The National Audit Bill: Should they hold it up?

• Bill risks going off the rails without enabling laws

 By Lacille De Silva

Why is it that a group of powerful ministers, including a few secretaries to ministries, is mounting pressure on the President and the Prime Minister to dilute the National Audit Bill? Are they also dilly-dallying with the enabling legislation bill? It had been sent through all appropriate channels, namely the Auditor-General, legal draftsman and Attorney-General since 2003. The previous regime endorsed the bill in its entirety but prevented it becoming law.

A subcommittee consisting of ministers Sarath Amunugama (Chairman), Rauff Hakeem, Anura Priyadarshana Yapa and Ravi Karunanayake, serving as members, has been appointed to consider whether this bill could violate the rules of natural justice. 

The Constitution (Article 42 (2)) specifies that the Cabinet of Ministers is “collectively responsible and answerable to the Parliament”. The Cabinet of Ministers is “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 subcommittee disregard the Attorney-General’s opinion? Shouldn’t they opportunely grant the necessary powers and enact enabling law to achieve good governance objectives? The AG performs a duty as the trustee of the whole nation. The AG therefore is the people’s officer.  Financial Act No. 38 of 1971 too requires that the AG carry out statutory audits. If so, why did successive governments create roadblocks otherwise?

The auditor-general has budget cuts imposed by the General Treasury. A good number of vacancies had not been filled for years. The AG had to face endless difficulties in obtaining necessary funds to carry out his legitimate functions. Due to this reason, the AG is unable to attract, train and retain qualified staff. 

The outcome is that audit contribution is not timely, lacks materiality and is not on par with international best practices. An assessment carried out by the World Bank has shown that there are delays across the entire audit process which are due to factors beyond the AG’s control. 

Similarly, due to manipulation, the executive arm had kept the AG out when it came to ‘defence expenses’ and other critical investigations citing national security interests, etc. as reasons. 

However, numerous irregularities such as the MiG-jet deal, etc. had been unearthed by the AG amidst numerous complications. There had been instances where the AG had to be content with only a certification by the President and the minister of finance particularly in regard to defence expenditure.  

The IMF in 2003 had pointed out the need to implement necessary reforms to achieve basic requirements for fiscal transparency. Hasn’t that become worse thereafter?

The Auditor-General’s Department Trade Unions too had insisted that clauses Nos. 21-25 should not be deleted. They had urged that the Auditor-General’s powers, independence and authority be further strengthened over public finances. They had pointed out that both the President and the Prime Minister during their election campaign had assured that the bill would be tabled in Parliament on 19 February 2015 and approved and raised the issue why the present government too had deferred enacting an important bill even after 17 months from the scheduled date.

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. 

CHOGM communiqué

The Auditor-General is the Constitutional machinery introduced and established for the purpose of assisting the Parliament. The 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 the office of the AG credible and effective for the benefit of the people. 

Shouldn’t we ensure that we produce high quality and insightful audits in order to improve public financial management and reduce waste, fraud and corruption? This office began over two centuries (1799) ago in Sri Lanka.

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 did so by stating 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 after the Commonwealth Auditors General Conference, participants (including Sri Lanka) resolved to launch a campaign across the Commonwealth to make the CHOGM communiqué a reality.  What is the barrier to making it a reality? It is corrupt political leadership.   

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

The AG is an officer of Parliament. The AG has been constitutionally strengthened to perform his constitutional duties for the benefit of Parliament. The AG’s role briefly is to safeguard, maintain and ensure financial integrity in the Government. All the reports of the AG are therefore directed to the Parliament. 

In addition, Parliament can direct the AG to carry out a specific audit or request the AG to provide necessary advice or comments regarding a matter under investigation. The Parliament accordingly is the forum where the AG’s reports are considered. The AG’s primary duty is to analyse government spending and revenue and report its findings, being the people’s watchdog of 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 utilisation of the public’s purse for the betterment of the people. 

Antagonism towards AG 

However, since the 1970s the AG’s staff has been threatened, insulted, persecuted and pressurised when they had to perform their duties to protect public interests. The most recent development is that certain MPs have reported the AG to the Prime Minister.

Shouldn’t the relevant MPs request the PM to finalise investigations pending in CIABOC, PRECIFAC and FCID independently instead? 

Can you remember that an Audit Superintendent in Ambanwela had acid thrown at him for his contribution in revealing a massive fraud running into a few billions? May I add, I myself was dealt with and became a victim when I got the AG’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 narrow shave!

Let me add, the 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 PAC and COPE 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, which I believe is a serious deficiency in our system. I would suggest laws be amended to issue surcharge notices on the 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. 

May I add that it is the lack of Government responsiveness which is currently an issue and hence the Cabinet of Ministers must encourage the establishment of more innovative responses in this regard. Shouldn’t they establish far superior and more effective follow-up systems to ensure that the Auditor-General’s findings are properly implemented to improve public expenditure and 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 presently building up a series of laws and the state of our mind to achieve bigger goals for the benefit of the people by upgrading the AG’s independence. 

It has recently been in jeopardy as a result of the executive trying to make inroads into the AG’s Department. This must be stopped. 

AG’s independence

There seems to be nagging ambiguity although the 19th Amendment has given more strength to the AG due to the imprudence, inexperience, coarseness and arrogance of ministers and other petty politicians. Independence does not come by accident. It has to be carefully planned, which could take years of persistent effort. 

The overriding intention of the Government should be to implement the same law that Britain had introduced – The National Audit Act (1983) - which provided total independence to carry out the functions of the Auditor-General. 

The money required for the AG in UK is provided separately by Parliament, on the basis of the estimates provided by the National Auditor-General having substituted treasury control over the operations of the National Auditor. 

Shouldn’t we follow the mother Parliament? The AG could then accomplish the duties entrusted to him objectively and effectively in the name of good governance. The AG could then function independently to serve the Parliament without being dependent on the executive arm with the necessary freedom - functionally, financially and administratively in order to be able to issue independent and unbiased reports to the Parliament.

The AG could then more vigorously ensure accountability from the executive arm. All public financial operations without an exception must be audited. The executive arm includes the Cabinet of Ministers, Ministries, Departments, etc. as stipulated in the Constitution. The AG therefore does not need to act on the dictates of the Cabinet of Ministers. The AG should be strengthened to carry out auditing even if ministers commit irregularities for personal gain.

Shouldn’t we also take into consideration the remarks made by the highly respected Former Auditor-General S. Mayadunne that “the National Audit Commission has presently become dysfunctional”. It was during Mayadunne’s period that this bill was initiated. 

If this bill could have been enacted in 2005, losses reported by the COPE and PAC reports running into billions could have been surcharged from the culprits without any difficulty. The relevant bill has been gathering dust for decades.

My argument is that the Auditor-General should have the power to issue surcharge notice against officers if they have acted contrary to written law. As was stated by the President, the 19th Amendment was indeed a progressive step. It had specified the need for enacting the necessary enabling laws, i.e. 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) provides that Parliament should provide by law for meetings of the Commission, the establishment of the Sri Lanka State Audit Service. Shouldn’t every citizen support, unite and demand to ‘remake Sri Lanka’ once again? The National Audit Law is a necessity!

In conclusion, Parliament has to rely on an independent statutory officer, the Auditor-General, in order to provide Parliament with information, whether the activities of the executive arm is 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 thereby strengthen the core values of the public sector and ensure effective audit activities by helping to establish independent audit functions to take the country forward for the benefit of the people. It is Parliament that must take up the responsibility to ensure that the Government is doing the right thing. This is why a powerful Auditor-General is necessary, one who will be an apolitical expert and continuous window into the bureaucracy to implement necessary checks and balances, without which it will go off the rails completely.

(The writer can be reached via [email protected])