the Court of Audit (Auditor-General) was established in accordance with the Rules of Procedure of the National Council. Rule vi section 29 on “Establishment of Committees” states that “The National Council shall elect the Main Committee from among its Members in accordance with the principles of proportional representation” and it states further in section 32e (1) “The Court of Audit Committee shall elect a Standing Sub-Committee, in which each party represented in the Main Committee shall have at least one member.”

It is however that the current Chairperson of the Court of Audit Committee is a member of the opposition.

The Court of Audit reports are discussed in the Court of Audit Committee, which can call witnesses and interrogate them in a public hearing. In addition, the Court of Audit submits the annual Federal Financial Accounts, which present federal revenue and expenditures during the previous fiscal year and allow an assessment of whether, and in how far, the actual management of the budget tallies with the budget proposals.

6.1.2 Investigation Committee on Corruption

Section 33 (1) of the Rules of Procedure further states that: “On the basis of a procedural motion the National Council may decide to set up an investigating committee. Such a motion shall be submitted to the President in writing and shall state the subject of investigation, its objective and the completion of the investigation. Each of the parties represented on the main committee of the National Council shall have at least one member on the committee”.

Investigating committee is empowered to request the courts and all other public authorities to take evidence, and the latter have to produce their files as per such request. Witnesses before an investigating committee are under obligation to testify truthfully. If a witness refuses to testify and the committee feels that such refusal is not justified, it may request a court to impose a coercive penalty.

If a witness fails to comply with summons, the committee may have him/her arraigned by police. While civil servants cannot plead being bound by official secrecy, such a plea can only be made by said civil servant’s administrative authority. The deliberations of an investigating committee are confidential. Hearings of witnesses and experts are; however, open to media representatives unless the committee decides to hear them in camera.

Importantly, the activities of an investigating committee are terminated once it submits its report to the National Council or at the end of the legislative period.

6.2. Meeting with the Austrian Court of Audit (Auditor-General)

6.2.1 Summary of Findings

The Auditor-General’s Office, better known as the Austrian Court of Audit (ACA), is a monitoring instrument of the Austrian Parliament. It is independent of the Federal Government and the Laender (Provincial) Governments and subject only to the provisions of the law. It is not bound by any instructions when it takes action in response to a request or demand. Its official goal is to “attain the most effective use of public funds, that is, the reduction of costs and /or the increase in benefits when spending public monies”. The audits focus primarily on financial compliance. The federal constitution states that the president of the ACA is elected by the National Council for a term of twelve years, re-election is not possible. The long term tenure is intended to allow the president and the office in general to maximum independence from parliament as well as government. He can only be removed via a procedure independent of government and authorities.

In the case of incapacity, the President is represented by the highest ranking official of ACA. The President ranks equal to the members of the Federal Government (Cabinet).

The federal constitution stipulates that the ACA has the right to audit the accounts and financial management of the state: federal government, Laender governments, and municipalities with over 10,000 inhabitants, legal entities, funds, foundations, institutions, enterprises with over 50% public stake or predominant position and statutory professional representative bodies.

Auditors are entitled to be granted unrestricted access to information. This principle is realized in the Federal Act on the Austrian Court of Audit. All audited entities have to cooperate with the Court of Audit and provide it with any information requested for the purpose of the particular audit: books, records of account, business documents, contracts, pieces of correspondence.

The federal constitution further stipulates that ACA should report at least once a year on the audit outcomes but also has the right to produce reports more often and report its observations at any time to the National Council and must simultaneously inform the Federal Government of every report. Reports shall be published after submission. Furthermore, ACA also evaluates if recommendations of the previous year have been implemented and assesses their effect, a principle stated in the Strategic Plan of the Austrian Court of Audit.

The federal constitution also states that the president of the ACA has a right to attend, and to take the floor in the National Council plenary and its competent committees and sub-committees during deliberations on Court of Audit reports, including discussions on the subdivisions of the Federal Finance Bill relating to the ACA. His reports are debated in the Council’s regular sessions. The cabinet has the right to respond to the office’s critique but cannot influence the reports. This also holds for deliberations concerning instructions to investigate certain matters and for discussions of the Court of Audit budget. Members of the National Council may also address written questions to the president of the Court of Audit; all personnel matters of the ACA shall be managed on independent basis; the president of the ACA can appoint officials and auxiliary personnel.

Over and above, tasks of the Court of Audit also include the presentations of reports concerning the development of incomes in the public area. Moreover, the President of the Court of Audit obtains the list of donations received in excess of stipulated amount from the political parties and, if requested by the party concerned, informs the general public whether said donations have been duly declared.

In accordance with the provisions of the Incompatibility Act s/he receives every year from all Members of the federal and provincial government’s declarations, concerning their financial circumstances and reports to the President of the National Council or, as the case may be, of the Provincial Diet any extraordinary increases in the assets held by the individual in question.

It is worth noting to highlight the fact that the committee delegation was also informed that most members of the EU are moving towards performance auditing. Performance audit refers to an examination of a program, function, operation or the management systems and procedures of a governmental or non-profit entity to assess whether the entity is achieving economy, efficiency and effectiveness in the employment of available resources. The examination is objective and systematic, generally using structured and professionally adopted methodologies.

The scope of performance audits may include the detection of fraud, waste and abuse, although often these are not included in the scope. Prior to engaging in a performance audit, the auditor must have a defined scope and plan which will be used to guide the audit process.

Performance auditing differs from performance measurement, the latter being the responsibility of management of the entity. In addition, performance measurement may include a broad variety of activities that do not meet the rigour of an independent external assessment.

7. Attend Parliamentary panel discussion on: “Change and Challenges for Development Cooperation”.

7.1 Summary of Findings

The delegation attended a panel discussion at the Austrian Parliament where the topic was “Change and Challenges for Development Cooperation”. The speakers included the President of the Austrian National Council, the Secretary of State, Austrian Federal Ministry for European and International Affairs, Deputy Minister of Foreign Affairs for Mozambique , the Deputy Director-General for Development and Cooperation in the European Commission and the incoming Austrian Ambassador to South Africa .

Economically and politically, the emerging countries are redefining global development cooperation. Their investment policy challenges traditional development cooperation and has initiated new ways of collaboration.

Some of the questions the panel tried to find answers are interalia : What will be the impact of this new development architecture? What is the EU’s response? What drives the emerging powers to engage in South-South cooperation? What development partners do developing countries choose? What role do national parliaments in both donor and recipient countries play in shaping development processes in this new context?

8. Meeting with the International Chamber of Commerce: Prevention of Commercial Crime and Corruption Division.

8.1. Summary of Findings

The International Chamber of Commerce (ICC) has been a pioneer in the business fight against corruption, issued its first version of the Rules of Conduct to combat Extortion and Bribery in 1977.

About the commission

ICC is on the forefront in the development of ethics, anti-corruption and corporate responsibility advocacy codes and guidelines, providing a lead voice for the business community in this rapidly changing field.

The Commission on Corporate Responsibility and Anti-Corruption works closely with other ICC Commission to combine expertise on a number of current issues, including:

  • anti-money laundering and counter terrorist financing (Banking Law and Practice)
  • public procurement and anti-corruption clauses in model contracts (Commercial Law and Policy)

The Commission on Corporate Responsibility and Anti-Corruption meets twice per year, but carries out work constantly throughout the year, including through issues to specific task forces.

Hence the corruption occurs in many different forms, such as bribery, bribe solicitation or extortion, the ICC maintains the following:

Bribe solicitation

ICC has long argued that fighting corruption requires action against extortion as much as against bribery. Without effective action to address the "demand side" of corruption, the fight against corruption cannot be won. ICC's Commission on Anti-Corruption, in cooperation with ICC's specialized division.

Commercial Crime Services is currently exploring ways to establish a facility where companies can voluntarily and anonymously report attempts of bribe solicitation by public officials.

Private-to-private bribery

Private-to-private bribery refers to corrupt practices within and between enterprises.

It occurs, for example, when an employee accepts the advantage granted to him by a person from outside of the company, without informing the corporate bodies or persons.

As a consequence, the corrupted executive's or manager's freedom of judgment is abdicated in return for money (or other considerations).

There is a significant risk that purchases will be made at overstated prices (in order to recover the bribes) and under unfavourable conditions, and that the product sold will not be of the optimal or even required quality.

9. Meeting with Provincial Courts of Audit of Province of Lower Austria and Province of Upper Austria .

9.1 Summary of Findings

Within the scope of the Austrian Federal States relative constitutional autonomy, the Austrian federated states ( Bundeslander ) have the authority to set up independent regional courts of audit for their area and vest them with auditing powers. Independent Land courts of audit have been established in eight of the nine Austrian federated states. Due to its special status as a federated state and municipality, the federal capital of Vienna is the only one to have an audit office which, as a department within the municipal authority, is organisationally, part of the regional and municipal administration.

The Austrian (Federal) Court of Audit has a long tradition and history. The regional courts of audit are new compared to the Austrian (Federal) Court of Audits in comparison. The first was established in 1982, with the rest following in the years after. This wave of setting up such courts reflects a positive political climate with regard to control activities and was the start of a dynamic development in public sector auditing in Austria

Legal position of the regional courts of audit

In the main, the regional courts of audit of the individual federated states meet the international standards of the Lima Declaration. They are set up as organs of the legislature and are protected institutionally by the respective constitutions of the Lander. Their task is to support the regiona l parliaments ( Landtage ) in their control duties.

The position of the regional courts of audit as an organ of the legislature is underlined by the constitutional clarification that they are independent from the regional governments ( Landesregierungen ) and are subject only to legal provisions. This is aimed at preventing those being audited or government policy from influencing the audit process. For the most part, the essential organisational and financial principles and the regulatory framework of the regional courts of audit have constitutional status and thus enjoy increased preservation of the status quo.

Remit of the regional courts of audit

The remit of the regional courts of audit is, without exception, laid down in the regional constitutions, the specific provisions of which vary from state to state, to audit the financial management of the respective federated state, its administration, the foundations, funds and institutions as well as companies in which the Federal participates as shareholder or over which it can exercise influence. Other tasks which are similarly laid down in all Austrian court of audit acts include examining the proper use of grants and subsidies awarded by the federated states. Furthermore, most Austrian courts of audit are also involved in auditing funds received from the European Union, under Community Law.

The Austrian legal system tends to follow the basic principle of comprehensive management auditing when establishing the competencies of the regional courts. According to this principle, there should be no audit –free areas in which the public sector is financially active but not controlled. In principle, all federal and regional administrative activities, irrespective of the legal form in which they take place and irrespective of whether they are performed by government bodies themselves or have been outsourced, are thus subject to court audit control.

An essential principle and a manifestation of the independence of the regional courts of audit is the right to audit on their own initiative, thus independently of external auditing mandates. This principle is put into practice universally in all federated states and is supplemented by the use of analysis methods which aim at ensuring that audits are selected in an impact-and-risk-oriented manner.

In addition, the regional parliaments are entitled to request the regional courts of audit to carry out an audit. Audits can be requested both through a resolution of the parliament and the parliamentary committee entrusted with management auditing and-effectively as a parliamentary minority right- as the request of a smaller number of members of parliament. Furthermore, most of the regional governments are entitled to request an audit. In some Lander , individual political fractions represented in the regional parliament, which otherwise would not be able to do so due to the low number of their members in parliament, are also entitled to request an audit to a limited extent.

The courts of audit have legally defined powers that are aimed at ensuring that they are able to examine all documentation and obtain all information relevant to the audit. They communicate directly with all the bodies that come under their auditing competence.

They have the authority, among other things,

· to obtain all information that appears to be required from all audited bodies at any time in writing or in a convenient form,

· to request the forwarding of files, accounts books, receipts, other records and documents,

· to have their auditors inspect accounts, invoices and other materials including electronic data processing systems related to financial management and to carry out local investigations themselves.

However, the regional courts of audit are not entitled to exert influence directly, that is by virtue of unilateral orders ( imperium ) on the administration and organisations audited. The regional courts of audit are certainly required to make suggestions for improvements and propose measures for making savings or increasing income, but the implementation of these is the responsibility of the competent bodies of the audited entities which, in turn, come under legal and political responsibility.

In almost all federated states, the Constitutional Court of the Republic of Austria shall rule on any differences in opinion regarding the interpretation of legal provisions relating to the authority of the regional courts of audit.

Audits performed by the regional courts of audit must regularly look at the accuracy of figures and compliance with current regulations (legality), and ensure that financial management is carried out economically, efficiently and effectively in accordance with constitutional provisions and the regulations of the various acts governing regional courts of audit, which are by and large identical.

Court of audit controls are now focussing more on performance audits, with the effectiveness and efficiency of government operations increasingly coming under the spotlight as a benchmark for action and success.

The determining elements for evaluating performance and assessing efficiency are the predetermined objectives, the resources employed and the result achieved. Courts of audit increasingly seek to examine whether the objectives specified, and thus the interest of taxpayers have been met with the public money used. In addition, they are pushing for the reduction of bureaucracy and the modernisation of administration accordance with the principles of new public management and good governance.

The Austrian regional courts of audit are set up monocratically . The heads of these courts are elected by the regional parliaments for a specific period of time. They represent the regional court of audit externally, and are senior and authorised to issue instructions to all other staff. The heads of the courts of audit are on a level with the members of the respective government in terms of their responsibility (responsibility under constitutional law). In most federated states they have complete control over staff in matters of personnel management and performance of duties.

The legal position of the heads of regional courts of audit is specifically regulated. There are, for example, strict conditions relating to incompatibility that stipulate that they may not belong to a parliament or local council and that they had not been a member of a federal or regional government in the last few years prior to their election. In addition, no member of a regional court of audit may be involved in the management and administration of commercial undertakings or undertakings subject to audit by the regional court of audit.

The regional courts of audit are financed exclusively by the federal state for which they have responsibility. The head of the respective court of audit informs the regional parliament of his/her financial, personnel and material requirements. After examination and consultation the parliament recommends the regional government to consider those requirements recommendations in their budget.

Despite the creation of the regional courts of audit, the auditing competence of the Austrian Court of Audit in the federated states has not been restricted or amended. It is all the more important to coordinate auditing activities in order to avoid potential duplication of work. Coordination of meetings therefore regularly takes place, providing opportunities for mutual exchange of information and implementation of ideas.

This co-existence not only calls for a coordination input, but also offers benefits as each audit institution can play out its individual strengths. So, for example, only the Austrian Federal Court of Audit is able to undertake extensive cross-audits of several federated states and make comparisons across states.

The regional courts of audit, on the other hand, are closer to the action and as a rule have a better insight into the structures of the audited bodies. They can thus detect any irregularities more quickly than would have been possible by the Austrian Court of Audit in Vienna .

10. Key findings/ observations

Flowing from the above summary of findings, the following points are of importance to be noted, and they are as follows:

· The existence of International Anti-corrupt Academy which acts as a centre of excellence to provide a new, holistic approach to professionalising anti-corruption education and research, attempts to bring the new ways of overcoming the current shortcomings of knowledge and practice in the field of anti-corruption. Importantly, it provides some new and advanced methods of dealing with the complex offence such as corruption as opposed to the predominantly use of traditional methods.

· The EU is moving towards the direction of performance audit which is critical to assess whether the audited institution or entity has employed its available resources economically, efficiency and effectively when implementing its programs or producing its outputs. The implementation of performance audit impacted positively in the reduction of costs while increasing benefits when spending public funds.

· The Austrian Federal states have the authority to set up independent regional courts of audits into their areas of jurisdiction. Although the functions of these regional court of Audit differ from region to region depending on their constitution, their standard tasks that they perform include, auditing the financial management of the respective federated state, its administration, the foundations, funds and institutions as well as companies in which regional parliament ( Landtage ) participates as shareholder; and the examination of the proper use of grants and subsidies awarded by the Federal State.

· The existence of Commercial Crime and Corruption division of the International Chamber of Commerce which is a specialised division which renders commercial crime services is currently exploring ways to establish a facility where companies can voluntarily and anonymously report attempts of bribe solicitation by public officials. It is worth noting that in South Africa such similar initiative with the above notion has been implemented. In 2001, South Africa has launched National Anti-Corruption Forum (NACF) aiming to combat and prevent corruption, build integrity and raise awareness. Through its communication strategy, it created a conducive ground to improve access to report wrongdoing and protection of whistleblowers. Thus, such forum provides the space into which companies can voluntary and anonymously report attempts of bribe solicitation by public officials.

· The federal constitution states that the president of the Austrian Court of Audit (ACA) is elected by the National Council for a term of twelve years, re-election is not possible. The long term tenure is intended to allow the president and the office in general to maximise independence from parliament as well as government. The president can only be removed via a procedure independent of government and authorities; and in the case of incapacity, a highest ranking official from the ACA should temporary take the reins until the new president is elected.

In spite of the above, the system of appointing the Auditor General is distinct from the South African one. In Austria, the Auditor- General is elected and as such it is politically driven, while in South Africa, it is more administrative, whereby a woman or a man of South African citizen with specialised knowledge of, or experience in, auditing, state finances and public administration is appointed following a stringent processes of recruitment.

11. Recommendations

The Committee recommends the following:

· The office of the Auditor-General should consider affiliating to the Austrian based International Anti-corruption Academy (IACA). The motive behind that is for South Africa to be part of this critical initiative to get some new and advance ways of dealing with corruption as opposed to the predominant use of the traditional methods. This will indeed enhance the performance of South African anti-corruption institutions by learning modern and advanced ways and other experiences from other member states on how to efficiently and effectively combat corruption.

· There is a need for the introduction of corruption as a subject in South African Higher Education curricula, notably, Further Education and Training Colleges as a means to crystallise government commitment in uprooting corruption. This will assist in impacting specialised knowledge peculiarly to the South African context of corruption, and thereafter, formulation of modern and advanced ways of fighting corruption which are customised to the country’s needs to combat corruption.

· The South African AG’s office should intensify the use of performance auditing when the government institutions are audited. The proper use of performance audit can enhance the efficiency of the state, due to efficiency gains derived from the efficiency of the state, a greater and better satisfaction can be ensured and felt by ordinary South Africans. In the main, the value for money principle will be achieved and from little that the country has, the country can do more to better the lives of its citizens.

· As opposed to the Austrian Auditor-General structure, South Africa should keep the status quo whereby South African Auditor-General is a supreme audit institution and have branches throughout the nine provinces. For better and value addition to the system, it is suggested that other key role players that have a responsibility in assisting sub-national governments to implement financial discipline and prudence should double their efforts in this regard. In addition, there is a need for the proper establishment, implementation and functioning of Municipal Public Accounts (MPAC) and Audit Committees in Municipal Councils, which will complement with other afore-said institutions in conducting oversight role with regard to the proper use of public funds.

Report to be considered.


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