Audit Committee Chair -
Submission to the Richard Commission
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Audit Committee Role & Remit
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| Contents
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Annex
A
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| Section 60 of the Government
of Wales Act (the Act) requires the Assembly to
establish an Audit Committee. Its members have to
be elected by the Assembly, which must ensure that,
as far as is practicable, the balance of parties
in the Assembly is reflected in the membership of
the Committee. The Act prevents the First Secretary
or any other Assembly Secretary from being a member
of the Audit Committee. Standing Order 12.1 prevents
the Committee being chaired by a member of a political
group that is represented in the Assembly Cabinet.
These provisions are designed to ensure the Committee’s
independence. |
| The responsibilities
of the Audit Committee are set out in detail in
Standing Order 12. (A copy of which is attached
at Annex A and extracts from the relevant parts
of the Government of Wales Act are attached at Annex
B). |
| In broad terms, the role
of the Audit Committee is to examine the reports
on the accounts of the Assembly and other public
bodies prepared by the Auditor General for Wales;
and to consider reports by the Auditor General for
Wales on examinations into the economy, efficiency
and effectiveness with which the Assembly has used
its resources in discharging its functions. |
| The post of Auditor General
for Wales is currently held by Sir John Bourn, who
is also the Comptroller and Auditor General for
the UK, although there is no requirement in the
Act that the two posts should be held by the same
person. |
Witnesses
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| The Committee has the
power to summon certain witnesses or require the
production of documents in accordance with Section
74 of the Act. Schedule 5 to the Act lists organisations
for the purposes of this section. Broadly, they
are public bodies exercising functions in Wales
in fields where the Assembly also exercises functions.
Any person who is a member, or a member of staff,
of an organisation on the list in schedule 5 is
subject to the terms of section 74, as is any individual
listed in schedule 5 or an employee of such an individual.
The Committee has not had to use these powers as
yet. |
| The normal practice is
to invite the current Accounting Officer,
and any other relevant staff, to give evidence to
the Committee. The Committee has expressed some
concern about this limited range of people it can
compel to attend, in particular its inability to
require former members of staff in the specified
public bodies to attend. (This arose in connection
with the Committee’s report on the Centre for
the Visual Arts, where staff responsible for the
project had moved on. In the event the individuals
accepted the invitation to attend the Committee,
although they were not obliged to do so). |
Range of organisations covered
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| The Committee’s
remit is closely tied to that of the Auditor General
for Wales and therefore, like the Auditor General
for Wales (AGW), the Audit Committee does not cover
all public bodies in Wales. For example, local authorities
fall outside the remit of the Auditor General for
Wales and the Audit Committee, although around 80
per cent of their funding comes from the Assembly.
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| The Assembly Government
has requested that the UK Government bring forward
primary legislation to set up a single audit body
for Wales headed by the AGW. This body would bring
together the functions currently exercised by the
National Audit Office and the Audit Commission in
Wales. When this new system is in place, it is expected
that the AGW will be able to scrutinise Assembly
money wherever it goes. Consideration will then
need to be given to whether changes are required
to the operation of the Audit Committee. |
Significance of the corporate body for the
audit function
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| It is also worth noting
that any significant change to the structure of
the Assembly, for example replacing the corporate
body with a legally separate Assembly and Executive,
would have an impact on the audit function. |
| In terms of the important
principle of audit independence, it is not acceptable
for a public body with executive functions to appoint
its own external auditor. Legally, the Assembly
is a corporate body with executive powers and therefore
cannot appoint its auditor. Instead the Secretary
of State advises the Crown on the appointment of
the AGW (after consulting certain key post holders).
In Scotland and Westminster the Parliaments are
able to take a more formal role in the appointment
process of their equivalent of AGW. Similarly the
Secretary of State has a role in protecting the
independence of the AGW. For example, the Secretary
of State and not the Assembly, has the power to
amend the bodies subject to the AGW's remit and
has to be involved if the Audit Committee wishes
to change the budget of the AGW. |
| Therefore, if the Commission
proposes any changes to the constitution of the
Assembly it would be appropriate to consider whether
any consequential changes are needed to the audit
arrangements. |
