Chapter 1 The role and functions of the Joint Committee of Public Accounts
and Audit
Introduction
1.1
The Joint Committee of Public Accounts and Audit (JCPAA) is a committee
of the Commonwealth Parliament, established pursuant to the Public Accounts
and Audit Committee Act 1951 (PAAC Act).[1]
1.2
The PAAC Act provides for Committee members to be drawn from both the
House of Representatives and the Senate. Following the 2010 Federal Election
and subsequent ‘Agreement for a Better Parliament —Parliamentary Reform’,[2]
the Chair of the JCPAA for the 43rd Parliament is an
Independent Member of the Parliament, and the Deputy Chair a Government Member.
1.3
The JCPAA is one of the oldest committees in the Parliament, with its mandate
essentially unchanged since 1913: to hold Commonwealth agencies to account for
the lawfulness, efficiency and effectiveness with which they use public monies.
1.4
Committees such as the JCPAA perform a key role within a parliamentary
democracy calling organisations to account for their performance, in particular
their management of Commonwealth resources.
Committee duties
1.5
The duties of the Committee, as outlined in the PAAC Act, include:
- to
examine the financial affairs of authorities of the Commonwealth;
- to
examine all reports of the Auditor-General that are tabled in the Parliament;
- to consider the
operation and resources of the Australian National Audit Office (ANAO);
- to approve or reject
any nomination for appointment of any person to the office of the
Auditor-General or Independent Auditor of the ANAO;
- to increase
parliamentary and public awareness of the financial and related operations of
government; and
- ‘any other duties
given to the Committee …by any other law’.[3]
1.6
In the last year, an amendment to the Parliamentary Services Act 1999,
incorporating the Parliamentary Budget Office (PBO) into legislation, named the
JCPAA as the PBO’s oversight body. In many regards, the Committee’s oversight
duties for the PBO are similar to those undertaken in oversight of the ANAO.
1.7
The following section provides more detail on the Committee’s specific
roles and functions. Further information is also accessible on the JCPAA’s
website at www.aph.gov.au/jcpaa, or by contacting the Committee secretariat at
jcpaa@aph.gov.au or on 02 6277 4615.
Examining the financial affairs of
Commonwealth authorities
1.8
The PAAC Act provides that the Committee may report to the Parliament,
with any comment it thinks fit, on any items or matters concerning the
financial accounts and affairs of Commonwealth authorities, any report of the
Auditor-General tabled in Parliament, or any circumstances connected with
either. This allows the Committee to essentially set its own work program—a
power unique amongst parliamentary committees—and ensures a high degree of
autonomy from executive government.
Review of Auditor-General’s reports
1.9
The Committee is responsible for examining all of the Auditor-General’s
reports on behalf of the Parliament. This process is supported by regular
briefings from ANAO officers to the Committee on the findings of tabled audit reports.
1.10
Following these briefings, the Committee selects audit reports for
further examination, typically where: the ANAO has been largely critical of an
agency; the agency audited has a history of performance issues; or there may be
a high financial or safety risk to the community.
1.11
Public hearings are then conducted on the selected reports with witnesses
present from both the audited agency and the ANAO. Guided by the findings of
the audit report, at the hearings the Committee generally focuses on
determining how particular deficiencies or issues arose, as well as what
actions the agency is undertaking to rectify the shortcomings identified in the
audit, in particular progress on implementing the ANAO’s recommendations.
1.12
The Committee periodically tables reports in Parliament on its reviews of
Auditor-General’s reports. The Committee’s reports incorporate the evidence
taken during public hearings and may include recommendations by the Committee
in addition to those already presented by the Auditor‑General.
1.13
Other committees are also able to review ANAO reports that are relevant
to their area and portfolio coverage.[4]
Review of the Defence Materiel
Organisation Major Projects Report
1.14
In addition to the review of ANAO reports referred to above, each year
the JCPAA scrutinises the Defence Materiel Organisation (DMO) through examining
the ANAO’s annual DMO Major Projects Report (MPR).
1.15
The MPR was developed following requests from the 41st
Parliament for the ANAO to produce an annual report on major Defence
acquisition projects.[5] The annual MPR gives the
Parliament accessible, transparent and accurate information about the status of
Defence's major acquisition projects, and provides a basis for longitudinal
analysis of project performance.
1.16
Each MPR is automatically referred to the JCPAA in accordance with its
statutory obligations to examine all reports of the Auditor-General. The
Committee currently examines each MPR through a public hearing, and prepares a
report to Parliament.
1.17
In support of this process, the JCPAA also annually reviews and endorses
the MPR Guidelines prior to the ANAO’s production of each report.
Consideration of the operations and
resources of the ANAO
Advise on the Parliament’s audit
priorities
1.18
While the Auditor-General is given the authority to autonomously
determine the work program undertaken by the ANAO,[6]
the JCPAA is responsible for determining and advising the Auditor-General of
the Parliament’s audit priorities.
1.19
As part of the identification of the Parliament’s priorities, the JCPAA
seeks input from all other parliamentary committees, asking advice on any
programs or functions within their portfolio they believe should be audited.
The consolidated list is then referred to the Auditor-General for consideration
in the finalisation of the ANAO’s work program for the proceeding financial
year.
1.20
An Independent Auditor is tasked with auditing the ANAO’s financial
statements, as well as periodically conducting performance audits of the ANAO. In
its role overseeing the ANAO, the Committee engages with the Independent
Auditor, including providing advice on the Parliament's priorities for future
audits of the ANAO.
Review the annual budget of the
ANAO
1.21
Under the PAAC Act, the Committee is required to consider ‘draft
estimates’ for the ANAO and the level of fees determined by the Auditor‑General.
1.22
In support of this process, the ANAO submits the draft estimates and
briefs the Committee on its ability to meet its mandate within the funding
envelope. The Committee then:
- is able to make
formal representations to the Government on behalf of the ANAO if necessary;
and
- make a statement to
both Houses of Parliament on budget day, expressing the Committee’s opinion as
to whether the ANAO has been given sufficient funding to perform its functions.
1.23
The intention of this process and the Committee's power in considering
the draft estimates for the ANAO is to dissuade governments from attempting to
influence the Auditor-General through restrictions to the ANAO's funding.
Appointment of the Auditor‑General
or Independent Auditor
1.24
The JCPAA plays an important role in the appointment of a new Auditor‑General.
While the Minister for the Public Service and Integrity is responsible for
nominating and recommending to the Governor-General a new Auditor-General, this
proposal must first be approved by the Committee on behalf of the Parliament.
1.25
Similarly, the Committee also approves or rejects any nomination for the
position of the Independent Auditor of the ANAO. The Independent Auditor is appointed
from the private sector on a part-time basis to serve as the ANAO’s external
auditor.
Oversight
of the Parliamentary Budget Office
1.26
In August 2011, the Government tabled a response to the report of the
Joint Select Committee on the Parliamentary Budget Office, agreeing that the
Joint Committee of Public Accounts and Audit should ‘have oversight of the
Parliamentary Budget Officer and their office …
in line with similar provisions in the Auditor-General Act 1997
(Cwlth).’[7]
1.27
The subsequent amendment to the Parliamentary Services Act 1999,
incorporating the Parliamentary Budget Office (PBO) into legislation,
formalised the JCPAA as the oversight body. This role includes: approving the
appointment of the Parliamentary Budget Officer; considering the operations and
resources of the Office; and reporting to Parliament on relevant matters
relating to the PBO.
Other activities
Commissioner of Taxation hearing
1.28
In the 41st Parliament, the then Committee initiated an
inquiry into numerous taxation matters. During the course of the inquiry the
Commissioner of Taxation agreed to biannual appearances before the Committee to
update the Parliament and public on recent developments in tax administration.
1.29
Following a decision taken at the 2011 meeting, the Committee now meets
annually with the Commissioner of Taxation, and key stakeholders including the
Auditor-General, the Inspector‑General of Taxation, the Commonwealth
Ombudsman, as well as representatives from small business and tax professional
organisations to scrutinise the activities of the Australian Tax Office.
Annual report requirements for
Commonwealth agencies
1.30
Annual reports of Australian Government agencies are an important source
of both current performance and historical information.
1.31
Each year, in accordance with the Public Service Act 1999, draft Requirements
for Annual Reports for Departments, Executive Agencies and FMA Act Bodies
are submitted by the Department of the Prime Minister and Cabinet to the JCPAA
for approval. As these provide the basis for agency reports, the Committee
carefully considers any proposals to amend, add or omit any requirement.
1.32
The Committee considered and reported on the 2011–12 requirements as
part of the Australian Public Service Annual Update.
Australian Public Service Annual
Update
1.33
The annual meeting with the heads of key agencies responsible for public
sector governance and administration provides the JCPAA with a regular
opportunity to discuss whole-of-government issues and trends, and review the
overall performance of the Australian Public Service (APS).
1.34
Previously held as a private briefing, to increase transparency, the
Committee decided to open up the 2012 meeting to the public. Following the
success of this format, the Committee has agreed to continue to hold the APS
Annual Update as a public hearing.
Policy inquiries
1.35
The Committee also, on occasion, exercises its power to undertake policy
inquiries. These inquiries may arise either from findings of the Auditor‑General
or at the initiative of the Committee.
1.36
Over the term of the 43rd Parliament, the JCPAA has tabled reports
of three major inquiries: two that assisted in scrutinising the role of the
Auditor-General; and the most recent report on National Funding Agreements examining
the arrangements surrounding Federal financial relations with States and Territories.
Responses to JCPAA reports
1.37
The JCPAA’s reports can include both ‘policy recommendations’ and/or
‘administrative recommendations’.[8] Administrative recommendations
can be implemented and decided on by the relevant affected agencies. Policy
recommendations may have direct implications to existing Government policy and therefore
necessitate the relevant Minister or Cabinet to respond.
1.38
The Government has given a commitment for responses to be provided
within six months of the date of a report’s tabling.
1.39
Upon receipt, the Committee reviews each Government response and
considers:
- whether it addresses
the issues raised in the report recommendations; and
- if any further action
should the taken by the Committee in regard to the Government’s response.
External engagement and
communication
1.40
The JCPAA seeks to disseminate information on its role and activities,
and to contribute to enhancing public sector accountability. The Committee
ensures relevant information is accessible through its website at
www.aph.gov.au/jcpaa.
1.41
The Committee, often through the Chair, Deputy Chair and secretariat, endeavour
to meet with visiting delegations, attend seminars, make presentations, and encourage
regional engagement in support of the Committee’s work.
Regional engagement
1.42
Over the last twelve months, the JCPAA has been working with the ANAO
and regional parliaments on capacity building, including planning for
secondments for the staff of the Indonesian and Papua New Guinea public
accounts committee equivalents.
Australasian Council of Public
Accounts Committees
1.43
The JCPAA is an active member of the Australasian Council of Public
Accounts Committees (ACPAC). ACPAC provides a forum for public accounts
committees to: exchange information and opinions; consider ways to improve
quality and performance in scrutinising government expenditure; and promote communication
between committees and Auditors-General, experts, the media and the public.
1.44
Membership consists of parliamentary public accounts committees from
around Australia, New Zealand, Papua New Guinea, Fiji and the Solomon Islands.
ACPAC holds biennial conferences for member and interested non-member
committees from the region, and smaller members-only mid‑term meetings on
alternate years. These conferences are a valuable opportunity to exchange views
and experiences between the different jurisdictions.