Mr BYRNE (Parliamentary Secretary to the Prime Minister) (5:42 PM) —I present the explanatory memorandum to this bill and move:

The Auditor-General Amendment Bill 2008 [2009] proposes minor amendments to the Auditor-General Act 1997.

The bill amends the Auditor-General Act to implement certain recommendations of the 2001 inquiry into the Auditor-General Act by the Joint Committee of Public Accounts and Audit. The JCPAA inquiry was intended to assess the act and determine if it was achieving its stated intentions. Overall, the committee found that the act provided an effective framework for the Australian National Audit Office to carry out its functions.

While these are the first substantive legislative amendments to the Auditor-General Act since the JCPAA issued its report in 2001, some of its recommendations have been implemented administratively by the Auditor-General. Amending the act will provide legislative certainty for these administrative actions. A number of the amendments also build on, or are additional to, the JCPAA’s recommendations as other areas of the Auditor-General Act which could be strengthened or require amendment have been identified in the time since the report.

The proposed amendments are minor. For example, they clarify and extend the distribution of performance audit reports, make provision for the inclusion of comments on proposed reports in final reports, and clarify the circumstances in which audit information made available to entities and other parties in the course of a performance audit may be disclosed. The bill will also update the penalty provisions in the Auditor-General Act to bring them in line with current criminal law policy.

When the Auditor-General conducts a performance audit of a Commonwealth agency, a copy of the final report is provided to interested persons prior to the tabling of the report in the parliament. This gives the recipients an opportunity to consider the report in advance of tabling so that they are able to respond to any questions that may arise. Although it is the Auditor-General’s practice to give the chief executive of an audited entity a copy of the final report prior to tabling, this is not an explicit requirement of the legislation. To address this deficiency in the act, the bill would provide that the Auditor-General must give a copy of the report to the chief executive of an agency or, if the audited entity is a Commonwealth authority or company, to an officer of the authority or to a director or senior manager of the company, as soon as practicable after the report is completed. The bill also provides that the Auditor-General may provide a copy of a report, or extracts from a report, to any person, including a minister, or any body who, in the Auditor-General’s opinion, has a special interest in the report.

With the increased outsourcing of government services in recent years, there are potentially many groups, such as contractors engaged to deliver government services, which may be involved in a performance audit. There is no provision in the act at present to require the Auditor-General to give draft reports to these people for comment. To address this, the bill would allow the Auditor-General to give a copy of a proposed report, or an extract from a proposed report, to any person who, in the Auditor-General’s opinion, has a special interest in the report. The recipient of the draft report would then have 28 days to provide written comments, which the Auditor-General is obliged to take into account in finalising the report. This process will help ensure that information in the report is correct. It also provides for natural justice by giving persons who may be criticised in a report an opportunity to comment on the findings set out in the proposed report. To preserve the integrity of the audit process, the recipients of such information would, of course, be subject to the confidentiality provisions in the act that apply generally to persons who are in possession of audit information.

In the interest of fairness and completeness, the bill also requires that the Auditor-General must include, in full, all written comments received on a proposed report under subsection 19(4) in the final audit report. This amendment provides a legislative basis for the Auditor-General’s current practice.

The bill also corrects a number of errors in the act that were identified by the JCPAA in its 2001 report, particularly in those provisions relating to the omission of information from reports on public interest grounds. These are explained in detail in the explanatory memorandum that accompanies the bill.

The amendments will have no financial impact. The changes to the Auditor-General Act proposed by this bill, while relatively minor, are an important step towards encouraging open communication and improving the fairness, effectiveness and integrity of the audit process.