Keeping the Audit Alive:PAC examination of performance audits

Paul McLeay MPChair, PAC

PUBLIC ACCOUNTS COMMITTEE

PUBLIC ACCOUNTS COMMITTEE The Committee

The NSW Public Accounts Committee

PUBLIC ACCOUNTS COMMITTEE

• PAC background and functions

• Examination of performance audits

• Created by Part 4 of Public Finance and Audit Act 1983

• Comprises six members of the Legislative Assembly

• Ministers and Parliamentary Secretaries excluded from membership of the Committee

• Chaired by a Government member

• Four members required for quorum

OVERVIEWPUBLIC ACCOUNTS

COMMITTEE

HISTORYPUBLIC ACCOUNTS

COMMITTEE

• Established in 1902

• Examines financial and accountability issues on behalf of the NSW Parliament

• Previously, limited range of issues

unable to initiate own inquiries

Parliament and Auditor-General reluctant to refer matters

• Reforms in the 1980s expanded powers can now initiate its own inquiries

Public Finance and Audit Act 1983, Section 57

• PAC’s primary functions are to examine:

Total State Sector Accounts Financial reports of State authorities Opinions and reports of the Auditor-General

Restrictions on the Committee

x Government policy, unless inquiry referred by Assembly or Minister

x Estimates of proposed expenditure

Current functionsPUBLIC ACCOUNTS

COMMITTEE

Referral by:

Source of InquiriesPUBLIC ACCOUNTS

COMMITTEE

• Referral by:

Legislative Assembly

• Referral by:

Legislative Assembly

Minister

• Referral by:

Legislative Assembly

Minister

Auditor-General

The NSW Public Accounts Committee

Referral by:

Legislative Assembly

Minister

Auditor-General

the Committee

Inquiries

Functions include reporting on circumstances connected with Auditor-General’s reports

Auditor-GeneralAssists Parliament to improve

State accountability & performance through auditing

PACAssists Parliament to improve

State accountability & performance through examination of audits

ParliamentDelegates to the PAC

detailed examination of expenditure & audit reports

Reports

ReportsRefers

Refers

Former Approach — the PAC would:

• choose a performance audit once or twice a year for detailed examination

• conduct a standard, detailed committee inquiry, publicly calling for submissions and hearing from a broad range of witnesses

• Produce a detailed report with recommendations reflecting the Committee’s views on the subject matter of the audit

Review of Performance AuditsPUBLIC ACCOUNTS

COMMITTEE

New Approach — the PAC:

• Examines every performance audit

• Seeks submission from agency 12 months after audit

• Refers agency’s submission to A-G for comment on consistency with audit recommendations

• Holds hearings with agency and A-G

• Report with recommendations regarding response to the audit

• Report debated in Parliament

• Government response within 6 months

Review of Performance AuditsPUBLIC ACCOUNTS

COMMITTEE

Timeline:

• Submission request 12 months after audit

• One month for agency to produce submission

• Two weeks for Auditor-General’s response

• Hearings held periodically on a number of audits

Review of Performance AuditsPUBLIC ACCOUNTS

COMMITTEE

Agency submissions:

• Outline response to each recommendation, including:

Assessment of recommendation

Plans made in response

Timetable for completion

Current status and action taken to date

Review of Performance AuditsPUBLIC ACCOUNTS

COMMITTEE

Hearing Process:

• Questioning on issues arising from consideration of submissions

• Auditor-General appears as a witness at the same time as agencies

• A number of reports will be considered on a single day

Review of Performance AuditsPUBLIC ACCOUNTS

COMMITTEE

Parliamentary Debate:

• New sessional orders provide for debate of all committee reports

• Opportunity for Members to raise enduring concerns or points of interest in Parliament

• Alerts the whole House to issues raised in the Committee

Review of Performance AuditsPUBLIC ACCOUNTS

COMMITTEE

Purpose:

• Bring together the professional expertise of the Audit Office and political authority and accountability of the PAC

Review of Performance AuditsPUBLIC ACCOUNTS

COMMITTEE

Purpose:

• Bring together the professional expertise of the Audit Office and political authority and accountability of the PAC

• Ensure recommendations of value are not forgotten

Agency revised responses for hearing

Review of Performance AuditsPUBLIC ACCOUNTS

COMMITTEE

Purpose:

• Bring together the professional expertise of the Audit Office and political authority and accountability of the PAC

• Ensure recommendations of value are not forgotten

• Allow both recommendations and responses to be tested in the political arena

Explain any rejection of recommendations

Demonstrate how any problems have been addressed

Review of Performance AuditsPUBLIC ACCOUNTS

COMMITTEE

Purpose:

• Bring together the professional expertise of the Audit Office and political authority and accountability of the PAC

• Ensure recommendations of value are not forgotten

• Allow both recommendations and responses to be tested in the political arena

• Ensure CEOs account to the Parliament for how they respond to recommendations

Outline changes to address issues

Explain any lack of progress

Review of Performance AuditsPUBLIC ACCOUNTS

COMMITTEE

Purpose:

• Bring together the professional expertise of the Audit Office and political authority and accountability of the PAC

• Ensure recommendations of value are not forgotten

• Allow both recommendations and responses to be tested in the political arena

• Ensure CEOs account to the Parliament for how they respond to recommendations

• Provide reality check to Audit Office

External assessment of recommendation in light of experience

Review of Performance AuditsPUBLIC ACCOUNTS

COMMITTEE

Purpose:

• Bring together the professional expertise of the Audit Office and political authority and accountability of the PAC

• Ensure recommendations of value are not forgotten

• Allow both recommendations and responses to be tested in the political arena

• Ensure CEOs account to the Parliament for how they respond to recommendations

• Provide reality check to Audit Office

Review of Performance AuditsPUBLIC ACCOUNTS

COMMITTEE

Outcome:

• Improved accountability & performance of State agencies

Review of Performance AuditsPUBLIC ACCOUNTS

COMMITTEE

www.parliament.nsw.gov.au/publicaccounts