 |
The Independence of the Auditor-General
Rose Verspaandonk
Politics and Public Administration Group
5 December 2000
Introduction
The work of the Auditor-General provides a critical link in the chain
of accountability from the Executive to Parliament.
This Research Note provides a brief introduction to the work of the Auditor-General,
and outlines some key issues of independence.
The role and powers of the Auditor-General
The Statutory Office of Commonwealth Auditor-General was created in 1901.
The Auditor-General provides an independent view of the performance and
financial management of public sector agencies and bodies. He or she is
assisted by the Australian National Audit Office (ANAO). The ANAO's 257 staff
(as at 30 June 2000) are employed under the Public Service
Act 1999.
The powers of the Auditor-General are mostly specified in the Auditor-General
Act 1997.
The Auditor-General is empowered to audit all Commonwealth agencies,
authorities, companies and subsidiaries, with the exception of performance
audits of Government Business Enterprises (GBEs) and of persons employed
under the Members of Parliament (Staff) Act 1984. However performance
audits of wholly owned GBEs may be undertaken at the request of the responsible
Minister, the Finance Minister or the Joint Committee of Public Accounts
and Audit (JCPAA). The Auditor-General can access Commonwealth premises
to examine documents.
Increasingly, private sector organisations are contracted to provide
services to, or on behalf of, government. In these cases, the Auditor-General
will only have access to private premises if an access clause has been
included in the contract. The ANAO has argued that such clauses are not
routinely included.(1)
The JCPAA has restated its recommendation that the Auditor-General be
given access.(2)
The Auditor-General prepares:
- performance audits (evaluation of the economy, efficiency and effectiveness
of the management of public sector entities)
- financial statement audits (independent examination of the financial
accounting and reporting of public sector entities), and
- Better Practice Guides (guides outlining good procedures used in agencies).
The current Auditor-General is Mr Pat Barrett AM.
The independence of the Auditor-General
In October 1996 the Joint Committee of Public Accounts (JCPA) outlined
its view of the preconditions for the functional independence of the Auditor-General.
These were:
- personal independence in relation to appointment and tenure
- a wide legislative mandate empowering the Auditor-General to audit
the complete spectrum of Commonwealth functions
- audit independence, including freedom to determine the audit programme,
and to decide the nature and scope of audits to be conducted
- unrestricted access to information in performance of the audit function
together with the right to report any findings to Parliament, and
- adequate resourcing to fulfil audit functions effectively.(3)
The Committee argued that the independence of the Auditor-General should
be strengthened, recommending:
- enshrinement of the Auditor-General as an independent officer of the
Parliament, and a clear statement of his/her independence
- effective oversight of the Auditor-General's operations by an Audit
Committee of the Parliament (in order to make transparent the administrative
relationship between the Auditor-General and the Executive), and
- an extension of the Auditor-General's statutory rights and powers.(4)
The Auditor-General Act 1997(5) enhanced the independence
of the Auditor-General. For example:
- the Auditor-General is an Independent Officer of the Parliament and
is not subject to direction from anyone regarding the conduct of audits
(s. 8), and
- the JCPA was reconstituted as the JCPAA, whose approval must be received
before a new Auditor-General is appointed (Schedule 1).
Further, the Public Accounts and Audit Committee Act 1951 authorises
the JCPAA to make recommendations regarding the draft estimates for the
ANAO (s. 8). Although the JCPAA is a Government-majority committee,
its membership includes parliamentarians from the Opposition and the Australian
Democrats.
JCPA recommendations not adopted in the legislation include:
- access by the Auditor-General to the premises of contractors to government
- a restriction on subsequent appointment to public office
- remuneration linked to that of departmental secretaries
- capacity to disclose sensitive information, and
- discretion to conduct performance audits of GBEs.
Some issues raised by the Auditor-General
A large number of governance issues are discussed in the ANAO's performance
audit reports each year. The following examples were highlighted by Mr
Barrett in the ANAO's Annual Report 1998-99 and Annual Report
1999-2000:
- the importance of effective contract management and accountability
mechanisms in the context of outsourced service delivery (1998-99, pp. 2-4)
- the adequacy of performance information under the outputs-outcomes
framework (1999-2000, p. 2)
- the governance challenges presented by increased partnering and networking
of public and/or private sector organisations (1999-2000, pp. 3-5),
and
- the importance of effective control structures in preventing fraud
(1999-2000, pp. 5-6).
Among the ANAO reports that have captured public attention are the 1993
report into the administration of sports grants and the 2000 report into
the outsourcing of government information technology services.(6)
Each of the States and Territories has its own Auditor-General, who operates
under the legislation of that State or Territory. Notable reports by State
or Territory Auditors-General include:
- a report by the Australian Capital Territory (ACT) Auditor-General
outlining concerns with aspects of the redevelopment of Bruce Stadium,(7)
and
- a report by the Victorian Auditor-General outlining concerns about
the tendering process for that State's metropolitan ambulance service.(8)
The re-emergence of independence-the case of Victoria
Events in Victoria demonstrate the political sensitivity of the independence
of the Auditor-General.
In 1997, the Victorian Government legislated to transfer the majority
of the Auditor-General's staff to a proposed organisation, Audit Victoria,
that would be privatised within two years. More audits would be conducted
by the private sector, with the Auditor-General losing discretion over
the operation of such audits.
Considerable controversy followed, with the changes viewed by many as
an attempt to weaken the independence of the Auditor-General.(9)
They were strenuously opposed by the then Victorian Auditor-General, Mr
Ches Baragwanath.(10) Peter McLellan, a Government parliamentarian,
abstained from voting for the changes.(11)
With the Opposition's support, the Bracks Government restored (and extended)
the independence of the Auditor-General,(12) amidst allegations
that the 1997 initiative had failed on both ethical and efficiency grounds.(13)
Conclusion
Clearly there is some disagreement as to the optimal level of independence
for the Auditor-General. However, discussion in academic journals, Parliament
and the media demonstrates that both the work and the independence of
the Auditor-General are highly valued as a means of enhancing the accountability
of the Executive.
Endnotes
- For example, an examination of 35 contracts across eight agencies
revealed that only two referred to possible access by the Auditor-General
(Submission by the ANAO to the JCPAA inquiry into Contract Management
in the Australian Public Service).
- See JCPAA, Report 379: Contract Management in the Australian Public
Service for discussion of this issue. The recommendation was also
made in the JCPAA's Report 368.
- JCPA, Report 346: Guarding the Independence of the Auditor-General,
AGPS, Canberra, 1996, p. 10. Another influential report by the
JCPA was Report 296: The Auditor-General: Ally of the People and
Parliament.
- ibid., p. 59.
- The 1997 legislation is similar to the Keating Government's Auditor-General
Bill 1994, which was not passed before Parliament was prorogued for
the March 1996 election.
- Commonwealth Auditor-General, Community Cultural, Recreation and
Sporting Facilities Program, Report No. 9, 1993-94 and Commonwealth
Auditor-General, Implementation of Whole-of-Government Information
Technology Infrastructure Consolidation and Outsourcing Initiative,
Report No. 9, 2000-01.
- ACT Auditor-General, Reports of the Performance Audit of the Redevelopment
of Bruce Stadium, 2000.
- Victorian Auditor-General, Metropolitan Ambulance Service: Contractual
and Outsourcing Practices, Special Report No. 49, 1997.
- For example, Sushila Das, 'Plan for auditor flawed say CPAs', The
Age, 2 August 1997 and Karina Barrymore, 'Watchdog was ready to
growl at Kennett', Australian Financial Review, 21 July 2000.
- John Waugh, 'The Kennett Government and the Constitution: No Change?'
in Brian Costar and Nicholas Economou, eds, The Kennett Revolution:
Victorian Politics in the 1990s, UNSW Press, Sydney, 1999, p. 61.
- Damon Johnston, 'MP in vote protest', Herald Sun, 21 November
1997.
- Audit (Amendment) Act 1999 (Vic).
- For example, Ewin Hannan, 'Audit changes attacked', The Age,
31 May 2000.
|
 |
