Transparency International challenges National Audit (Amendment) Bill in SC

The Transparency International Sri Lanka (TISL) yesterday filed legal action in the Supreme Court challenging the National Audit (Amendment) Bill which was published in the gazette on 23 June 2025. 

The Bill is to amend the National Audit Act No. 19 of 2018. The petition has been filed in public interest.

TISL said the National Audit Act is one of the key legislative tools to uphold financial accountability and combat corruption within the public sector. It empowers the Auditor-General to audit public institutions and hold officials accountable for misuse or mismanagement of public funds. This is done particularly through its provisions on imposing surcharges as penalties. Surcharge is designed to ensure that public officers are accountable for losses or mismanagement of public resources due to fraud, negligence, misappropriation, or corruption.  In the proposed amendment, there are several provisions that weaken this framework and risk undermining the independence, authority, and effectiveness of the public auditing process. 

According to TISL, one of the most concerning features of the Bill is the proposed removal of “negligence” as a basis for surcharge under Sections 19 and 23 of the principal enactment. This lowers the standard of responsibility for public officials, potentially shielding them from being held liable even where losses to the State are caused by careless or reckless duty of care. This contradicts the public trust doctrine and weakens constitutional safeguards for citizens against mismanagement of public funds.

The Bill introduces a “Surcharge Review Committee” to make decisions on recommendations on imposing a surcharge made by the Auditor-General. The power to make final decisions on surcharging and the amounts to be recovered is vested in the “Surcharge Review Committee” appointed by the President. The petition flags concerns over the absence of a mechanism to ensure that the decisions taken by the Surcharge Review Committee are open, fair, and accountable.   

TISL also raised concerns over the lack of clear timelines and sanctions for non-compliance with the complaint mechanism on audit findings to law enforcement. The proposed amendments allow the Auditor-General to notify, where reasonable grounds to believe that any fraud, corruption or misappropriation in any transaction has been committed, the Chief Accounting Officer in terms of the auditee entity or Secretary to the Cabinet of Ministers when such allegation is against the Chief Accounting Officer, to act “immediately”, thereby placing the obligation of making a complaint to law enforcement. However, absence of defined timeframes or penalties for non-compliance opens this process to arbitrary delay, inaction, or political influence – seriously weakening enforcement.

TISL said Sri Lanka’s own Governance Action Plan and the National Anti-Corruption Action Plan 2025–2029, along with the IMF Governance Diagnostic Assessment, call for stronger public audit frameworks and robust enforcement. However, the Bill’s proposed amendments inhibit these national and international commitments. Instead of strengthening institutional oversight, it dilutes accountability and compromises timely legal action on audit findings.

“At a time when Sri Lanka is attempting to restore public confidence in state institutions and meet its anti-corruption reform pledges, it is imperative that the Auditor-General’s independence and enforcement powers are preserved – not curtailed,” TISL said.

TISL’s petition urges the Supreme Court to determine that the relevant clauses of the Bill are inconsistent with key provisions of the Constitution, including the sovereignty of the people, the right to equal protection of the law, and the proper exercise of public power.