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Principle One –

The existence of an appropriate and effective constitutional/statutory/legal framework

SAI independence should be firmly established in the Constitution and/or legislation of the country. 

It is expected that:

1. A SAI is established and mandated by the Constitution or other form of legislation;
2. A SAI’s independence is set out in the Constitution or other form of legislation;
3. A SAI is protected from outside influence; and
4. A SAI has functional and organisational independence to carry out its mandate.

1. Legislative examples – The existence of an appropriate and effective constitution and legal framework


Auditor-General
4(1) There shall be appointed an Auditor General who shall be the principal auditor for Government, responsible for carrying out the duties and responsibilities conferred on him under this or any other Act and who shall be responsible for the Audit Office.
(2) The Auditor General shall be an independent statutory office holder and shall not be subject to administrative control or direction in the exercise of his functions and duties other than as imposed by law (Public Audit Act 2007 Tonga) 

Officer of the Legislative Assembly and Auditor-General Independence
6A(1) The auditor-general is an independent officer of the Legislative Assembly.
7(1) Subject to this Act and to other Territory laws, the auditor-general has complete discretion in the exercise of the auditor-general’s functions.
(2) In particular, the auditor-general is not subject to direction from anyone in relation to—
(a) whether or not a particular audit is to be carried out; or
(b) the way in which a particular audit is to be carried out; or
(c) the priority to be given to any particular matter (Auditor-General Act 1996 Australian Capital Territory )

Independence of the Auditor-General
8(1) The Auditor-General is an independent officer of the Parliament.
8(4) Subject to this Act and to other laws of the Commonwealth, the Auditor-General has complete discretion in the performance or exercise of his or her functions or powers. In particular, the AuditorGeneral is not subject to direction from anyone in relation to:
(a) whether or not a particular audit is to be conducted; or
(b) the way in which a particular audit is to be conducted; or
(c) the priority to be given to any particular matter (Auditor-General Act 1997 – Commonwealth of Australia)

Controller and Auditor-General and duty to act independently
7(1) There is an officer of Parliament called the Controller and Auditor-General
(2) The Controller and Auditor-General is appointed by the Governor-General on the recommendation of the House of Representatives.
9 The Auditor-General must act independently in the exercise and performance of the Auditor-General's functions, duties, and powers (Public Audit Act 2001 – New Zealand)

Auditor-General and functions of the Auditor-General
151.—(1) The office of the Auditor-General established under the State Services Decree 2009 continues in existence.
(2) The Auditor-General is appointed by the President on the advice of the Constitutional Offices Commission, following consultation with the Minister responsible for finance.
(3) The President may, on the advice of the Constitutional Offices Commission, appoint a person to act as the Auditor-General during any period, or during all periods, when the office of the Auditor-General is vacant or when the Auditor-General is absent from duty or from Fiji or is, for any reason, unable to perform the functions of office (Constitution of the Republic of Fiji)
152(5) In the performance of his or her functions or the exercise of his or her authority and powers, the Auditor-General shall be independent and shall not be subject to the direction or control of any person or authority, except by a court of law or as otherwise prescribed by written law (Constitution of the Republic of Fiji)

Establishment of Audit Office 3
8(1) There is established an Office called the Australian National Audit Office.
(2) The Audit Office consists of the Auditor-General and the staff referred to in section 40 (AuditorGeneral Act 1997 – Commonwealth of Australia)
 


2. Practical Notes

A SAI is established and mandated by the Constitution or other form of legislation.

The legal framework of a SAI may vary. For example, legislation may establish the office pertaining to an individual (e.g. the Auditor-General) or establish the institution of the SAI, or both. In practice, the distinction between the office and institution can be important. For example, terms and conditions of employment would only apply only to the office, and not the institution. Also, indemnity provisions may only apply to the office, and not the institution, meaning that the institution could potentially be subject to litigation.

In some Westminster-model jurisdictions, such as New Zealand and Victoria, the Auditor-General is an Officer of Parliament which provides the Auditor-General with increased status as well as ensuring the Auditor-General is separated from the Executive. The Officer of Parliament status will also usually mean that the Auditor-General is responsible and accountable to the Legislature, rather than the Executive, which strengthens the Auditor-General’s independence in a legal and/or a practical sense.

The statutory framework should also spell out, and recognise, independence. Matters covered should include the capacity to undertake the role free from interference, independence from audited entities, and functional and organisational independence to carry out a mandate.

Some jurisdictions explicitly recognise independence in their constitution. This is the preferred international best practice, because it gives entrenched protection (amendments to the constitution are often more difficult to make than amending specific legislation). However, other jurisdictions recognise independence through “basic” legislation (e.g. an audit act) which would usually provide appropriate independence.

The role of a SAI is to hold senior government officials, Government Ministers and heads of state to account for their actions. Accordingly, it is important that the establishing law recognises that the SAI is the pre-eminent financial accountability office or institution in a jurisdiction, and that it has appropriate rank and status within government and the public service.

Also, the individual holding the office should be prohibited from holding any office or having any other occupation on the basis that to do so may create a conflict of interest. However, the legislation could provide for the SAI head to hold such a position on the approval of the Legislature.