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Auditor-General Amendment Bill 2008 [2009]

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2008

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

THE SENATE

 

 

 

 

AUDITOR-GENERAL AMENDMENT BILL 2008

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Cabinet Secretary,

Senator the Honourable John Faulkner) 

 



 

AUDITOR-GENERAL AMENDMENT BILL 2008

 

 

GENERAL OUTLINE

 

The Auditor-General Amendment Bill amends the Auditor-General Act 1997 (‘the Auditor-General Act’) to implement and build on recommendations in the Inquiry into the Auditor-General Act by the Joint Committee of Public Accounts and Audit (JCPAA) (Report 386)  (‘the JCPAA Report’) in 2001.  The JCPAA conducted the inquiry to assess the Auditor-General Act and determine if it was achieving its stated intentions.  A number of recommendations to enhance the operation of the Auditor-General Act were made.  Although some of those recommendations have been implemented administratively, the amendments will provide legislative certainty for the Auditor-General’s practices. 

 

The proposed amendments to the Act are minor.  They clarify the distribution of performance audit reports and make provision for the inclusion of any comments on a proposed report in the final report.  The proposed amendments also clarify the circumstances in which audit information made available to entities and other parties during the course of a performance audit may be disclosed.  Additional amendments are proposed to clarify the powers of the Auditor-General when sensitive information, the disclosure of which would be contrary to the public interest, is not to be included in a public report.

 

The Bill also updates penalty provisions in the Auditor-General Act in accordance with criminal law policy. 

 

FINANCIAL IMPACT STATEMENT

 

The Bill will not have any financial impact.

 

 



 

NOTES ON CLAUSES

 

 

Clause 1 - Short title

This clause provides that when the Bill is enacted, it is to be cited as the Auditor-General Amendment Act 2008.

 

Clause 2 - Commencement

This clause provides that the Bill is to commence on the day after it receives the Royal Assent.  Commencement on the day after receiving the Royal Assent will avoid any issue of retrospectivity (however short the actual period of time) that could occur if the Bill commenced on the day of Royal Assent.

 

Clause 3 - Schedules

This clause is a machinery provision which explains the effect of the Schedules to the Bill.  Schedule 1 contains the amendments to the Auditor-General Act relating to reporting requirements.   Schedule 2 contains amendments to the Auditor-General Act relating to penalties. 

 

Schedule 1 - Amendments relating to reporting requirements

 

Auditor-General Act 1997

 

Items 1, 2 and 3 - Subsection 5(1)

These Items amend subsection 5(1) of the Auditor-General Act to insert definitions of ‘director’, ‘officer’ and ‘senior manager’, respectively.  The new definitions provide that the words are, in relation to a Commonwealth company or authority or a subsidiary of a Commonwealth company or authority, to have the same meaning in the Auditor-General Act as they have in the Commonwealth Authorities and Companies Act 1997 .

 

Item 4 - Paragraphs 15(2)(a) and (b)

Section 15 of the Auditor-General Act deals with performance audits of Agencies established under the Financial Management and Accountability Act 1997

 

Paragraphs 15(2)(a) and (b) require the Auditor-General, as soon as practicable after a performance audit report has been completed, to table a copy in each House of the Parliament and give a copy to the responsible Minister.  This Item is of a housekeeping nature:  it adds the words ‘of the report’ after the word ‘copy’ in each paragraph. 

 

Item 5 - At the end of subsection 15(2)

As indicated above, subsection 15(2) of the Auditor-General Act currently requires the Auditor-General to table a copy of a performance audit report in each House of the Parliament and give a copy to the responsible Minister.  While it is the Auditor-General’s practice to provide the Chief Executive of the audited Agency with a copy of the report at the same time, this is not explicitly authorised by the Act.  This amendment to subsection 15(2) would provide explicit authority for the Auditor-General to give a copy of the report to the Chief Executive of the Agency that is the subject of the report.  This amendment will ensure that the Chief Executive receives a copy of the report at the same time as the responsible Minister, which is appropriate as the Chief Executive has direct responsibility for the operations of the audited Agency.  This will provide the opportunity for the Chief Executive to consider the content of the report and for briefing to be prepared for the responsible Minister prior to tabling.

 

Item 6 - After subsection 15(2)

This Item inserts a new subsection to give the Auditor-General a discretion to provide a copy of a report on a performance audit of an Agency, or an extract from the report, to any Minister, other than the responsible Minister, or to any person or body who, in the Auditor-General’s opinion, has a special interest in the report or extract. 

 

This amendment implements and builds upon the JCPAA’s recommendation that the Auditor-General, as soon as practicable after completing the report on an audit, provide a copy of the report to any Minister who has a special interest in the report.  This provides an opportunity for recipients of a report to be briefed on its contents prior to its being tabled in Parliament.

 

Item 7 - Paragraphs 16(4)(a) and (b)

Section 16 of the Auditor-General Act deals with performance audits of Commonwealth authorities or subsidiaries of Commonwealth authorities.

 

This Item is similar in intent to Item 4, except that it applies to reports of a performance audit of a Commonwealth authority or a subsidiary of a Commonwealth authority, rather than an Agency.

 

Item 8 - At the end of subsection 16(4)

This Item is similar in intent to Item 5, except that it requires the Auditor-General to give a copy of a performance audit report of a Commonwealth authority or a subsidiary of a Commonwealth authority to an officer of that authority or subsidiary, rather than the Chief Executive of an Agency.

 

Item 9 - At the end of section 16

This Item is similar in intent to Item 6.  It authorises the Auditor-General to give a copy of a performance audit report (or an extract) of a Commonwealth authority or a subsidiary of a Commonwealth authority to any person who, in the opinion of the Auditor-General, has a special interest in the report (or extract). 

 

Item 10 - Paragraphs 17(4)(a) and (b)

Section 17 of the Auditor-General Act deals with performance audit reports of Commonwealth companies and subsidiaries of Commonwealth companies.

 

This Item is similar in intent to Item 4, except that it applies to reports of a performance audit of a Commonwealth company or a subsidiary of a Commonwealth company, rather than an Agency.

 

Item 11 - At the end of subsection 17(4)

This Item is similar in intent to Item 5, except that it requires the Auditor-General to give a copy of a performance audit report of a Commonwealth company or a subsidiary of a Commonwealth company to a director or senior manager of that company or subsidiary, rather than the Chief Executive of an Agency.

 

Item 12 - After subsection 17(4)

This Item is similar in intent to Item 6.  It authorises the Auditor-General to give a copy of a performance audit report (or an extract) of a Commonwealth company or a subsidiary of a Commonwealth company to any person who, in the opinion of the Auditor-General, has a special interest in the report (or extract). 

 

Item 13 - Paragraphs 18(2)(a) and (b)

Section 18 of the Auditor-General Act allows the Auditor-General to conduct a review or examination of a particular aspect of the operations of the whole or part of the Commonwealth public sector, being a review or examination that is not limited to the operations of only one Agency, body or person.

 

This Item is similar in intent to Item 4, except that it applies to reports of audits of the kind described above, rather than performance audits of Agencies. 

 

Item 14 - At the end of subsection 18(2)

Subsection 18(2) currently requires the Auditor-General to table reports on audits conducted under section 18 in each House of the Parliament and give a copy of the report to the Finance Minister.  This Item is similar in intent to Item 5, except that it requires the Auditor-General to give copies of a report on an audit conducted under section 18 of the Auditor-General Act to:

·        the Chief Executive of an Agency;

·        an officer of a Commonwealth authority or subsidiary of a Commonwealth authority; or

·        a director or senior manager of a Commonwealth company or subsidiary of a Commonwealth company

if the report relates to the operations of that Agency, authority, company or subsidiary.  The Auditor-General must also give a copy of a report to the Minister responsible for that body and, to the extent that the report relates to the operations of a person, to that person.

 

Item 15 - Subsection 18(3)

Subsection 18(3) currently allows the Auditor-General to give a copy of an audit report to any other Minister who, in the Auditor-General’s opinion, has a special interest in the report.  This Item repeals subsection 18(3) and replaces it with a new subsection which would allow the Auditor-General to give a copy of a section 18 report (or an extract) to any body or person, including a Minister, who in the Auditor-General’s opinion has a special interest in it or in the extract. 

 

Item 16 - Subsection 19(2)

Section 19 of the Auditor-General Act requires the Auditor-General, before finalising a report under section 15, 16 or 17 of the Act, to give a copy of the proposed report to the Chief Executive of the Agency or an officer of the Commonwealth authority, company or subsidiary to which the proposed report relates.  Section 19 also allows the Auditor-General to give a copy of a proposed report under section 15, 16, 17 or 18 of the Act to any other person who, in the Auditor-General’s opinion, has a special interest in the report.  The recipient of a proposed report has 28 days to provide written comments, which the Auditor-General must take into account in finalising the report.  Section 19 as currently drafted is deficient in that it does not use the correct terminology when referring to directors and senior managers of Commonwealth companies and their subsidiaries [ss19(2)] and does  not authorize the provision of extracts of proposed reports [ss19(3)].

 

This Item repeals subsection 19(2) and substitutes a new subsection which corrects the terminology used to refer to officers of Commonwealth authorities (or subsidiaries), and directors or senior managers of Commonwealth companies (or subsidiaries). 

 

Item 17 - Subsection 19(3)

This Item would omit part of subsection 19(3) of the Act and replace it with words which make it clear that extracts of proposed reports as well as complete proposed reports can be provided for comment to any person who or body that, in the Auditor-General’s opinion, has a special interest in the report or the extract. 

 

Items 18 and 19 - Subsection 19(4)

These Items take account of the amendment that would be made to subsection 19(3) by Item 17 by including references to extracts of proposed reports that might be provided to persons with an interest in them. 

 

Item 20 - At the end of section 19

This Item adds a new subsection 19(5) which would require the Auditor-General to include in full in the final audit report all written comments received under subsection 19(4) from a person or persons who received a proposed report (or an extract of a proposed report).

 

The proposed amendment would implement recommendation 3 in the JCPAA Report.

 

Item 21 - After section 23

It is current practice for staff of the Australian National Audit Office who are conducting a performance audit to provide information that they have received in the course of the audit to third parties for comment to assist in resolving any inaccuracies or misunderstandings prior to preparing the audit report.  Proposed section 23A, which would be inserted by this Item, will provide a legislative basis for this practice.  

 

Item 22 - After subsection 36(2)

Section 36 of the Auditor-General Act makes it an offence for a person to disclose information obtained in the course of performing an Auditor-General function except in certain circumstances. 

 

This Item would insert three new subsections into section 36 of the Act.

 

New subsection 36(2A) would provide that section 36 does not prevent staff of the Australian National Audit Office from disclosing information in accordance with new section 23A (see Item 21).

 

New subsection 36(2B) would make it an offence for persons who receive information under new section 23A to use or disclose that information except where those persons are also themselves performing an Auditor-General function (e.g. staff of the Australian National Audit Office).  The maximum penalty for this offence would be 2 years imprisonment.  This is consistent with other penalties for similar offences set out in section 36.  The extension of the confidentiality provision in this manner preserves the integrity of the audit process, particularly as information obtained by the Auditor-General in exercise of the Auditor-General’s broad information gathering powers may be confidential and sensitive.  This is particularly important where any information and findings are only of a preliminary nature and have not been presented to the Parliament.

 

New subsection 36(2C) would provide that new subsection 36(2B) does not apply if the Auditor-General has consented to the use or disclosure of the information provided under new section 23A.  The defendant would bear the evidential burden of proof in relation to proving whether the Auditor-General has consented to the use or disclosure, because this information is likely to be in the particular knowledge of the defendant.  This is consistent with Commonwealth criminal law policy, as described in A Guide to Framing Commonwealth Offences, Civil Penalties and Enforcement Powers .  The Guide refers to the settled principle that it is legitimate to cast a matter as an evidential burden on the defendant where a matter is particularly within the defendant’s knowledge and not available to the prosecution.

 

Items 23 and 24 - Subsection 36(3)

Section 36(3) of the Auditor-General Act provides that it is an offence for a person who receives a proposed report under section 19 of the Act to disclose any of the information in the proposed report.  These Items extend this restriction on disclosure to the recipients of an extract of a proposed report [see Item 17 - subsection 19(3)].

 

Item 25 - Subsection 37(4)

Section 37 describes circumstances in which the Auditor-General must not include sensitive information in a public report.  For example, it provides that the Auditor-General must not include particular information in a public report if the Auditor-General considers that it would be contrary to the public interest to do so, or if the Attorney-General has issued a certificate to the Auditor-General to the effect that the disclosure of the information would be contrary to the public interest.

 

Subsection 37(4) of the Act currently provides that, if the Auditor-General decides to omit certain information from a report because the Attorney-General has issued a certificate to the effect that it would be contrary to the public interest to disclose that information, the Auditor-General must state in the report that certain information has been omitted and the reason why the Attorney-General issued the certificate in question.

 

This Item would correct an error, identified by the JCPAA in its 2001 report, in subsection 37(4) of the Act as currently drafted:  the Auditor-General has no discretion to decide whether to omit information referred to in a certificate issued by the Attorney-General, as implied in the current wording of subsection 37(4) of the Act.  The proposed amendment would make this clear.

 

Item 26 - Subsection 37(5)

Subsection 37(5) of the Act currently provides that, if the Auditor-General decides to omit certain information from a public report, or not prepare a public report because to do so would disclose sensitive information, the Auditor-General may prepare a report containing that information and give it to the Prime Minister, the Finance Minister and any other responsible Minister. 

 

This Item repeals subsection 37(5) of the Act and substitutes a new subsection which would correct an error, also identified by the JCPAA in its 2001 report, that is similar to the error described above in relation to Item 25.  Subsection 37(5) currently implies that the Auditor-General may exercise a discretion to omit or not omit particular information if the Attorney-General has certified that it would be contrary to the public interest to do so.

 

New subsection 37(5) would make it clear, as originally intended, that the Auditor-General has no discretion in those circumstances.

 

Item 27 - Subsection 37(6)

This item inserts a definition of ‘information’ for the purposes of section 37 of the Act  It would define ‘information’ to include written comments on a proposed report or an extract of a proposed report provided by a person who received the proposed report under subsection 19(4) of the Act.  Accordingly, any such comments which it would be contrary to the public interest to disclose in a public report may be omitted from the report in accordance with the regime set out in section 37 of the Act. 

 

Item 28 - At the end of section 45

Division 2 of Part 7 of the Auditor-General Act provides for the auditing of the Australian National Audit Office by the Independent Auditor whose office is established by Division 1 of Part 7 of the Act.  The functions of the Independent Auditor are to audit the financial statements and carry out performance audits of the ANAO.   

 

Section 45 of the Auditor-General Act allows the Independent Auditor to conduct performance audits of the ANAO.  Performance audit reports must be tabled in each House of the Parliament and provided to the Minister responsible for the ANAO (the Prime Minister). 

 

This Item would allow the Independent Auditor to give a copy of a performance audit report, or an extract of such a report, to any other Minister who, in the opinion of the Independent Auditor, has a special interest in the report or the content of the extract.

 

Item 29 - Application - general

This Item provides that the amendments made by Schedule 1, other than items 21 and 22, apply to reports and proposed reports completed on or after the commencement of the Schedule, regardless of whether work on the report started before or after that commencement.

 

Item 30 - Application - items 21 and 22

This Item provides that the amendments made by items 21 and 22 apply to the use or disclosure of information on or after the commencement of those items.

 

 

Schedule 2 - Amendments relating to penalties

 

Auditor-General Act 1997

 

Item 1 - Readers guide (second paragraph under the heading “Summary of this Act”)

This Item repeals the paragraph in the Readers Guide under the heading “Summary of this Act” that relates to Part 2 of the Act headed “General provisions about definitions and offences” and substitutes a new paragraph headed “Interpretation” together with a new explanation of Part 2 of the Act.  The proposed amendment is consequential on the amendment made by Item 3 of Schedule 2 below. 

 

Item 2 - Part 2 (heading)

This Item repeals and substitutes the heading to Part 2 of the Act to read “Interpretation” instead of “General provisions about definitions and offences”.  The proposed amendment is consequential on the amendment made by Item 3 of Schedule 2 below.

 

Item 3 - Section 6

This Item repeals section 6 of the Act, which provides that a prohibition coupled with a penalty in the Act is an offence and that a penalty is a maximum penalty only.  It is not necessary to include this provision, as this presumption is set out in Section 4D of the Crimes Act 1914 (Cth).  Chapter 2 of the Criminal Code applies to all offences in the Act. 

 

Item 4 - Subsection 32(3) (penalty)

Item 5 - Subsection 33(3) (penalty)

Item 6 - Subsection 36(1) (penalty)

These Items replace the term “maximum penalty” with the term “penalty”.  Under section 4D of the Crimes Act 1914 (‘the Crimes Act), the stated penalty for a Commonwealth offence is to be read as being a maximum unless the contrary intention appears.

 

Item 7 - Subsection 36(3) (penalty)

This Item replaces the term “maximum penalty” with the term “penalty for contravention of this subsection” Under section 4D of the Crimes Act, the stated penalty for a Commonwealth offence is to be read as being a maximum unless the contrary intention appears.  The particular wording is required to make clear that the penalty relates only to subsection 36(3) and not to subsection 36(1) which has its own penalty provision.

 

Item 8 - Subsection 48(1) (penalty)

This Item replaces the term “maximum penalty” with the term “penalty”.  Under section 4D of the Crimes Act, the stated penalty for a Commonwealth offence is to be read as being a maximum unless the contrary intention appears.