The Hon. (Dr.) Anil Jayantha — Minister of Labour and Deputy Minister of Economic Development

¶ 01 Hon. Presiding Member, I am pleased to speak on the Bill amending the National Audit Act, No. 19 of 2018. The importance of audit must be recognized. Our Government emphasized transparency and fiscal discipline, and improving the conduct of officials. In the wake of the past crisis, misuse of public finances, fraud, and corruption drew much attention, including from international bodies. Under the IMF programme, for the first time, we underwent a Governance Diagnostic Assessment. Whether or not such institutions intervene, our political movement is committed to good governance.

¶ 02 What does this amendment primarily do? To establish accountability over public resources, the auditor needs genuine independence and tools. The 2018 Act included many laudable provisions; however, regarding surcharges — the need to impose, implement, and recover — there were practical and efficiency issues. Hence, based on experience since 2018, we are bringing these amendments.

¶ 03 What is a “surcharge”? In simple terms, where transactions occur contrary to law, involving fraud, corruption, or even negligent inattention — advertent or otherwise — that cause loss to the State, a surcharge can be imposed to recover that loss. The Opposition queried whether “advertent negligence” is included; it is, as reflected at Committee Stage.

¶ 04 Previously, even if an independent audit identified loss, the auditor lacked standing to prosecute or initiate recovery in court. The 2018 Act vested surcharge powers in the Audit Service Commission. But that Commission’s core remit is administrative — recruitment, promotions, transfers, discipline, retirements — not the execution of surcharge determinations. Consequently, since 2018, the surcharge process barely functioned; only about ten surcharge certificates have been issued, evidencing severe inefficiency.

¶ 05 These amendments therefore establish a Surcharge Review Committee in place of the prior arrangement. Where the auditor recommends a surcharge, the concerned officer can present a defence before this Committee. If, after review, loss is confirmed, the Committee will instruct the Chief Accounting Officer — usually the Secretary — to initiate legal recovery. If the Secretary is implicated, instructions will go via the Cabinet Secretary.

¶ 06 To safeguard independence and expertise, the Committee will have five members, chaired by a retired Supreme Court or Court of Appeal Judge. The previous framework only required “experts” without a cap and routed appeals to the Court of Appeal. With a retired appellate or Supreme Court Judge chairing, determinations will be grounded in legal rigor, minimizing vendettas and ensuring surcharges only where actual loss is established.

¶ 07 We also tighten scope and access to information. Historically, some concealed information, limiting the auditor to documents and audit queries without effective legal recourse. Penalties for withholding information were a nominal Rs. 5,000–25,000. We raise this to Rs. 100,000, and can enhance further if needed.

¶ 08 The 2018 Act envisaged a special fund to enhance audit capacity, but it never operated nor had a mechanism. The amendment enables funding by allowing up to 15% of audit fees paid by Ministries and entities to be set aside for this purpose.

¶ 09 In short, these amendments strengthen financial accountability, fiscal discipline, and the auditor’s ability to act independently, with administrative and financial autonomy, and report directly to Parliament under Article 148 via the Treasury Secretary.