Chapter 1 JCPAA functions and methods of operation
Introduction
1.1
The Joint Committee of Public Accounts and Audit (JCPAA) is a committee
of the Commonwealth Parliament. The Committee is established pursuant to the Public
Accounts and Audit Committee Act 1951 and is empowered to scrutinise the
monies spent by Commonwealth agencies from funds appropriated to them.[1]
Committee duties
1.2
The duties of the JCPAA are described in detail in sections 8 and 8A of
the Committee’s Act. In general terms, the duties are to:
- examine the financial
affairs of authorities of the Commonwealth;
- examine all reports
of the Auditor-General that are tabled in Parliament;
- consider the
operation and resources of the Australian National Audit Office (ANAO);
- approve or reject any
nomination for appointment of any person to the office of Auditor-General or
Independent Auditor of the ANAO; and
- increase
parliamentary and public awareness of the financial and related operations of
government.
1.3
Importantly, the Act provides that the Committee may report to the
Parliament, with any comment it thinks fit, on any items or matters concerning
the financial accounts and affairs of Commonwealth authorities, any report of
the Auditor-General tabled in Parliament, or any circumstances connected with
either. This power allows the Committee to essentially set its own work
program, ensuring a high degree of autonomy from executive government.
1.4
More detailed information on the Committee’s functions follows. Further
information on the JCPAA’s work is available through its website at www.aph.gov.au/house/committee/jcpaa,
or by contacting the Committee secretariat at e-mail jcpaa@aph.gov.au or
on ph 02 6277 4615. The website contains information on the Committee and its
members, details of current and former inquiries including reports and evidence
received, government responses to Committee recommendations, and advice on how
to give evidence to the Committee.
Review Auditor-General’s reports and conduct policy inquiries
1.5
Under its Act the Committee must examine all of the Auditor-General’s
reports on behalf of the Parliament.
1.6
In support of this process, every few months officers of the ANAO
privately brief the Committee on the findings of all audit reports tabled since
the last such briefing. The briefing includes suggestions from the ANAO as to
which of its reports it thinks the Committee could most usefully examine in
detail at a public hearing.
1.7
After the briefing the Committee formally selects audit reports it
wishes to publicly review (the selection will not necessarily coincide with
those reports proposed by the ANAO). The Committee will typically select
reports where the ANAO has been particularly critical; where the agency
concerned has a history of poor performance; where there is a high financial risk
or safety risk to the community; or where the Committee is the obvious
candidate to conduct a parliamentary review.
1.8
The Committee then conducts a public hearing in a “roundtable” format,
with the witnesses from the audited agency, and the ANAO audit team, at the
table together. The hearings usually focus on the findings of the audit report
– how any deficiencies arose, and what actions the agency is undertaking in
response to the ANAO’s recommendations.
1.9
The Committee periodically tables reports in Parliament on recently‑reviewed
audit reports, including any recommendations it wishes to make additional to
those already made by the Auditor-General. The Committee, unlike the ANAO, is
able to make recommendations about Government policy. The Committee can also use
the ANAO’s recommendations to draw conclusions for broader Government
administration.
1.10
It should be noted that other committees are also able to review Auditor‑General’s
reports relevant to their area of portfolio coverage. House of Representatives
Standing Order 215(c) requires that the JCPAA be notified in writing if a House
committee decides to review an Auditor‑General’s report.
1.11
The Committee also has the power to initiate its own policy inquiries. Such
inquiries may arise either from findings of the Auditor‑General or at the
initiative of Committee members.
Advise the Auditor-General of the audit priorities of the Parliament
1.12
Under its Act, the Committee determines the audit priorities of the
Parliament and advises the Auditor-General of those priorities. The Committee performs
this function by writing to all other parliamentary committees each year,
asking for their advice on any programs or functions within their portfolio
area they believe should be audited.
1.13
Those suggestions – and any the JCPAA wishes to put forward itself – are
then referred to the Auditor‑General for his consideration in finalising
his work program for the following financial year (subject to a basic screening
process to make sure the topics suggested are appropriate; for example, not asking
the ANAO to comment on the merits of Government policy).
1.14
The Auditor-General Act 1997 properly stipulates that the
Auditor-General has autonomy in determining his work program, and as such he is
free to reject, delay or amend suggested audits. However, the process ensures
that the Auditor-General is cognisant of the views of the Parliament, and that
the Parliament is engaged in planning scrutiny strategies rather than simply
being presented with the final result of investigations.
Approve or reject any nomination for an appointment as Auditor‑General
or Independent Auditor
1.15
The Auditor‑General Act 1997 provides that the Audit
Minister, when nominating a new Auditor‑General, must not recommend an
appointment to the Governor‑General unless the proposed recommendation
has first been approved by the Committee on behalf of the Parliament.
1.16
The Committee’s Act in turn provides that within
14 days of receipt of the nomination, it must either: approve or reject the
nomination by absolute majority; or seek an extension of time of 30 days.
Failure to reach a decision within that period shall be taken to be approval of
the nomination.
1.17
In the same way the Committee also approves or rejects any nomination
for the position of Independent Auditor. The Independent Auditor is a person
from the private sector appointed on a part-time basis to serve as external
auditor to the ANAO – s/he audits the ANAO’s financial statements, and periodically
conducts performance audits of the ANAO following consultation with the
Committee.
Review the annual budget of the ANAO
1.18
The Committee’s Act requires it to consider draft estimates for the ANAO
and the level of fees determined by the Auditor-General, and to make
recommendations on the draft estimates to both Houses of Parliament and the
Minister who administers the Auditor-General Act 1997.
1.19
In support of this process, over the second half of the financial year
the Auditor-General briefs the Committee on the funds he will be seeking in the
budget and why, and the ANAO’s informal understanding of which of its proposals
are likely to be successful or unsuccessful. The Auditor‑General Act
empowers the Auditor-General to disclose to the JCPAA, before the federal
budget, the draft estimates for the Audit Office . The Committee then has the
information it requires to make formal representations to government on behalf
of the ANAO if necessary.
1.20
Immediately before the federal budget is delivered to the Parliament,
the ANAO briefs the Committee on its funding allocation for the following year.
The Chair then makes a statement to the Parliament, on budget day, on whether
the Committee believes the ANAO has been given sufficient funding to carry out
its functions.
1.21
This power is intended to discourage governments from trying to
influence the Auditor-General by unduly restricting his funding, and is
reinforced behind the scenes by the Committee having the information needed to engage
government during the budget process.
Approve the annual report requirements for Commonwealth agencies
1.22
To ensure that Commonwealth agencies’ annual reports are in a form that
is useful to the Parliament, the Public Service Act 1999 requires that
those reports be prepared in accordance with detailed Requirements for
Annual Reports approved by the JCPAA. The draft Requirements are prepared
by the Department of Prime Minister and Cabinet (DPM&C).
1.23
Amongst other things the Requirements state that annual reports should
provide “…sufficient information and analysis for the Parliament to make a
fully informed judgement on departmental performance”.
Biannual hearings with the Commissioner of Taxation
1.24
The Committee in the 41st Parliament initiated an inquiry
into certain taxation matters. During the course of the inquiry the Commissioner
of Taxation agreed to appear before the Committee at a public hearing twice
each year, to update the Parliament and the public on recent developments in
tax administration.
1.25
Seven of the biannual hearings have been held to date. The hearings are
typically preceded by private briefings from tax law academics and interest
groups. Transcripts of the hearings are available through the Parliament’s
website or from the Committee secretariat.
Annual hearing on the ANAO/Defence “Major Projects Report”
1.26
During the course of an inquiry into Defence financial reporting and
equipment acquisition, the Committee in the 41st Parliament
recommended that the ANAO be funded to produce an annual report on progress in
major Defence acquisition projects, based on a similar process in the UK.[2]
The Senate had previously requested that the Auditor-General produce such a
report, based on recommendations of its Foreign Affairs, Defence and Trade
References Committee.[3]
1.27
The JCPAA’s belief was that an annual progress report would put the ANAO,
and the Parliament, in a stronger position to review major Defence projects
while they are still in train, rather than relying solely on scrutiny of
individual projects via an audit, and parliamentary review, sometime after the
event. The Committee was also of the view that continuous monitoring through
the annual review would assist in promoting cultural change in the management
of Defence projects.
1.28
The first “Major Projects Report” (which comprises summary information
on selected projects provided by the Defence Materiel Organisation and
subjected to assurance review by the ANAO) was released in November 2008. A
further two reports have since been released. The Committee has determined to hold
a public hearing with the ANAO and the DMO after the release of each Major
Projects Report.
Australasian Council of Public Accounts Committees (ACPAC)
1.29
The JCPAA, like the PACs or equivalent
committees of the States and Territories, New Zealand, Papua New Guinea, the
Solomon Islands and (when applicable) Fiji is a member of the Australasian
Council of Public Accounts Committees (ACPAC). ACPAC is designed to share
knowledge amongst the PACs and discuss common challenges.
1.30
ACPAC conducts its business at biennial
conferences which rotate amongst the jurisdictions. The jurisdictions’
Auditors-General usually conduct their own conference immediately beforehand,
and then attend the ACPAC conference.
How the Committee operates
Conduct of inquiries
1.31
The Committee usually advertises its inquiries in the national media and
on the internet, and invites interested organisations and individuals to make
written submissions. Public hearings and inspections are conducted around Australia
as required.
1.32
While the Committee can receive confidential submissions and take
evidence in camera, the Committee prefers to take as much of its evidence as
possible in public. With limited exceptions its hearings are conducted in open
session and broadcast through the parliamentary website. Interested parties
can also access transcripts of the hearings, and written submissions, through
the Committee’s website or by contacting the secretariat.
1.33
The Committee is able to divide itself into smaller “Sectional Committees”
(sub-committees) for specific inquiries and reviews, although a Sectional
Committee’s draft report must be adopted by the full Committee before tabling
in Parliament.
1.34
As with other parliamentary committees, the JCPAA can summons witnesses
to appear before it and produce documents, and can issue a warrant for the
arrest of anyone who disobeys a summons. The Committee’s Act states that it is
able to take evidence on oath, and sets out a penalty of up to five years’
imprisonment for anyone who deliberately gives false evidence while under
oath.
1.35
As with other committees, proceedings before the JCPAA attract
parliamentary privilege – the submissions made to it, and comments made by
members and witnesses at public hearings, are part of the proceedings of Parliament
and cannot be used in legal proceedings. It is also illegal to prejudice any
person on the basis of evidence they have given, or propose to give, to a
parliamentary committee.
1.36
The Committee presents the findings of its inquiries in reports containing
recommendations for the Government’s consideration. The reports are tabled in
both Houses of Parliament. Copies are distributed to all submitters, witnesses
and Commonwealth agencies with a responsibility for matters raised in the
report. The reports are available to the public and can be accessed on the
Committee’s website.
Government responses to JCPAA reports
1.37
The JCPAA’s reports are referred to the Minister for Finance and
Deregulation after tabling in Parliament. The Minister’s department in turn
refers the Committee’s recommendations to relevant agencies for attention.
1.38
Government responses to the JCPAA’s policy recommendations are usually presented
in a manner common to other committees, namely tabling in the Parliament by the
relevant Minister. For the JCPAA’s “administrative” recommendations (typically,
those recommendations directed to agencies in the Committee’s reviews of
Auditor-General reports) responses are received in the form of what are termed
“Executive Minutes” from individual agencies, addressing those recommendations
addressed to them in the Committee’s report. Executive Minutes are required to
be presented within six months of the Committee’s report.
1.39
The JCPAA authorises publication of Executive Minutes on its website as
soon as practicable after receipt. Responses not previously tabled in
Parliament will be presented in conjunction with this report. Authorising an
Executive Minute for publication does not imply that the Committee is
necessarily satisfied with the relevant agency’s response to its
recommendations; the Committee reserves the right to follow up responses with
agencies and Ministers.
The Committee secretariat
1.40
The Committee’s secretariat is staffed by
officers of the Department of the House of Representatives, and may be
supplemented from time to time with secondees from the ANAO or relevant
agencies (in particular, the Committee has a regular program of secondments
from the ANAO). The secretariat provides procedural advice and administrative,
research, analytical and drafting support to the Committee.
