COMMENTS ON THE DRAFT PUBLIC AUDITOR’S BILL

SUBMISSIONS BY ESKOM

JUNE 2003

COMMENTS ON THE DRAFT PUBLIC AUDIT BILL

 

  1. INTRODUCTION

    1. Eskom Holdings Limited (Eskom) hereby submits its comments on the Draft Public Audit Bill (hereinafter referred to as "the bill").

    2. This submission is made on behalf of Eskom as well as all its subsidiaries namely: Eskom Enterprises (Pty) Ltd, Escap Limited, Gallium Insurance Limited and Eskom Finance Company (Pty) Ltd.

  2. BACKGROUND

    1. The bill gives effect to section 188 of the Constitution, which requires effective auditing of all national and provincial state departments, municipalities, publicly funded institutions, and public entities. It seeks to deal with the status and functions of the Auditor-General and his/her subordinates.

    2. Eskom is a public entity listed in terms of Schedule 2 of the Public Finance Management Act no.1 of 1999 (hereinafter referred to as the PFMA) and as such falls within the ambit of this bill.

    3. To the extent that the bill is intended to improved governance practices in the public sector, it is, in principle, supported.

     

  3. SUBMISSIONS

    4.  

    Chapter 1

     

    1. Section 1(1)

      2. In terms of section 1(1) an audit means the examination or investigation, in accordance with any applicable audit standards. An attempt should be made to clarify what "applicable audit standards" mean, even if it provides that this will be determined by regulations from time to time.

    2. Section 2(b)

      3. This section mentions "accounting entities" which is a term used in the Constitution. However, this term should be clarified, in the light of the PFMA, which refers to "accounting authorities".

       

      Chapter 2

       

    3. Section 5(1)(a)(i)

      4. This section implies that the Auditor-General should not be seen to be compromising its independence when providing services. It is suggested that the same strict guidance applied for a person registered in terms of the Public Accountants’ and Auditors’ Act be applied to the Auditor-General, in order to assess independence.

    4. Section 9 (section 33(2))

      5. This section provides for instances where the Deputy Auditor-General is required to assume the role of an acting Auditor-General. The bill should clarify that in such capacity, he/she shall have all the powers of the Auditor-General.

       

      Chapter 3

       

    5. Section 25(1)

      6. The process in this regard, and, in particular, the time period within which the decision by the Auditor-General should be specifically set out. This will contribute to efficiency and a better governance process.

    6. Section 25(2)

      7. This section should read as follows "Before appointing an auditor in terms of subsection (1), the institution must give notice of the suggested appointment to the Auditor-General…." Instead of the words "….such appointment…".

    7. Section 25(3)

3.7.1 The notice referred to in this section should be in terms of subsection (2) and not subsection (1) as stated in the bill.

      1. This section should clarify that there is automatic acceptance of the appointment, where the proposal in terms of subsection (2) is not rejected within 14 days.

      2. The section should clearly state that where the appointment is rejected and another auditor is appointed then a subsequent notice of the suggested appointment has to be given in terms of subsection (2).

      3. In addition, the entire section should clarify whether consultation with or approval of the Auditor-General is required.

3.8 Section 26

In terms of this section only the Auditor-General’s consent is required to discharge an auditor appointed in terms of section 25(1). The involvement of the executive authority, as is presently the position in terms of the PFMA, is now not necessary. The drafters should consider whether this change is consistent with good governance practices.

3.9 Section 27(2)

This section only makes reference to section 15. Reference should also be made to section 16, 17 and 18. In order to avoid omitting any sections in the cross-reference, it may be advisable to refer to powers conferred in terms of the bill.

    1. Section 28(3)(a)

      2. The reference to section 27(2)(c) is incorrect.

    2. Section 29(4)

      3. This section allows the Auditor-General to charge a reasonable fee for carrying out an investigation or special audit in terms of this section. The term "reasonable fee" creates uncertainty about the criteria that should be used for calculating the fee, and this should be set out in the regulations or other appropriate directives.

       

      Chapter 4

       

    3. Section 42(3)(b)

3.12.1 This section lists the responsibilities of the deputy Auditor-General in relation to the Auditor-General. The responsibilities should be listed as general responsibilities of the Auditor-General and all the Auditor-General’s staff should comply.

      1. The Auditor-General should be the accounting authority and not the Deputy Auditor-General.

      2. Generally, the governance mechanism should be reviewed to avoid duplication and confusion regarding the Auditor-General and Deputy Auditor-General, and furthermore, to avoid repetition of issues already addressed in terms of the PFMA and other legislation.

 

 

 

 

  1. CONCLUSION

Eskom hereby expresses its appreciation for the opportunity to comment on the bill.

 

 

Dated on this………………day of ……………………………2003.

 

Mohamed Adam