National Audit Bill: Should they hold it up?
Posted on July 26th, 2016

By Lacille De Silva Former Director General (Administration) and former Secretary to Special Presidential Commission on corruption (Courtesy The Island)


Why are some powerful ministers and secretaries to ministries mounting pressure on the President and the Prime Minister to dilute the National Audit Bill? It has been sent through all appropriate channels, namely the Auditor General, Legal Draftsman and the Attorney-General since 2003. The previous regime endorsed the bill in its entirety but prevented it from becoming law.

A Sub-Committee consisting of Ministers Sarath Amunugama (Chairman), Rauff Hakeem, Anura Priyadarshana Yapa and Ravi Karunanayake, as Members, have been appointed to consider whether the bill could violate rule of natural justice. The Constitution (Article 42 (2)) specifies that the Cabinet of Ministers are “collectively responsible and answerable to the Parliament”. The Cabinet of Ministers are “charged with the direction and control of the government”. Aren’t they, therefore, duty bound, if they genuinely support good governance, to honour the principle that “public sector auditing is key to good public governance”? Article 148 has mandated Parliament to demand transparency and accountability.

Nevertheless, did the Cabinet Sub Committee disregard the Attorney-General’s opinion? Shouldn’t they opportunely make available necessary powers and enact enabling law to achieve good governance objectives? The Auditor General performs a duty as the Trustee of the whole nation. The AG, therefore, is a peoples’ officer. Financial Act No. 38 of 1971, too, requires that the AG carry out statutory audits. If so, why have successive governments have slapped roadblocks?

The Auditor General has budget cuts imposed by the General Treasury. A good number of vacancies have not been filled for years. He had to face endless difficulties in obtaining funds for legitimate functions. Due to this reason, the AG is unable to attract, train and retain staff. The outcome is that audit contribution is not timely, lacks materiality and does not conform to international best practices. An assessment carried out by the World Bank has shown that there are delays across the entire audit process and they have been owing to factors beyond the AG’s control.

Similarly, through manipulations, the executive arm has kept the Auditor General out in respect of ‘defence expenses’ and other critical investigations citing national security interests etc. as reasons. However, numerous irregularities such as ‘Mig-jet deal’ etc. have been unearthed by the Auditor General against numerous odds. There have been instances where the AG had to settle for mere certification by the President and the Minister of Finance particularly in regard to defence expenditure. IMF in 2003 pointed out the need for implementing necessary reforms to achieve basic requirements for fiscal transparency. Hasn’t the situation taken a turn for the worse thereafter?

The Auditor General’s Department trade unions, too, have insisted that the clause Nos. 21 – 25 be retained. They have urged that the Auditor General’s powers, independence and authority be further strengthened over public finances and both President and the Prime minister during their election campaign assured the bill would be tabled in Parliament on Feb. 19, 2015 and approved. The present government, too, has deferred enacting an important bill!

The Auditor General is a Constitutional appointment (Article 153) by the President subject to the approval of the Constitutional Council. He could be removed only by adopting the procedure stipulated in the Constitution and upon an address of Parliament by the President. Auditor-General is the Constitutional machinery introduced and established for the purpose of assisting Parliament. Basic powers of the AG are laid down in the Constitution and problems have now arisen when additional powers are to be extended through proposed enabling legislation to make that office credible and effective for the benefit of the people. Shouldn’t we ensure producing high quality, insightful audits in order to improve public financial management and to reduce waste, fraud and corruption? This office came into being in Sri Lanka over two centuries (in 1799) ago.

Do you know the Commonwealth Heads of Government (CHOGM) in Sri Lanka in 2013 affirmed their commitment to the independence of supreme audit institutions? They stated in their final communiqué: “Heads recognised the contribution that strong, properly resourced and independent supreme audit institutions play in improving transparency, accountability and value for money to ensure that public funds are appropriately spent.” In Malta, in March, 2014, at the Commonwealth Auditors General Conference thereafter participants (including those from Sri Lanka) resolved to launch a campaign across the Commonwealth to make the CHOGM communiqué a reality. What prevents it from becoming a reality? Corrupt political leadership!

Constitutionally, Parliament has been entrusted with full powers and responsibility over the public finances. For this purpose, the Constitution has mandated (Article 154 (5)) that the Auditor General be provided with access to all books, records, returns and other documents, stores and other property besides information and explanations as may be necessary for the performance of his duties and functions efficiently. This does not happen as desired.

The Auditor-General is an Officer of Parliament. AG has been constitutionally strengthened to perform his constitutional duties for the benefit of Parliament. His role briefly is to safeguard, maintain and ensure financial integrity in the government. All the reports of the AG are, therefore, directed to Parliament. In addition, Parliament could direct AG to carry out a specific audit or request AG to provide necessary advice or comments in regard to a matter under investigation. Parliament, accordingly, is the forum where AG’s reports are considered. The AG’s primary duty is to analyse government spending and revenue and report its findings as the watchdog of the people to Parliament. In other words, the AG is the Agent of Parliament who has been entrusted with a specific job to audit the legality and regularity of financial management and accounting on behalf of the citizens to ensure efficient and effective utilization of public purse for the betterment of the people.

However, since 1970s the  Auditor General’s Staff have been threatened, insulted, persecuted and pressured in the performance of their duties to protect public interest. The most recent development is that certain MPs reported the Auditor General to the Prime Minister. Shouldn’t the relevant MPs request the PM to finalise investigations pending in CIABOC, PRECIFAC and FCID instead? It may be recalled that an Audit Superintendent came under an acid attack for his contribution to exposing a massive fraud running in to a few billions of rupees.I myself became a victim when I got the Auditor General’s department to investigate Parliament. I was lucky the CID reported to the Supreme Court when my FR case taken up that I had no hand in leaking the information to the AG. It was indeed a close shave!

Let me add that officers who value social responsibilities have always positively facilitated auditing as a compulsory activity to protect public property and resources. Officers who are corrupt with personal objectives to maximise income through devious means dislike auditing. Which category do you think most of the legislators fall into?

Both Public Accounts Committee and the Committee on Public Enterprises begin their work based on reports from the Auditor-General. It is the bureaucrats who have to answer the queries raised by the members of the Committee because they are responsible to Parliament as accounting officers and administrative heads and not the politicians.  This, I believe, is a serious deficiency in our system.

I would like to suggest that laws be amended to issue surcharge notices on relevant ministers as well. Furthermore, the follow-up mechanism after the hearing, too, needs to be specified if we are to make tangible improvements with regard to the prevention and misuse of public funds. It is the lack of government responsiveness which is currently at issue and hence the Cabinet of Ministers must encourage more innovative responses in this regard. Shouldn’t they establish far superior and more effective-follow up systems to ensure that Auditor General’s findings are properly implemented to rationalise public expenditure and improve the day-to-day administration?

The Auditor General should, therefore, be given the required independence and strength to perform his duties without fear or favour in an unbiased manner. Independence, no doubt, is an evolving construct. In Sri Lanka, in order to achieve better outcomes, we are currently making a series of laws and aspiring to achieve higher goals for the benefit of the people by upgrading the Auditor General’s independence. It has recently been in jeopardy due to the executive trying to make inroads into the Auditor General’s Department. This must stop forth with!

There seem to be a nagging ambiguity though the 19th Amendment has given more powers to the AG owing to imprudence, inexperience, coarseness and arrogance of ministers and other petty politicians. Independence does not come accidentally. It has to be planned carefully and that may take persistent effort over a long period of time.

The overriding intention of the government should be to implement the same law as the UK––The National Audit Act (1983), which gives the Auditor General total freedom to carry out his duties and functions. The funds required for the AG in the UK are provided separately by Parliament, on the basis of the estimates provided by the National Auditor-General.

Shouldn’t we follow the mother Parliament?

The Auditor General could then accomplish the tasks entrusted to him, objectively and effectively in the name of good governance. He could then function independently to serve Parliament without being dependent on the executive arm and issue unbiased reports to Parliament.

All public financial operations without an exception must be audited. The executive arm includes Cabinet of Ministers, ministries, departments etc as stipulated in the Constitution. The Auditor General, therefore, does not need to act on the dictates of the Cabinet of Ministers. He should be empowered to carry out auditing even in the case of ministers committing irregularities for personal gain. Shouldn’t we also take in to consideration the remarks made by the highly respected Former Auditor-General S. Mayadunne? He said, “The National Audit Commission has presently become dysfunctional.” It was during Mayadunne’s period he initiated the current bill. If it had been enacted in 2005, losses reported by COPE and PAC reports running into billions and billions could have been surcharged from the culprits without any difficulty. The relevant bill has been gathering dust for a period over decades.

My argument is that the Auditor General should have the powers to issue surcharge notice against officers if they have acted contrary to the written law. As was stated by the President, the 19th Amendment was indeed a progressive step. It has specified the need for enacting the necessary enabling laws, such as the National Audit Bill. Article No. 153 (A) provides for the establishment of an Audit Service Commission with the Auditor-General as the Chairman. Article 153 B (2) stipulates that Parliament provide by law for meetings of the Commission and the establishment of the Sri Lanka State Audit Service. Shouldn’t every citizen support, unite and demand to “re-make Sri Lanka” once again? NATIONAL AUDIT LAW IS A MUST!

In conclusion, Parliament has to rely on an independent statutory officer, the Auditor General, to provide information as to whether the activities of the executive arm are correctly being carried out and accounted in accordance with the Parliament’s intentions and purposes. The new bill will ultimately strengthen public sector auditing and public sector governance by providing accountability and transparency. It will, in its present form, thereby strengthen core values of the public sector and ensure effective audit activities by helping establish independent audit functions to take the country forward.

It is Parliament that must take up the responsibility to ensure that the government is doing the right thing. Hence the need for a powerful Auditor-General, who, as an apolitical expert, will ensure there are necessary checks and balances in the public interest.

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