NEWS & COMMUNICATION Major concerns regarding the proposed Draft Public Audit Bill [ Back to the News & Communication Page ] The Draft Public Audit Bill (version May 2003) was recently issued for public comment. The Bill seeks to provide for the auditing of institutions in the public sector (refer to full background at the end of this news release). According to the Executive President of the Southern African Institute of Government Auditors (SAIGA), Prof Dieter Gloeck, there are great concerns that the Draft Public Audit Bill in its current form, does not strengthen accountability arrangements in the public sector, but rather that it achieves the opposite. SAIGA has prepared detail comments on the document and disseminated them widely. The following are some of the principle issues involved: The Draft Public Audit Bill legalises the Auditor-General’s provision of other services to the very same institutions on which he is appointed to express an independent audit opinion. As the Auditor-General’s services, advice and support will be reflected in the accounts of the institutions concerned, the Auditor-General will effectively also be reporting on his own work and the effects thereof. At a time when private sector audit firms are voluntarily separating audit from other services within their firms, the South African Auditor-General is going against a world-wide trend by actually introducing and legalising such questionable practices. This is not in the public interest and directly contradicts the spirit of the Constitution’s requirements for an independent public audit institution. The Draft Public Audit Bill overlooks the Registered Government Auditor (RGA) profession with its formalized qualification and structures which are designed, developed and maintained in order to strengthen the public audit function, advance public accountability and to assist with the professionalisation of government auditors. Provision is made for the extensive engagement of private sector auditors in the audit of public sector entities without introducing the necessary safeguards to ensure audit competence. The absence of important public sector topics (PFMA, Treasury Regulations, government auditing standards, etc.) from the private sector auditors’ syllabus and the fact that no public sector audit experience is required to qualify, has resulted in wide-spread criticism of private sector auditor involvement. Yet the Draft Public Audit Draft Bill prescribes no formal assessment to ensure that private sector auditors do indeed possess the necessary public sector audit competence. Totally different audit reports (style, contents and wording) are going to be issued and different auditing standards are going to be applied to public entities, depending on whether the Office of the Auditor-General, or private sector auditors are appointed as auditors. This is not in the public interest. Although the Public Finance Management Act (PFMA) requires all public entities, national and provincial departments to adhere to a strict system of statutory performance management, this Bill does not make a performance audit compulsory. It is rather left to the discretion of the Auditor-General whether or not to perform an audit on the efficient, effective and economical use of the auditee’s resources. The Draft Public Audit Bill confers absolute powers on the Auditor-General. The Auditor-General may act as auditor (section 4), as well as accounting service provider, consultant, and advisor, (section 5), and set the very standards by which his work is to be appraised (section 13(2)). The Auditor-General is also allowed to determine the nature and scope of his work (section 13(1)), to chose assistants outside his Office (“authorised auditors”) and to set the procedures for the handling of complaints (section 13(1)). The Auditor-General is therefore player, coach, referee, time keeper, selector, administrator and also writes and interprets the rules of the game. The information required by the Draft Public Audit Draft Bill to be included in the annual reports by the Auditor-General, fails to contain critical aspects, that are necessary to hold the Office accountable and to provide the public with relevant information. Gloeck summarises: "The Draft Public Audit Bill provides for an environment which is not conducive to the advancement of public accountability not to the performance of an independent audit function. Our country’s Constitution requires the independence of the Auditor-General. Is therefore most concerning that certain fundamental issues in the Draft Public Audit Draft Bill will erode the Auditor-General's independence." - - END OF THE NEWS RELEASE - - Background: The purpose of the Draft Public Audit Bill "The Constitution of South Africa requires the auditing of all public sector departments, municipalities, and publicly funded entities. In Chapter 9, the Constitution recognizes the Auditor-General as an Institution Supporting Constitutional Democracy through auditing and reporting and envisages, in section 188(4), the prescription, by national legislation, of additional powers and functions for the Auditor- General. The Draft Public Audit Bill seeks to give effect to the provisions of the Constitution establishing and assigning functions to an Auditor-General by prescribing such additional powers and functions as well as ancillary matters necessary to enable the Auditor-General to perform his or her functions effectively. The Draft Public Audit Bill therefore seeks to provide for the auditing of institutions in the public sector; seeks harmonisation with existing public financial management legislation; seeks to provide for the continuation an Audit Commission; and to provide for matters connected therewith. The Bill also seeks to repeal the existing Auditor-General Act, 1995 (Act No 12 of 1995), the Audit Arrangements Act, 1992 (Act No 122 of 1992) and certain sections of the PFMA (Act No 1 of 1999)." [ Back to the News & Communication Page ]
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