The Sunday Leader

National Audit Bill Grants Sweeping Powers To AG?

by Santhush Fernando & Amavasya Sirisena

The proposed National Audit Bill grants sweeping powers to the Auditor General with some provisions charged of being ‘draconian’ by certain quarters.

A copy of the final draft of the National Audit Bill was submitted to the Office of the Prime Minister by Legal Draftsman on 14 June 2016, The Sunday Leader learns.

The new Act granted sweeping powers some of which breached accepted global best practices and norms, a source at the Auditor General’s, on grounds of anonymity, told The Sunday Leader.

“Some of the provisions are of a draconian nature and grants powers to Auditor General which are quasi-judicial, in breach of the universally accepted principle of separation of powers. This is an example of the executive usurping the powers of the judiciary. Even the previous principal enactment – the Financial Act of No.38 of 1971 did not grant such sweeping powers. I don’t think unless in authoritarian regimes accord powers to the State (i.e. Auditor General) to take it upon itself to intervene into only foreign projects but even bodies which are corporate or incorporate!”

According to him as per Section 4 the Auditor General empowered with “the discretion to inquire into any matter relating to an audited entity brought to his notice by any member of the public in writing along with substantial proof of the matters asserted, and report thereon to Parliament.”

“This is actually a sweeping power. This is too broad because under Section 53 an ‘audited entity’ includes, inter alia -

l)        Projects sourced by a foreign entity or a foreign Government which are facilitated or carried out by an audited entity;

o)      Anybody corporate or incorporate established by law.”

In addition the country’s security and defence establishments have been brought under the purview of the Auditor General, which was a departure from not only previous practice but also global practices and norms. Under Section 8(1)(e) the Auditor General (or any person authorised by him) shall have powers require any person to disclose, either orally, in writing or by any other means, any information based on reliable evidence, that may be strictly relevant for the audit, and may question any person to verify its accuracy: provided that any information relating to classified information the disclosure of which is prejudicial to national security of Sri Lanka shall be audited personally by the Auditor General. A high ranking official of the Legal Draftsman’s Department noted that security and defence establishments have never been brought under the purview of any outside department or body.

“Those are classified under Sri Lanka’s Official Secrets Act No 32 of 1955 and this will come into conflict with the new National Audit Act once this law comes into effect,” he added.  Several legal experts have raised concerns over Section 9 (c) which empowers the Auditor General to implementing the surcharge provisions under part IV of the Act. “Surcharge is normally not imposed by the Auditor General, which was hitherto imposed by the Secretary of the Ministry. There is also a new provision – Section 21(1)(a)  read with S 21(2) where the Auditor General could surcharge against persons, notwithstanding anything to the contrary in any other written law. Normally entities were subject to surcharge but not individuals.”

Under Section 21(1)(a) the Auditor General shall impose a surcharge on the value of the deficiency or loss in every transaction of an audited entity, where the Auditor General has reasonable grounds to believe that such transaction has been made contrary to any written law, and has caused any deficiency or loss due to the fraud, negligence or corruption of those involved in that transaction.   He added that this breached the limited liability principle of companies and other incorporated bodies.

“This can mean that not only officials but even directors could be surcharged which goes against corporate laws of majority countries with advanced economies. As a result of this public servants and officials will be very reluctant to take decisions not improving the efficiency but stagnating the whole economy”

Under Section 25, any person who is responsible for the deficiency or loss could be brought before a magistrate for recovery of such monies.

“This is something that the Commission to Investigate Allegation of Bribery or Corruption (CIABOC) and Police initiates. once this comes into effect you have the Bribery Commission, Auditor General and the Police duplicating duties. This would lead to a waste of public resources.”

Many public officials and legal experts hope that both the government and civic organisations look critically into the new Bill.

“It is true that you need a strong Auditor General’s Department in order to combat corruption and fraud. But that should not mean that the Department should be given police or judicial powers. This would be highly detrimental and would lead to further stagnating of the economy,” lamented an accounting expert serving the government.



2 Comments for “National Audit Bill Grants Sweeping Powers To AG?”

  1. Going by the greater incidents of crime and frauds, and the even greater delay of justice, the cure may be in the proposed new bill, and this approach should also be with the law of the country. Criminality has taken a deeper and vicious route and is ceaseless and the stricter application of the law would have a mitigating effect. Crime of all types has become a profession and even the members of the legal fraternity are involved. Even sadder, the courts have become infected with it. The Rajapakse regime took it to new and greater heights.

  2. gamarala

    Finances of the armed forces have never been audited.
    Monthly food contracts worth millions are awarded without tenders.
    Arms procurements same.
    Army businesses too need auditing.

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