Transparency International Sri Lanka red flags diluted National Audit Bill

Transparency International Sri Lanka (TISL) is extremely concerned over amended provisions in the gazetted National Audit Bill. There are three major areas of concern – 1. the surcharge powers, being the power to recover monies related to any fraud, negligence, misappropriation or corruption, have been vested in the Chief Accounting Officers (e.g. Secretary to a Ministry or Department Head) instead of the Auditor General 2. Vast discretionary powers have been vested in Chief Accounting Officers in determining the final surcharge 3. Persons subject to an inquiry by the Auditor General are entitled to nominate others to appear on their behalf.

It was originally envisaged that the National Audit Bill would grant powers of surcharge to the Auditor General to hold public sector officials financially accountable for any loss emanating from fraud, negligence, misappropriation or corruption in transactions for which they were responsible. This would have been in line with international best practices as espoused in the Lima Declaration adopted by the International Organization of Supreme Audit Institutions (INTOSAI). The gazetted Bill however vests the final determination on surcharge with the Chief Accounting Officers (CAO) – which highlights a potential conflict of interest.

Furthermore, in the event that the CAO’s themselves are subject to an inquiry, surcharging power has been vested in the President as the appointing authority. However, should the President choose to impose a surcharge, the Act does not provide a right of appeal to the CAO.

Whilst the Audit Service Commission investigates and reports on the amount of loss incurred and the individuals determined to have caused the loss, a CAO can choose to reduce the amount to be recovered, with no restriction and providing no justification, with the State not given an opportunity to appeal such action.

Additionally, any individual who is the subject of an inquiry is able to nominate any other person ‘conversant on the subject’ to appear on their behalf if they are unable to appear themselves. TISL fears that this provision could be abused by those seeking to avoid accountability – especially since the refusal to appear before the Auditor General is no longer an offence, as was provided in previous versions of the Bill.

TISL recognizes however, the positive revisions incorporated in the gazetted Bill, including the appointment of the surcharge appeals committee being placed under the purview of the Constitutional Council instead of the Audit Service Commission, ensuring the independence of the body from the Auditor General.

Speaking on the subject, TISL Executive Director Asoka Obeyesekere said; “After numerous revisions, if the National Audit Bill in its current form is adopted, it will fall short in strengthening accountability in public finance. TISL will therefore share a legislative brief with all MPs calling on them to effect the key amendments during the committee stage of the National Audit Bill”.