1. Background

The Standing Committee on Public Accounts (SCOPA) was invited by the Australasian Council of Public Accounts Committees (ACPAC) to participate at a Conference that took place from 6 to 8 February 2005, at Parliament House, Brisbane, Australia. The main theme of the Conference was "Current Challenges Facing Public Accounts Committees".

SCOPA was represented by four of its members and control committee secretary. The multi-party delegation consisted of: Mr PJA Gerber (ANC), Mr RS Ndou (ANC), Ms TV Tobias (ANC), Dr SM Van Dyk (DA) and Mr L Pakati (Official).

The objective of the visit was informed by the need for the Committee to continuously enhance its oversight capacity, and build on its knowledge capital by exchanging ideas with its counterparts, both at domestic and international levels. It was anticipated that the knowledge gleaned at the Conference would go a long way towards empowering members in order to continue to exercise their oversight function from an enlightened perspective that takes cognizance of global trends.

Conference papers were delivered by Members from various Parliaments falling within the ACPAC jurisdiction, as well Parliamentarians from South Africa’s ten Legislatures, and experts from tertiary institutions in Australia. All themes attempted to deal with topical issues relating, largely, to the oversight role of Public Accounts Committees, and provided recommendations as a way forward.

Due to flight delays caused by South African Airways and Quantas airline, the delegation joined the conference in the second session of the first day of the proceedings, thereby missing the first morning session.

Key themes that the delegation participated in on the first day of the Conference included:

• Information and the public service – balancing privacy, confidentiality and accountability
• Trends in performance reporting
• Accountability issues relating to government outsourcing

Second day presentations were made on the following themes:

• Improving governance and accountability including government corporations and heads of agencies
• Accountability of non-profit organizations: The Queensland Chart of Accounts project was used as a case study
• Public private partnerships
• Risk management – the relationship between planning, risk and accountability
• Public liability changes
• Report on the establishment of the public sector governance and accountability
• Research centre.

1. Information and public service – balancing privacy, confidentiality and accountability: Hon Jim Wilkinson (Member of Joint Standing committee on Public Accounts Tasmania)

The paper raised critical issues around the matter of confidentiality and accountability. The main argument was that there have been claims that governments and the public service are reluctant to release information to the public. The paper, however, recognizes that there is a clear need for some information to be kept confidential for reasons relating to privacy and commercial considerations. However, the decision of what legitimately falls within these categories and what could be released without compromising privacy cannot reside solely with the public service or government. The Auditor General, Parliament and the Public Accounts Committee have the responsibility to intervene as part of their oversight function.

The paper provided examples where, in Tasmania, the Public Accounts Committee successfully intervened and compelled government to release information that was classified as extremely confidential and could course harm to the public.

The paper concluded by stating that systems should be developed to allow the public to be reassured that the government and public service are not the sole adjudicators on the release of information; that it is essential that the decision to make information public is independently tested, e.g. by Parliament.

2. Trends in performance reporting: Auditors General Panel

The theme focused on trends in performance reporting. Its central thesis was that output based budgeting and management is a useful tool and yet is under used. It argues that government departments are still locked in the thinking that they are producers of goods and services rather than consumers of goods and services. In this sense, they do not often look for value for money in what they do.

The same argument applies to Parliaments. When scrutinizing government spending, they tend to focus largely on inputs and processes as opposed to outputs i.e. quality of services rendered. The paper recommends that Public Accounts Committees should begin to focus on the purpose of expenditure, performance indicators, benchmarking, targets and the relevance of these targets. They should also consider providing incentives to good performers.

The paper concludes by recommending that the PACs should ask critical questions such as: does a program add value to life, is there an alternative way to better carry it out using the same resources, is it sustainable, and what should be prioritized?

The paper was presented by Professor Neal Ryan of the Queensland University of Technology. It focused on research the university has conducted over the years. The research projects focus on agreements that the Australian government has entered into with non – profit service providers.

The objective of the research is to ascertain whether the government is able to get value for its money subsequent to the awarding of contracts, and whether the outcomes meet political objectives and whether the public benefits over the private sector? It concludes by asserting that so far research indicates that governments in Australia and several other countries in the world tend to focus more on inputs and less on outputs, and the quality thereof. For this reason there is an increasing need for a shift in this kind of paradigm.

The paper was presented by the Hon, Clayton Cosgrove, chairperson of Finance and Expenditure Committee in Wellington, New Zealand. It argues that while New Zealand is regarded as a country that enjoys a high degree of transparency and accountability in relation to its public institutions, and relatively high quality governance, there have been a number of challenges to the quality of governance of public institutions. This led to a call to strengthen a number of areas in the public management system. The presentation mentioned a number of policy initiatives undertaken in this regard, such as:

The Ministerial Advisory Group: In July 2001, a Ministerial Advisory Group was appointed by the Prime Minister and Ministers of State Services and Finance to look at New Zealand’s whole public management system to determine how it was responding to the needs and expectations of citizens, business and communities. In its November 2001 Report the advisory group finding was that New Zealand’s public management system was providing only a reasonable platform to work from, and that some significant shifts in emphasis were needed to better respond to the needs of the future.

Departmental Statement of Intent: Another effective tool to improve service delivery in public management was the development of departmental statements of intent for all government departments. This happened for the first time in December 2001 wherein the Cabinet approved the roll-out of this approach to planning and reporting on the business of departments.

Legislative change: Public Finance Bill: The Public Finance Bill was introduced by the Government on 3 December 2003 and was referred to Finance and Expenditure Committee on 6 September 2004. The Bill became law on 16 December 2004. The Act set out reporting requirements for Departments. The Act provides, amongst other things, that the Chief Executive of a department is responsible for the financial performance of the department and for ensuring that the department complies with statutory reporting requirements.

Parliament: The presentation concluded by placing parliaments at the centre stage of the accountability process. It does that by its emphasis on the fact that democracy entails accountability of the excise of power. Such accountability has a number of facets, one of which is the executive being answerable to Parliament for its use of public resources to achieve specified outcomes. In this connection, the Public Finance Act was considered instrumental in establishing or redefining the mechanisms that enable Parliament to carry out effective scrutiny of executive.

Risk management is relevant to Public Accounts Committees because of the MPs’ responsibilities to look at the effectiveness of public sector agencies on behalf of Parliament. Risk management is a central component of good management practice as well as an important means by which organizations demonstrate accountability to their stakeholders. Recent corporate collapses in Australia illustrate the continuing importance of effective risk management not only with regards the private sector but also with regards to the public sector.

Risk management is an essential component of good corporate governance and Audit Committees can play an important role in ensuring that risk management is prioritized. For example, an effective audit committee can help the CEO of a department or the board of directors of a statutory authority or state owned cooperation with financial reporting, risk management and the internal and external control system.

According to the presentation, the audit committee provides an opportunity where the CEO of a department or the directors, the management and the auditors can meet together to deal with issues relating to the management of risks and with financial reporting obligations.

By taking a positive, proactive and holistic approach to risk management, organizations stand to reap the many benefits risk management has to offer, including:

• Improved planning, performance and effectiveness;
• Economy, efficiency and exploitation of opportunities
• Improved stakeholder relations and enhanced reputation;
• Director/executive protection; and
• Accountability, assurance and governance.

6. Public liability changes: Hon C Campbell (Victoria Public Accounts Committee)

In Australia, the debate around the matter of public liability funding was fuelled by the 11 September bombings in New York where a considerable number of Australians were victims of the attacks. There was a subsequent need to amend legislation dealing with public liability. The legislation has been in operation for more than two years and the presentation considered how this legislation is affecting both the availability and cost of insurance in the manner intended by the legislatures.

Since in Australia the debate about the effectiveness of the legislation has continued unabated, the paper reminds the Economic and Finance Committee of its obligation to contribute to the debate from the perspective of the legislature that initially enacted the changes.

The paper looked at the process and considered future options that are based on best practice. It this regard it mentioned that there was a Ministerial Forum on Insurance, which was scheduled to meet on 25 March 2005 to discuss the impact of the reforms. In addition, the Economic and Finance Committee has sought information on models of dealing with this issue around the world. One scheme of interest has been the New Zealand Accident Compensation Scheme (ACS), which provides accident cover for all New Zealand citizens, residents and temporary visitors. The scheme is funded by premiums paid by employers and earners, and by drivers through fuel levies and license fees.

The presentation concludes by mentioning that, increasingly, reforms are necessary in order to improve the provision and affordability of insurance and the quality and security of the lives of Australians.

The Centre prides itself on being the first institution in the world to provide academic support to Public Accounts Committee Members. It is an independent resource of information for Members. It conducts workshops and conferences for Members and staff. It has established an extensive network of contacts/ relations with organizations such as: the Commonwealth Parliamentary Association, Commonwealth Secretariat, Accounting Profession firms, World Bank, etc. It also organized the ICPAC Conference in Singapore in 2002.

The centre’s vision is to strengthen parliamentary democracy, synthesis of practical and academic skills and to generally serve the needs of parliamentarians and parliamentary staff.

It seeks to achieve the following;

• Exchange information across regions
• Develop accounting standards and approaches
• Best practice
• Develop training material for PAC members and staff.

The following Public Accounts Committees presented papers detailing, inter alia, their respective mandates, activities, membership and other internal arrangements:

1. Republic of South Africa – Hon, PJA Gerber
2. Free State – Hon, A P Oosthuizen
3. Limpompo – Hon, Dr H E Mateme
4. North West Province – Hon M N Matladi
5. Western Cape – Hon, J Gelderbloem
6. Gauteng – Hon, M Seloane
7. PNG – PAC – Hon, J Hickey
8. Northern Territory PAC (New Zealand) – Hon C Cosgrove
9. New South Wales – Hon, M Brown
10. Legislative Assembly for the Australian Capital Territory – Hon, S Mikak
11. Tasmania – Hon, H Hobart
12. Queensland PAC – Hon, G Fenlon
13. Victorian PAC – Hon, C Campbell
14. Papua New Guinea PAC – Hon, T Hanley
15. South Australian Economic and Finance Committee – Hon, G Thompson
16. Tasmanian Joint Standing Committee on Public Accounts – Hon, T Fletcher.

1. Mr Des Pearson – Western Australia
2. Ms Wendy Venter – Assistant Auditor General of New Zealand
3. Mr Shauket Fakie – Auditor General of South Africa
4. Mr Wayne Cameron – Auditor General of Victoria.
5. Mr Junias Kandjeke – Auditor General

Mr Fenlon gave a summary of the presentations and briefly suggested issues to be considered at future conferences. He observed that it was clear that there was diversity with regards to the role and functions of Public Accounts Committees around the world. However, there were fundamental functions that Public Accounts Committees must perform and, for this reason, they must have certain powers in order to perform those functions. For example, the powers to obtain information, to take evidence and to inquire, must be regarded as very fundamental.

He added that an issue that needed to be considered for future debate relates to the need to give PACs constitutional security. In essence, their powers should be guaranteed in the Constitutions of countries and states/provinces so that a government of the day is prevented from tampering with these powers. He thought that the role of PACs is so important that it must be given that very strong foundation as part of the fabric of the constitution of a country.

The delegation gained profound insight into the common challenges facing most Public Accounts Committees. In this regard the following observations were made:

1. The increasing need to encourage internal Auditing in the public sector and to implement effective risk management strategies. Risk management is an essential component of good corporate governance and Audit Committee can play an important role in ensuring that risk management is prioritized.
2. The need to strengthen forensic auditing. The Office of the Auditor General to play a prominent role in this regard.
3. Public Accounts Committees to encourage government departments to move away from Cash Basis to Accrual Accounting. Accrual accounting is more desirable because it records all transactions when they occur and not when they are paid for as in cash basis of accounting. Therefore the consumption of resources represents the true state of equity available in government.
4. Public Accounts Committees should encourage performance auditing to ensure good value for money. The goal of the performance auditing would be to improve programs and operations, saving taxpayers money, providing better services to the public and obtaining the best value for money. However, the initiative is faced with a number of challenges. The major constraint being the lack of funds and sufficient personnel at the office of the Auditor General.
5. The need to fight corruption in the Public Sector by promoting openness and transparency. There was an agreement that corruption thrives in environment of secrecy.
6. Research capacity to assist the PAC Committees in holding the government departments accountable.
7. Enhance accountability by placing Parliament at the centrer of the accountability chain. Such accountability has a number of facets, one of which is the executive being answerable to Parliament for its use of public resources.
8. The need to track and make follow-ups on implementation of PAC recommendations.
9. Public Accounts Committees to have access to information and powers to make enquiries and taking evidence.
10. The need to look into the issue of constitutionalsing the powers of the Public Accounts Committees. This means that the powers of the PAC should be guaranteed in the Constitutions of countries and states/provinces.

The delegation would want to thank the organizers of the Conference, especially the ACPAC Secretariat for making the attendance of the Committee possible. Special thanks goes to the Hon, Gary Fenlon for inviting the Committee to participate at the Conference.

Report to be considered.