SAI & PAC Relationship Perspective from the Maldives “The work of an SAI, and its relations with parliament are key factors in a strong chain of accountability and the effectiveness of public sector governance”

Outline of the Presentation 1. Auditor General’s Office - Brief 2. PAC - Brief 3. Public Accountability Model 4. Composition & Mode of Operation of PAC 5. PAC’s role in Review of AGO Audit Reports 6. PAC’s role over AGO Budget & Work Plan 7. Areas for further improvement

1. About the AGO Audit Office established in 1948, history of over 60 plus years, up until January 2008 reported to the President Audit Act of 2007 established an Independent AG & AGO: granted legal, operational & financial independence first independent auditor general appointed in January Impeached by the Parliament in March 2010 AGO Headless from March 2010 till May 2011 when the second & present independent AG appointed AG is responsible for the audit of – state government accounts, ministries, departments, independent institutions including the Parliament and the Judiciary (mandatory under the Public Finance Law) – State Owned Companies along with companies with the State’s Shareholding – Discretionary powers to audit the local government (council) accounts formed in 2010

1. About the AGO…….contd Additional Responsibilities of the AG Regulator over Private Sector Auditors – Issue Practicing Certificates to private sector auditors to conduct statutory audit & assurance services in the Maldives – Regulate the audit profession – Review the work of private sector auditors Declaration of Financial Interests Declarations of the President, Cabinet Ministers and members of Constitutional bodies to AG – Draft Bill to be submitted soon that covers senior ranking officials of the government and other officials within this scope

AGO Audit Universe DescriptionReporting EntitiesAccountsSubmit Accounts Issue Audit Report 1. Public Sector (State Budget) Financial Statements Audits 35 Entities for Financial Reporting Purposes, comprising 17 ministries & 18 independent institutions represented by 1000 plus spending Units IPSAS Cash Basis End of March for most entities 30 May for most entities 2. State Owned Enterprises (SOEs) Financial Statements Audits 65 SOEs as at end of 2011 Including 4 listed companies IFRSAs per Companies Act file by Most SOE financial audits are outsourced 3. Local Council Financial Statements Audits (Discretionary Powers to AGO) 188 Island councils 20 Atoll Councils 2 City Councils No framework prescribed by MoFT AGO assisting MoFT 28 February for Island Councils 10 Mar for Atoll & City Councils 4. Compliance & Special Audits Public Sector & SOEs No of programmes & projects varies as per AGO Work Plan Undertake audits on the request of the PAC As per AGO Work Plan 5. Performance Audits To be developed & operational by 2013 As per AGO Work Plan

2. About PAC 1.Scrutinize accounts of Public Sector & review of AG’s Audit Reports 2.Review Performance of SOEs 3.Review State Budget along with Economic Committee of Parliament 4.Approval of annual budget of AGO 5.Appointment of AG – recommendation 6.Approval of new Loans & Borrowings by the Government 7.Review the work of the AGO & Central Bank (MMA) 8.Decide on Pay / Remuneration of heads of independent institutions, MPs, President, Cabinet Ministers…etc 9.Approve subsidy programmes 10.Conduct own investigations

3. Public Accountability Model 1.The Executive branch of government is accountable to Parliament 2.The SAI audits the accounts of government departments and public funded institutions on behalf of Parliament 3.The SAI submits its audit reports to Parliament, President, Audited Entity & MoFT 4.The PAC scrutinises audit reports on behalf of Parliament 5.Both the SAI and PAC form a structure through which the Parliament exercises oversight of the Executive. SAI briefs the PAC on the findings of the audit to enable the PAC to conduct further investigations through public hearings 6.Through a public hearing, the PAC calls witnesses to provide testimony in response to audit findings 7.Following hearings, the PAC compiles a committee report and tables it in the Parliament for debate and approval 8.The Government is answerable to the voters through Parliament and its oversight mechanism (PAC)

4. Composition & Mode of Operation of PAC PAC comprises of 11 MPs Composition representative in proportion to the number of seats controlled by Political Parties Tenure of PAC membership not fixed for the length of office Chairman of PAC elected by vote of PAC members PAC support staff PAC Sessions are open hearings by default Invitation to AG and audit team to attend PAC hearings

5. PACs role in review of AGO audit reports No. of AGO reports published and sent to Parliament 2008 to Audit Reports Financial Statements Audit Reports plus 3 Special Audits 2012 (to-date)27 Financial Statements Audit Reports plus 3 Special Audits Review of AGO reports by PAC PAC Reports on audit reports tabled with the Parliament – Only 1 report tabled to date Follow-up on audit reports by SAI

6. PACs role over AGO Budget & Work Plan 1.AGO submits Budget Proposal along with Work Plan of Audits to be conducted 2.PAC is empowered to make amendments to AGO’s Budget Proposal 3.PAC Reviews & Approves AGO Annual Budget & Work Plan 4.PAC makes recommendation to Parliament regarding AGO Budget 5.AGO Budget approved separately by the Parliament 6.Once approved, AGO Budget is included in the State Budget 7.AGO submits quarterly reports on the work of the AGO to the PAC 8.AGO Financial Statements Audited Annually along with the Performance of Audits planned vs Delivery – Auditor appointed by PAC & Audit Report reviewed by PAC

7. Areas for further Improvement Increase the no. of audit reports that receive PAC scrutiny Table PAC reports on the Audit Report (prioritise) Develop the PAC rules of conduct with regard to procedures over AGO audit reports Grant more independence to the AG & AGO Provide adequate resources for AGO to effectively under the mandate

THANK YOU