1. Background

Section 10(3) of the Public Audit Act requires that the National Assembly

must provide for a mechanism to maintain oversight over the Auditor-General in terms of section 55(2)(b)(ii) of the Constitution.

It is proposed that the Rules Committee urgently establish a standing committee in terms of the Rules of the National Assembly in order to fulfill the oversight functions set out in various sections of the Public Audit Act. The first of these functions will be the appointment of the external auditor of the Auditor-General, already overdue.

2. Functions

Attached is a Calendar of Core Functions that illustrate the timelines for the time- linked functions of the oversight mechanism. In addition to these annual functions, there are other functions that the oversight mechanism from time to time will have to fulfill, for example:

It is also envisaged that as part of effective oversight, the oversight mechanism will

Resources and meetings required

Based on the experience of the predecessor of the oversight mechanism, the Audit Commission, and the additional functions provided for in the Public Audit Act, it is estimated that the mechanism would meet approximately 20 times a year. It should also be borne in mind that there will substantial preparatory time required for meetings. (The Audit Commission meetings required four hours preparation on average.)

The mechanism must be resourced with a secretariat capable of dealing with the support requirements, both in terms of volume and expertise. The secretary should have competencies similar to a company secretary - a knowledge of finances, applicable law, and excellent report writing skills.

The budget of the mechanism should provide for the normal committee support services, but should also provide limited funds for expert consultancy advice that will be needed from time to time.

4. Membership

The oversight mechanism should be as small as is feasible within a multiparty democratic parliament. Members should be a mix of persons with financial, legal, human resources, organizational and corporate governance expertise.

At every step of the oversight cycle members will require different skills. It is therefore proposed that members should receive regular training in order to effectively oversee the Auditor-General. Training could be from bodies such as the Institute of Directors (corporate governance); the Public Accountants and Auditors Board (audit standards), as well as training in IT (SAICA has a section that could provide such training).

Timelines for Core Functions of Oversight Mechanism

October (4 days) Receive AG's Budget & Business Plan for consideration

Provide input to AG on basis for determination o fees

Agreement with the AG regarding retention of surplus of funds

November; (1 day) Report to the NA and NT on the budget & business plan

Jan-March (3 days) Scrutinise draft regulations of the AG Consider Sec 10 Reports of the AG relating to:

April-August (10 days) Appointment of external auditor of the AG Make inputs to AG on Section 13 and other issues, including:

September - October (3 days) Scrutiny of AG's Annual Report and Financial Statements Report to Parliament

Total Number of Days 20 Days.