SUBMISSION TO THE JOINT RULES COMMITTEE: ESTABLISHMENT OF THE OVERSIGHT MECHANISM OF THE AUDITOR - GENERAL

Background

Section 10(3) of the Public Audit Act requires that the National Assembly -

must provide for a mechanism to maintain oversight over the Auditor-General in terms of section 55(2)(b)(ii) of the Constitution.

There are core functions which this committee has to perform:

October (4 days): Receive AG's Budget & Business Plan for consideration

Provide input to AG on basis for determination of fees

Agreement with the AG regarding retention of surplus funds

November (1 day): Report to the NA and NT on the budget & business plan

Jan - March (3 days): Scrutinise draft regulation of the AG

Consider See 10 Reports of the AG relating to:

· Auditing Standards

· Categories of non-audit services

· Instances of co-operation

April - August (10 days): Appointment of external auditor of the AG Make inputs to AG on Section 13 and other issues, including:

· Auditing standards, and nature & scope of

· audits

· Procedures for the handling of complaints

· All other matters prescribed by legislation

Oversight visit to Provincial offices and head-office

September - October (3 days): Scrutiny of AG's Annual Report and Financial Statements

Report to Parliament.

In addition to these annual functions, there are other functions that the oversight mechanism from time to time will have to fulfill, for example:

· Advise the National Assembly on any matter relating to the Auditor-General [section 2(c)];

· Assist and protect the Auditor-General in order to ensure the independence, impartiality, dignity and effectiveness of the Auditor-General [section 2(c)];

· Consult the person recommended by the NA for appointment as Auditor-General and make recommendations to the President for the determination of the conditions of employment of that person, including an appropriate salary, allowances and other benefits [section 7(1)];

· Make inputs to the Auditor-General on the code of conduct relating to professional conduct standards for the performance of audits, and disciplinary steps for misconduct [section 12(3)(b)];

· Make inputs to the Auditor-General on the appointment of the Deputy Auditor- General [section 31(1)];

· Consider concerns raised by the Audit Committee of the Auditor-General [section 40( 6)(b )(ii i)];

· Consider the accounting standards in terms of which the financial statements of the Auditor-General is compiled annually [section 41(2)];

· Consider reports from on any actual or impending under collection of revenue due, shortfalls in budgeted revenue, and overspending of the budget or expenditure not in accordance with the budget of the Auditor-General [section 43(5)(b)]; and

· Consider notification by the Deputy Auditor-General of instances of expenditure likely to be irregular or fruitless and wasteful, but where the Auditor-General has instructed the Deputy to proceed [section 45(3)]

It is also envisaged that as part of effective oversight, the oversight mechanism will -

· pro-actively and regularly review the public audit legislation; and

· annually undertake one or two site visits to the head office and/or provincial offices of the Auditor-General.

Resources and meetings required

Based on the experience of the predecessor of the oversight mechanism, the Audit Commission, and the additional functions provided for in the Public Audit Act, it is estimated that the mechanism would meet approximately 20 times a year. It should also be borne in mind that there will be substantial preparatory time required for meetings. (The Audit Commission meetings required four hours preparation on average.)

The mechanism must be resourced with a secretariat capable of dealing with the support requirements, both in terms of volume and expertise. The secretary should have competencies similar to a company secretary - a knowledge of finances, applicable law, and excellent report writing skills.

The budget of the mechanism should provide for the normal committee support services, but should also provide limited funds for expert consultancy advice that will be needed from time to time.

At every step of the oversight cycle members will require different skills. It is therefore proposed that members should receive regular training in order to effectively oversee the Auditor-General. Training could be from bodies such as the Institute of Directors (corporate governance); the Public Accountants and Auditors Board (audit standards), as well as training in IT (SAICA has a section that could provide such training).