Evolving Good Practice for PACs Rick Stapenhurst Professor of Practice, McGill University

Evolving Good Practice for PACs CPA-WBI Study Group (Toronto, 1999) McGee “The Overseers” (2002) Various additional studies ( ) WBI survey & research Kerry-Pelizzo-Stapenhurst revision of “The Overseers” (ms to be submitted next week)

“The Old Story”

“The Overseers” - content State of the art Ecology of the PAC Committee’s purpose, scope and functions Structure of PAC Relationship between PAC and Auditor General Special problems of PACs in small parliaments Methods of PAC operations Position of PAC in overall committee structure The future of the PAC

Conceptual Approach: Key Actors and their Relationships Auditor General Parliament Executive Reports Examines Accountability Relationship PUBLIC FINANCIAL ACCOUNTABILITY

“The Overseers” – conclusions (1) First PAC: UK House of Commons, 1862 Copied by most countries with a “Westminster” tradition Considerable variation in modus operandi across the Commonwealth

“The Overseers” – conclusions (2) Most effective when bipartisan Chaired by the senior Opposition (67%)

“The Overseers” – conclusions (3) Need to build capacity of Parliaments, PACs and AGs Critical: independence of AG from political, and legal constraints PACs need to develop the means to exchange information on developments, standards and best practice

More Specifically: Auditor-General Professional relationship with government Working relationship with all parliamentary committees Historically, focus on probity Increasing emphasis on VFM, performance audits Choose any item w/in mandate, but open to suggestions from PAC Adequate funding & resourcing

More Specifically: PACs (1) Bipartisan Terms of reference (wide vs. narrow) Work based on AG report, but free to undertake own inquiries McGee: sole focus on ex-post budget cycle Focus on policy implementation, not policy Some members reluctant to serve on committee Average size: 11 members; “adequate” representation of opposition (av: 30%) Need for training & adequate staff

PACs (2) Historically, PACs have not sought publicity – more recently, public hearings (55%) Use of sub-committees Do not examine individual complaints (refer to Minister or Ombuds) Divergence of reporting practices Deal with individual public servants? Problems with government implementation/PAC follow-up

Smaller PACs Problem of membership/quorum  Joint committee?  Co-opt non-Parliamentarians? Problem of adequate staffing  AG as secretariat?  Treasury officials? Deal with individual public servants? Problems with government implementation/PAC follow-up

Initial “Good Practice Guide” (2005) 1) The Committee is small; committees seem to work well with 5-11 members, none of whom should be government Ministers; 2) Senior opposition figures are associated with the PAC’s work, and probably chair the Committee; 3) The Chair is a senior parliamentarian, fair minded and respected by parliament; 4) The Committee is appointed for the full term of the parliament; 5) The Committee is adequately resourced, with an experienced clerk and a competent researcher(s); 6) There is clarity on the Committee’s role and responsibilities;

7) The PAC meets frequently and regularly; 8)Hearings are open to the public; a full verbatim 9)transcript and summary minutes are quickly available for public distribution; 10)A steering committee plans the Committee’s work in advance and prepares an agenda for each meeting to the full Committee; 11)The typical witness is a senior public servant (the “accounting officer”) accompanied by the officials that have detailed understanding of the issues under examination; 12)The Auditor’s Report is automatically referred to the PAC and the Auditor meets with the PAC to go over the highlights of the report;

13) In addition to issues raised by the Auditor, the PAC occasionally decides to investigate other matters; 14) The PAC strives for some consensus in their reports; 15) The Committee issues formal substantive reports to parliament at least annually; 16) The PAC has established a procedure with the government for following up its recommendations and is informed about what, if any, action has been taken; 17) In all its deliberations, the PAC uses the Auditor as an expert advisor; 18) Parliaments hold an annual debate on the work of the Committee.

“The New Story” Size: 2 (Anguilla) to 25 (Ghana); av: 11.6 Opposition: 0 Singapore) to 12 (Ghana); av: 42% Staff: 0 (Jamaica, Guyana, Grenada) to 20 (India); av: 4.5 Opposition Chair: 70% Emerging problem: political fragmentation

Impact of political fragmentation: INDIA

Quality of Members & Training For Liberia, the most pressing needs are proper secretariat “and to provide training for members on our committee too” For Tanzania, training is the solution for many of the problems confronting PACs. “Training, training, training. All Members of Parliament… need training. One piece of training you need to tell Members of Parliament who come to the Public Accounts Committee is that public money has no party (…) The people who should be most annoyed for money not being utilized properly are the people in power. If you are a Member of Parliament in power, you should be the first person to frown at or rebuke any public officer who misuses money, because he’s not carrying out the promises that were made out to the people”

Measuring PAC Effectiveness McGee: Number of meetings and reports Add: Number of inquiries, hearings Key findings:  PACs make a positive contribution to reducing corruption & hence, development  What works in some settings does not work on others -> one size does not fit all  Opposition chair, # of staff are important variables

New Important Factors PAC right of access PAC Powers

PowerAfricaCanadaCaribbeanBritish Isles/ Ireland Pacific Government agencies within the finance portfolio Government agencies outside the finance portfolio Statutory authorities Government owned corporations Local government authorities Parliament (and its expenditures) Parliamentarians’ expenditures (eg. Staff) Government service providers Government funded non-government organizations

AfricaCANCaribBrit IslesPacific Examination of accounts and financial affairs 100 Consideration of budget estimates (other than Audit Office) Efficiency, economy and effectiveness of government policy Efficiency and economy of policy implementation (value for money) Effectiveness of government implementation (delivery of outcomes) Undertake self- initiated inquiries Examine AG Compliance reports Examine AG Performance reports Refer matters to the AG

Changing World of PACs TRADITIONAL MODEL Associated with Westminster/Commonwealth Reactive/Ex-post institutions -> Many PACs have retained these features, but….

1 st Transformation: New & Non- Commonwealth PACs Afghanistan Bhutan Denmark Ethiopia Federated States of Micronesia Finland Israeldonesia Kosovo Liberia Nepal Rwanda Southern Sudan Thailand Turkey Afghanistan Bhutan Denmark Ethiopia Federated States of Micronesia Finland Israel Indonesia Kosovo Liberia Nepal Rwanda Southern Sudan Thailand Turkey

2 nd. Transformation : Powwers of New PACs Country Power to refer matters to the AG Power to self- initiate an inquiry Power to consider budget estimates BhutanYesNo IndonesiaYes No KosovoYes No NepalYes ThailandYes No

3 rd. Transformation: Ad Hoc PACs Bangladesh Pakistan Fiji Nigeria

New “Good Practice Guide” (2013) The Committee is small; committees seem to work well with 5-11 members, none of whom should be government Ministers; Senior opposition figures are associated with the PAC’s work, and probably chair the Committee; The Chair is a senior parliamentarian, fair minded and respected by parliament; The Committee is appointed for the full term of the parliament; The Committee is adequately resourced, with an experienced clerk and a competent researcher(s); There is clarity on the Committee’s role and responsibilities;

The Committee meets frequently and regularly; Hearings are open to the public; a full verbatim transcript and summary minutes are quickly available for public distribution; A steering committee plans the Committee’s work in advance and prepares an agenda for each meeting to the full Committee; The typical witness is a senior public servant (the “accounting officer”) accompanied by the officials that have detailed understanding of the issues under examination; The Auditor’s Report is automatically referred to the Committee and the Auditor meets with the Committee to go over the highlights of the report;

In addition to issues raised by the Auditor, the Committee occasionally decides to investigate other matters;  In addition to issues raised by the Auditor, the Committee has the power to investigate other matters. The Committee strives for some consensus in their reports; The Committee issues formal substantive reports to parliament at least annually; The Committee has established a procedure with the government for following up its recommendations and is informed about what, if any, action has been taken; In all its deliberations, the Committee uses the Auditor as an expert advisor; Parliaments hold an annual debate on the work of the Committee.

New (1) 1)A Committee should asses its performance annually. 2)Committees should be involved in determining their own budgets. Such budgets should provide financial resources for member allowances, site visits and costs related to public hearings. 3)Specialized training (including orientation and mentoring) should be provided to new PAC members.

New (2) 4)The Committee should have unconditional access to all government agencies and have the power to “follow” government money provided to non- government service providers. 5)In smaller jurisdictions, there may be benefit in combining ex-post and ex-ante budget review within the remit of the PAC. 6)Committee membership should provide for adequate participation by opposition MPs; their proportion of PAC membership should at least represent their proportion of the seats in Parliament.