The Public Audit Amendment Bill 2018: Extension of the Powers of the Auditor General Presentation to the Standing Committee on the Auditor General 6 March 2018

RAND WATER REPRESENTATIVES Ms. Ntombifikile Sonia Sithole Portfolio Integrated Committee Member Group Governance Executive Ms. Allarice Bosch Group Legal Services Manager Ms. Lebohang Motsoeneng Legal Advisor

INTRODUCTION Rand Water is an SOE, subject to Regulatory Framework applicable – PFMA Public Audit Act National Treasury Governance Tools etc. Appreciates the initiative to ensure greater level of compliance Presentation intends to add value and seek clarity- no actual objections to the substance of the proposed amendments

Rand Water is supportive of the proposed amendments and any other initiatives by Government to: Ensure revenue, expenditure, assets and liabilities of government entities are managed prudently; Enhance accountability and responsibility of persons entrusted with financial management that underscores good governance; and Assist SOE’s in achieving their sole regulatory mandates.

SUMMARY OF POINTS RAISED Referral for Criminal Investigation Personal Liability Concurrent Competency Retrospective Application

Referral for Criminal Investigation Clause 5.1 (Aa): The wording of the proposed clause permissive and not mandatory Likely to create uncertainty with regards to application of the provision Conditions of application of proposed discretion; - application of objective test on objective facts Sufficient in-built mechanisms to guide against self serving and inconsistent application of the provision

Referral for Criminal Investigation Proposed Amendment Clause 5(1A) The Auditor-General may refer any undesirable audit outcome to an appropriate body for investigation, and the relevant body must keep the Auditor- General informed of progress and the final outcome of the investigation

Referral for Criminal Investigation Clause 5.1 (A): The wording of the proposed clause permissive and not mandatory Likely to create uncertainty with regards to application of the provision Propose mandatory application On determination by application of objective test against facts of a case Sufficient in-built mechanisms to guard against self serving and inconsistent application of the provision

Personal Liability Clause 5(1)B & Section 5(1) B (D) “‘debt’ means the amount owed by the debtor as specified in the certificate issued by the Auditor-General in terms of section5 (1B) (b) “Debtor” means accounting authority or individual members of the accounting authority, identified in the certificate issued by the Auditor-General in terms of section 5(1B)(b) as liable for the debt either individually or jointly and severally, as the case may be

Personal Liability Section 5(1) insertion of what will be subsection (1) B at the end of subsection (1):   (a) The Auditor-General must recover from the responsible accounting officer, accounting officers, accounting authority or accounting authorities, ……., including— ……if, in his or her opinion, a satisfactory explanation for the failure to recover the loss is not furnished, within the prescribed period, by the relevant accounting officer or accounting authority.

Personal Liability Standard of proof required – to establish the existence of a “satisfactory” explanation; Form of evidence provided; Substance of evidence Culpa vs. Strict liability The determination should be based on actual failure to act where the responsible party was aware or ought to have been aware of the transgression.

Concurrent Competency Clause 5(1) (1A) The Auditor-General may refer any undesirable audit outcome to an appropriate body for investigation, and the relevant body must keep the Auditor- General informed of progress and the final outcome of the investigation.”

Concurrent Competency Definition of Investigative Authority: The proposed amendment does not give definition on what/ who is an investigative authority Harmonisation with other legislation- especially the SIU Act Clarity required whether the definition includes the SIU or not, if so how is the concurrent competency over SIU to be resolved

Concurrent Competency Clarity sought on whether this includes the SIU who under the current legal framework may only act upon the instruction of the President of the Republic Section (2)1 of the SIU Act. Is the precedency clause sufficient to establish supremacy of the authority of the AG to refer matters to the SIU as well Propose clear wording to reflect the intention of the legislature- eliminate ambiguous interpretation

Retrospective Application Definition of Accounting Officer and Accounting Authority: ………and includes former members of an accounting authority, former Chief Executive Officers or other persons formerly appointed as an accounting authority. (Our emphasis)

Retrospective Application Includes any former Accounting Officer and member Accounting Authority Creates application with retrospective effect- imputes liability for Acts prior to application of the Amendments Rand Water respectful of legislative authority to enact legislation with retrospective effect; Clarity is sought on the abovementioned definition or an explicit provision stating the law shall have retrospective application.

Conclusion Appreciate the role of SOE’s in a developmental state as lead agents of economic development Impact of poor management practices have far reaching effects All initiatives towards enhanced accountability, good governance are welcome

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