The Auditor-General’s Reporting Powers
A key feature of most parliamentary democracies is the existence of an independent audit office with robust reporting powers. The more robust those powers, the better informed is the parliament in holding the executive government accountable for its use of public resources.

Conversely any lessening, or threatened lessening of audit reporting powers must potentially diminish the parliament’s capacity to perform one of its key roles. Based on a Crown Solicitor’s opinion, the New South Wales Parliament may now have much narrower audit reporting available to it than most other Australian parliaments.

In July 2000, the Treasurer obtained a Crown Solicitor’s opinion on my reporting powers under the Public Finance and Audit Act 1983 (the Act). The Treasurer forwarded a copy of that opinion to me on 25 August 2000 (Attachment One).

While the opinion was sought specifically in relation to comments on the General Government Debt Elimination Act 1995 in my Volume Two 2000 Report, its implications appear to be far wider. The Crown Solicitor’s opinion, in effect, is that my ability to report on "matter[s] arising from audit" (section 52 of the Act) should be interpreted strictly, referring only to those matters that arise directly from the audit process.

If auditors-general are expected to do no more than private sector auditors, that interpretation may be acceptable. But parliaments and the public have come to expect much more from public sector auditing. Commentary on major changes in public sector agencies’ functions, on significant developments affecting their operations, on compliance with laws and regulations and on issues of probity and efficiency are some of the additional roles expected of public sector auditors. Indeed the very requirement in the Act that there be Auditor-General’s Reports to Parliament shows that Parliament wants more than the standard reporting carried out by the private sector auditor. And the recent Public Accounts Committee report on the NSW Grains Board has called for commentary on agencies’ risk environment as a further addition to the scope of my Reports.

On my understanding of the Crown Solicitor’s opinion, much of what has traditionally been included in Auditor-General’s Reports to Parliament, at least since 1983 when the Act in its current form was passed, could now be deemed outside my legislative mandate.

After the Treasurer forwarded to me a copy of the Crown Solicitor’s opinion, I wrote to him on 8 September and on 14 September and to Treasury in more detail on 29 September (Attachments Two, Three and Four). In these letters I raised my concerns at the wider implications of that opinion on my ability to report comprehensively to Parliament. I also took the opportunity to raise a number of other concerns with the current wording of the legislation which, while less urgent, were important to the efficient and effective operation of the Audit Office. On 17 October I met with the Treasurer and Treasury officers to discuss all these issues.

Having received in-principle acknowledgment at the time that legislative changes were appropriate, but could not proceed in that parliamentary session, I wrote to the Treasurer on 18 January 2001 (Attachment Five) further detailing the changes that I considered necessary and setting out the specific wording of the amendments.

Despite being given clear assurances that my proposals would be considered in time for the 2001 Budget session of Parliament, this has still not occurred. I can only assume that the Government does not view a reduction in my reporting powers to Parliament as a matter requiring priority attention.

This delay makes it imperative that I now bring the need for urgent action directly to Parliament’s attention. Unless legislative changes are made to clarify my reporting powers - or at least there is a clear indication by all parties that these will be supported and given a high priority in the next parliamentary session - I will be forced to reduce the scope of future reports in line with my understanding of the Crown Solicitor’s opinion.

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