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Principle TWO –

The independence of the SAI head and members of collegial institutions

SAI heads and members of collegial institutions (such as a court of audit) should have security of tenure and be free to act independently from the Executive.

It is expected that:

1.     A SAI head is appointed and reappointed by a process that ensures independence from the Executive;
2.     A SAI head can only be removed by a process that ensures independence from the Executive;
3.     The SAI head’s independence is guaranteed in the Constitution or legislation;
4.     The SAI head is appointed for a sufficiently long period to allow them to carry out their mandate without fear of interference;
5.     Legal immunity is provided for the SAI head and staff in the normal discharge of their duties; and
6.     There is protection of the SAI from interference through court action. 

1. Legislative examples - Independence of the SAI head and members of collegial institutions


Appointment
8 (1) The Speaker must, on behalf of the Territory, appoint a person as auditor-general.
(2) The appointment must be made—
(a) on the advice of the public accounts committee; and
(b) in consultation with the Chief Minister; and
(c) in consultation with the Leader of the Opposition; and
(d) in consultation with the leader (however described) of a registered party (other than the party to which the Chief Minister or Leader of the Opposition belongs) if at least 2 members of the Legislative Assembly are members of the party; and

(e) in accordance with the merit principles set out in the Public Sector Management Act 1994, section 65 (Application of merit principle) (Auditor-General Act 1996 Australian Capital Territory)

Term of appointment of Auditor-General
(1) The Auditor-General is to be appointed for a term not exceeding 7 years.
(2) Despite subclause (1), where the term of office of an Auditor-General expires, that Auditor-General, unless sooner vacating office or being removed from office, continues to hold office until a successor to the Auditor-General is appointed.
(3) The Auditor-General may resign at any time by notice in writing to the Speaker of the House of Representatives,or to the Governor-General if there is no Speaker or the Speaker is absent from New Zealand.
(4) A person who has been appointed as Auditor-General must not be reappointed as Auditor-General (Public Audit Act 2001, Schedule 3, New Zealand)

Protection of auditor-general etc from liability
37(1) A protected person is not personally liable for conduct done honestly and without recklessness—
(a) in the exercise of a function under this Act or another law; or
(b) in the reasonable belief that the conduct was in the exercise of a function under this Act
or another law (Auditor-General Act 1996 Australian Capital Territory)

Independence of the Auditor-General
8(1) The Auditor-General is an independent officer of the Parliament. (Auditor-General Act 1997 Commonwealth of Australia)

Schedule 1 - Appointment of Auditor-General
(1) The Auditor-General is to be appointed by the Governor-General, on the recommendation of the Minister, for a term of 10 years. (Auditor-General Act 1997 – Commonwealth of Australia)
Minister must refer recommendation for appointment of Auditor-General to the Joint Committee of Public Accounts and Audit
2(1) The Minister must not make a recommendation to the Governor-General under clause 1 unless:
(a) the Minister has referred the proposed recommendation to the Joint Committee of Public Accounts and Audit for approval; and
(b) the Committee has approved the proposal.
(Auditor-General Act 1997 Commonwealth of Australia)

Removal from office etc.
6(1) The Governor-General may remove the Auditor-General from office if each House of the Parliament, in the same session of the Parliament, presents an address to the Governor-General praying for the removal of the Auditor-General on the ground of misbehaviour or physical or mental incapacity.
(2) The Governor-General must remove the Auditor-General from office if the Auditor-General does any of the following:
(a) becomes bankrupt;
(b) applies to take the benefit of any law for the relief of bankrupt or insolvent debtors;
(c) compounds with his or her creditors;
(d) assigns his or her remuneration for the benefit of his or her creditors
. (Auditor-General Act 1997 Commonwealth of Australia)

Controller and Auditor-General
7(2) The Controller and Auditor-General is appointed by the Governor-General on the recommendation of the House of Representatives (Public Audit Act 2001 New Zealand)

Duty to act independently
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)

Protection from liability
41(1) This section applies to--
(a) the Auditor-General in his or her personal capacity; and
(b) the Deputy Auditor-General in his or her personal capacity; and
(c) every person employed by the Auditor-General, whether acting as an appointed auditor or not, in
connection with the performance or exercise of the Auditor-General's functions, duties, or powers.
(2) No person to whom this section applies is personally liable for an act or omission in connection with performing or exercising a function, duty, or power under this Act, unless the act or omission was done in bad faith. (Public Audit Act 2001 New Zealand) 


2. Notes

It is important the process of appointing the SAI head is free of political interference, as a political appointment may compromise the SAI head’s independence from the very start.

There is widespread variation on how SAI heads are appointed - for example, the Executive may make the appointment or it may be made by the Legislature.

The best practice approach is that the legislature appoint the SAI head but, at a practical level, this will not always be possible.  However, from an independence perspective the greater the involvement the legislature can have in the appointment process the better. 

The length of appointment is also important.  If the appointment period is to short then independence is at risk due to the inability to perform any meaningful work.  If it is too long there may be a risk of collusion or familiarity.  SAI heads are usually appointed for a period of between 6 – 10 years which can be used as a guide.

Also, it is common for there be no right of re-appointment, commonly in conjunction with a longer term of office.  This further preserves independence by virtue of the incumbent not being reliant or dependent on anyone for a further appointment.    

It is also important that the right person is appointed to the position.  A SAI head should have the necessary skills and qualifications required for the position, but must also be free of any conflicts of interest.  For example, they should not be affiliated to any political party or be a member of government or a political party.  If this is the case, it is useful to have minimum period of time between positions.

Because of the small populations in the Pacific, it is possible that there may be close personal relationships between members of the Executive (for example, Ministers) or members of the Legislature and a candidate for SAI Head.  Such relationships should not disqualify an appointment, but require the appointment process to be transparent.  Also, additional care would need to be taken if the appointed person had close personal relationships with the Executive to ensure that conflicts did not arise.  In they did arise, potential conflicts could be managed by, for example, providing for a deputy SAI head to be the decision maker.

Remuneration is another consideration.  It is important that this is determined independently and free of political interference.  The SAI head’s remuneration is often set by a body independent of the Executive established (sometimes under the Constitution) to independently set remuneration for certain other public officials such as judges.  Ideally, to preserve a SAI head’s status the remuneration should be at least commensurate with government department heads, and should also be the subject of a non-reduction provision for incumbents in office.