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Compromise on Audit Bill: Ministry Secretaries could impose surcharges
The power to impose a surcharge to recover losses caused due to fraud, negligence, misappropriation, or corruption from officials has been vested with the Chief Accounting Officer (CAO) — Ministry Secretaries or other officials of the relevant government institution — in the final version of the National Audit Bill.
The Chief Accounting Officer (CAO) of a Government institution varies depending on the nature of each institute. While in a Government Ministry it can be the Ministry Secretary, in Government institutions it can be the Chairman, General Manager or someone in a similar senior position.
The draft of the Bill,which will be presented to Parliament next month, was amended 22 times due to objections that the Bill granted too much power to the Auditor General. For almost four years, the Bill went to and fro between the Legal Draftsman’s Department and the Cabinet.
The final version of the Bill was published in the Gazette this week prior to its presentation to Parliament but the power that the AG sought to recover monies lost to the state has not been granted by this Bill. Instead the CAO (Ministry Secretaries) have been granted this authority while in cases where the CAO has caused or has been involved in causing any deficiency or loss due to fraud, negligence, misappropriation or corruption in a transaction made contrary to any written law, the power to impose the surcharge has been vested with the President who is also the appointing authority.
The National Audit Bill provides for the powers, duties and functions of the Audit Service Commission, the establishment of the National Audit Office and the Sri Lanka State Audit Service. It also specifies the role of the Auditor General over public finance. The surcharge provisions will be set in motion after the Audit Service Commission reports to the CAO the amount of any deficiency or loss in any transaction if it has reasonable grounds to believe that such transaction has been made contrary to any written law and has caused financial losses. The CAO can then impose the surcharge on the value of the deficiency or loss in every transaction.
The surcharge can be imposed against any person who is responsible for the deficiency or loss, either jointly or singly, followed by a formal disciplinary action by the Disciplinary Authority or a judicial process. The Bill also provides for the setting up of a Surcharge Appeal Committee that will be empowered to allow the appeal, amend, alter or vary the decision or disallow the appeal.
Once the law is enacted, every public corporation or company in which the Government or a public corporation or a local authority holds fifty percent or more of the shares will be required to include in its annual report the report presented by the Auditor General to the Chairman of such an institution, the performance report for the relevant year, annual audited financial statements and a future projection report, based on sustainable development. This may include details of activities to safeguard the environment and mitigate any negative impact on the environment and where necessary include environment and disaster impact assessment analysis.
The institutions which will come under the AG’s scrutiny will include all Ministries, Provincial Councils, public corporations, Commissions constituted under the Constitution or a Special Presidential Commission of Inquiry; the Presidential Secretariat; the Office of the Secretary General of Parliament or a company registered or deemed to be registered under the Companies Act in which the Government or a public corporation or a local authority holds fifty percent or more of the shares of that company.