2013 ▌ ASPG Conference
ASPG Conference 2013
Watching our watch-dogs:
current models for
accountability and
independence
Jacquie Stepanoff
Manager Policy and Coordination
1
2013 ▌ ASPG Conference
Why are we here? What will this presentation cover?
Recently…some disquiet around adequacy of checks and balances for
independent officials with powers of scrutiny.
Possibly… a response to the growth of the ‘independent review’ sector?
This presentation
•
Won’t comment on validity of the growth of integrity bodies – they are
created and empowered by Parliaments.
•
Won’t address specific concerns about particular exercises of authority
•
Will try to offer some context around this sense of unease by surveying
checks and balances in place for one sample group: Auditors General
•
Will offer perspectives on how Parliaments and researchers might
assess whether these are adequate
2
2013 ▌ ASPG Conference
Growth in size and scope of independent review bodies
Growth in size and number…an ‘audit explosion’?
•
UK study: 22% increase in numbers/100% in spending on bodies with
powers to review government activity (Hood et al, 2008)
•
Australia: rapid increase of commissioners with powers of scrutiny and
review (e.g. FOI, Privacy, Children’s, Gambling, Public Sector etc).
Growth in scope and powers
•
New powerful bodies with quasi judicial powers to prosecute and
make binding findings (e.g. corruption commissions, inspectorates)
•
Increased powers for existing bodies (e.g. A-Gs can compel
appearances by citizens, Ombudsmen can search 3rd party premises)
Growth in independence
•
Reforms by Parliaments to integrity and audit legislation across 2000s
3
2013 ▌ ASPG Conference
PART 1 – What Checks and Balances are in Place?
To help inform this conversation on oversight of independent offices, we
decided to get a better understanding of what kinds of checks and
balances were (already) in place.
So… as a case study - we surveyed legislation of Auditors-General (A-Gs)
in Australia, selected Canadian and UK jurisdictions
We hoped this quick survey might then trigger thinking on
• Common approaches, gaps/overlaps
AND
• How Parliaments might assess whether these checks and balances are
• Adequate
• The right ones
4
2013 ▌ ASPG Conference
Surveying the checks and balances: What did we find?
Our review found substantial layers of accountability in place under
legislation for most Auditors-General in Australia, NZ, Canada, UK.
We saw 4 distinct kinds of accountability mechanisms in place
1.Public Sector – controls that apply to A-Gs the same as they do to all
public sector entities, including judicial + administrative review
2.Parliamentary – checks and balances emanating from a direct
relationship with the Parliament.
3.Professional – controls on performance, conduct and ethics arising from
the application of professional auditing standards and quality assurance
requirements
4.Performance – formal reviews and oversight of A-Gs’ performance
5
2013 ▌ ASPG Conference
1. Public Sector (a) : General governance
6
Most public sector accountability mechanisms apply to most A-Gs too
• INTOSAI: sometimes translate indirectly to controls by Govts over A-Gs
Mechanisms that frequently applied to A-Gs include
• Appropriation – most A-Gs still receive budget through Executive.
Estimates hearings/inquiries can interrogate outputs.
• Financial Management – mandatory compliance and policy frameworks,
procurement restrictions, annual/quarterly reporting requirements
• People Management – conditions for employees who are public servants,
grievances, codes of conduct
• Public administration – can be subject to reviews by govt departments
• Risk Management and IA requirements – audit committees, risk
frameworks and attestations
2013 ▌ ASPG Conference
1. Public Sector (a): examples
7
•Appropriation -Treasurer has control over budget allocation for audit
office in NSW, NT, SA & TAS.
Gordon Robertson, (http://www.acag.org.au/Independence-of-Auditors-General-in-ANZ-2013.pdf)
•Financial Management – The Tasmanian Audit Office is subject to the
Financial Management and Audit Act 1990. (TAS)
Financial Management and Audit Act 1990 Schedule 1
•People Management - Public Sector Act 2009 (SA) governs employee
matters at SA Auditor-General’s Department.
•Public Administration - Public Administration Act (Vic) allows ‘special
reviews’ of VAGO by a government department/Minister.
•Risk Management - Statutory requirement for Audit and Risk
Management Committee (3 external independent representatives who
advise the Auditor-General). (QLD )
Annual Plan 2012
2013 ▌ ASPG Conference
1. Public Sector (b): Mutual accountability
8
A key accountability mechanism for the public sector is scrutiny by
‘integrity bodies’, including administrative and judicial review.
National Integrity Systems Assessment (2005) found Australia’s integrity
bodies should be – and often were - ‘mutually accountable’.
Our review supports this, finding offices and actions of A-Gs often subject to
• Cross-review * by other ‘core’ integrity bodies: e.g. Corruption
Commissioner, Human Rights Commissioner
• Administrative review: e.g. Ombudsman
• Judicial review. i.e. courts
* Hon Wayne Martin QC notes some limitations in W.A.
2013 ▌ ASPG Conference
1. Public Sector (b): Mutual accountability examples
9
Cross review of core integrity bodies
• Canada NAO: Languages Commissioner, Public Service Commission
(staffing and classification practices), Privacy Commissioner (Privacy
Act), Information Commissioner (Access to Information Act). (Canada)
Office of the Auditor-General of Canada, “Scrutinising the Office of the Auditor General,” 2011
• Australian NAO – Australian Public Service Commission, Merit
Protection Commissioner, Australian Crime Commission.
National Integrity Systems Report 2004, p. 25
• Administrative review – Victorian Ombudsman may investigate
actions of Office (VIC)
Ombudsman Act 1973, Schedule 2
• Judicial review – A-Gs are subject to judicial review in all Australian
jurisdictions, which can examine the legality of the agencies actions.
2013 ▌ ASPG Conference
2. Parliamentary
Beyond ‘public sector’ – A-Gs also have direct accountabilities to
Parliament (in accordance with traditional role as officer of Parliament)
Common mechanisms include:
Whole of Parliament
• Appointment, termination and suspension
• Appropriations – recommendations or directly
• Receive annual plan and hold to account via annual report
• Audit findings reported openly in Parliament
Parliamentary Committees
• Input to audit program + censure should input not be taken up
• Review of audit reports
• Noteworthy development: specific oversight Committees
10
2013 ▌ ASPG Conference
2. Parliamentary – Whole of Parliament examples
11
• Appointment, termination and suspension – Auditor-General may be
suspended & removed from office by resolution of both houses of
Parliament. (SA)
Public Finance and Audit Act 1987
• Appropriations – Auditor-General submit an estimate of funds
required in that fiscal year to Select Standing Committee of Parliament.
This is reviewed and the transmitted to Minister of Finance. (Alberta)
Auditor-General Act 2000 s12
• Receive annual plan and hold to account via annual report –
Auditor-General present annual report to House of Representatives and
must include account of the implementation of the annual plan. (NZ)
Public Audit Act 2001 s37
2013 ▌ ASPG Conference
2. Parliamentary – Parliamentary Committees examples
12
•Input to audit program – Annual plan, budget, and specifications for
performance audit developed in consultation with Parliamentary committee
before it can proceed (VIC)
S. 7A and s.5 (2), Audit Ac 1994
•Review of audit reports – Public Accounts committee selects parts of
Auditor-General’s report on which to hold public meetings for Minister and
senior staff. The committee submits a report to the legislature containing
comments and recommendations on the Auditor-General’s Report.
(Ontario)
Office of The Auditor-General of Ontario, (http://www.auditor.on.ca/en/about_what_en.htm#public)
•Specific oversight Committees – Public Accounts Committee reviews
reports. Joint Audit Committee (established June 2013) undertakes
statutory reviews of OAG. (WA)
2013 ▌ ASPG Conference
3. Professional
Note: these accountability mechanisms are possibly unique to A-Gs
International auditing standards have force of law in Australia, Canada and
UK. In some cases A-Gs can waive, but must disclose publicly.
Standards are highly proscriptive and set the bar above that required for
most public sector functions. They include binding dicta on:
• Evidentiary requirements for audit conclusions
• Natural justice for person/entities subject to public comment
• Ethics
• Complaints procedures
Holding to account for compliance with standards
• External - usually via external (non financial) audits of A-Gs
• Voluntary - peer and internal reviews on cyclic basis, external reported
13
2013 ▌ ASPG Conference
3. Professional - examples
14
•Force of law - S.13 of the Audit Act 1994 requires that standards made
by AUSAB must be applied to audits (VIC)
Auditing Standard ASA 500 A1
•Ethics - Auditors must have regard to the applicable requirements of
APES 110 Code of Ethics for Professional Accountants.
Auditing Standard ASA102 A1
•External review of compliance - PAEC performance audit of the VAGO
report includes in its terms of reference inquiry into whether the office
complies with Australian Auditing Standards. (VIC)
• Internal controls – Australasian Council of Auditors-General have
agreed a detailed quality framework for use by external reviewers of
A-G offices to ensure compliance with standards.
2013 ▌ ASPG Conference
4. Performance
Performance based accountability for A-Gs is often addressed via generic
public sector accountability mechanisms (see 1.)
But – on top of that, it is now common for Parliaments to require
‘performance audits’ or a performance-based statutory reviews
Common elements of these accountability mechanisms include
• Whole-office scope (not just areas of risk)
• Public reports
• 3-5 year intervals
• Strict requirements around independence of auditors undertaking them
Of note, in some jurisdictions:
• Audits in accordance with standards (inc independence requirements)
• New: standing auditor, potential for greater continuous disclosure
15
2013 ▌ ASPG Conference
4. Performance audits/reviews - examples
16
• Cyclic – Statutory reviews every 3-5 years (QLD, WA, VIC)
• Broad Scope – >40 criteria in 2013 performance audit of VAGO (VIC)
• Public report - Review made public and contains 44 recommendation
for areas of improvement. (QLD)
• Independence - Auditor undertaking financial and performance audits
of Audit Office must be independent. (ACT)
Auditor-General Act 1996 s27
• Same powers as A-G - An independent performance or financial
auditor is provided with the powers provided to Auditor-General (VIC).
Audit Act 1994 S17(6)(a)-(h) and S19(5A)(a)-(h)
• New: standing auditor - An independent auditor is appointed for a term
of 3- 5 years. Audits financial statements & conducts performance audit
of the ANAO at any time. (Commonwealth)
Auditor-General Act 1997 s41-45
2013 ▌ ASPG Conference
PART 2: Towards an assessment of accountability
17
A survey like this shows how much A-Gs are accountable…but not how well
To answer the ’how well’ question of whether the checks and balances are
the right ones – a more qualitative approach is needed…
Review of recent literature, conference papers and legislation suggests some
clear emerging evaluation approaches
A.Independence perspective – Independence is key value of A-G, so should
limit ‘hard’ accountability to (whole of) Parliament, not Executive.
B.Risk perspective – Independent review bodies can pose risks to
community and oversight/accountability mechanisms should be designed
accordingly
C.Regulatory effectiveness – Accountability of any public sector body
should encourage and allow effective performance of functions
2013 ▌ ASPG Conference
Concluding thoughts
Trend to create and empower independent review bodies (including
‘integrity bodies’)
Interest from some commentators in reassessing the balance between
independence and accountability/ adequacy of checks and balances
Review of Auditor-General legislation in Aus, Canada, UK show significant
layers of accountability, features include:
• binding/hard accountability largely confined to Parliaments
• additional ‘soft’ accountability mechanisms on top of those applying to
other public sector bodies
Qualitative approaches to evaluating the adequacy of these checks and
balances should consider independence, risk and regulatory perspectives
18
2013 ▌ ASPG Conference
Further reading
19
• Robertson, G. “Independence of Auditors General: A Survey of Australia
and New Zealand Legislation,” http://www.acag.org.au/Independenceof-Auditors-General-in-ANZ-2013.pdf , 2013
• Martin, W. “Forewarned and Four-Armed – Administrative Law Values
and the Fourth Arm of Government,” Whitmore Lecture, 2013
• Field, C. “The Fourth Branch of Government,” AIAL Forum, 2012
• Wood, J. “Ensuring Integrity Agencies have Integrity,” AIAL Forum 2007
• NISA, “Chaos or Coherence? Strengths, Opportunities and Challenges
for Australia’s Integrity Systems,” http://archive.transparency.org/policyresearch/nis/nis_reports_by_country , 2005
• Spigelman, J. “The Integrity Branch of Government,” AIAL Forum, 2004