Public Accounts Committee

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AN ASSESSMENT OF

PUBLIC ACCOUNTS COMMITTEE

Prepared by Consultants Gavin Woods, former Chair of Public Accounts Committee of Parliament of South Africa, and M. Mohsin Khan, former Controller General of Pakistan. Edited by PLSP Staff.

August 2009

The authors’ views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government or DAI.

Contents

Acknowledgements 4

Acronyms 5

Executive Summary 6

PART 1.

1.1 Background Perspectives 9

1.1.1. The nature and extents of Legislative Oversight 9

1.1.2. The nature and extents of the PAC Oversight Role 9

PART 2.

2.1. The Assessment Approach 10

2.1.1. Approach and Methodology 10

2.1.2. The relevance of International Oversight Perspectives 12

2.2. An Assessment of the PPAC mandate 12

2.2.1. The Current Mandate (Rule 203 of the NA rules) 12

2.2.2. Assessment of the PPAC’s Mandate 13

Recommendations

2.2.3. The Related Development of Financial Management Reforms 17

Recommendations

2.3. An Assessment of the General Functionality of the PPAC 19

Recommendation

2.4. An Assessment of the AGP – in Relation to the PPAC 20

2.5. An Assessment of Specific Functional Concerns Regarding PPAC 20

2.5.1. Backlogs of Audit paras 22

Recommendations

2.5.2. PPAC Performance and Accountability System 24

Recommendations

2.5.3. PPAC Independence 24

Recommendations

2.5.4. PPAC Members Training 25

Recommendations

2.5.5. PPAC Audit or FM Expert 26

Recommendations

2.5.6. Preparation for PPAC Hearings 27

Recommendations

2.5.7. The Hearings – Procedure 27

Recommendations

2.5.8. Follow up Routines/System 28

Recommendations

2.5.9. Other PPAC Engagements/Meetings 29

Recommendations

2.5.10. PPAC Method of Work 30

Recommendations

2.5.11. PPAC Branch 31

Recommendations

2.5.1.2 PPAC Module of NA MIS 31

Recommendations

2.5.13. PPAC Media Relations and Transparency 32

Recommendations

PART 3.

3.1. Short-Term Workplan for Assistance 33

3.1.1. Dealing with the Backlog 34

3.1.2. Building the PPAC Team and its Sense of Mission 35

3.1.3. Raising the PPAC’s Work Processing Efficiencies 36

3.1.4. Add to the PPAC’s Effectiveness through Member Training and Education 38

3.1.5. Add to the PPAC’s Efficiency and Effectiveness through Improvements
to the PPAC Branch 39

3.1.6. Add to the PPAC’s Facilitation of Public Accountability through
Good Media Relations and Transparency 41

3.1.7. Improving the Accountability of the PPAC itself - through an Annual Report 42

PART 4.

4.1. Longer-term Interventions 42

Appendices 44

List of Interviewees 45

Document Sources - International 46

Domestic 47

A Technical Needs Analysis on Design of Management Information System for PPAC Branch 48

Acknowledgements

Sincere thanks is given to the following individuals who provided their leadership, valuable time, knowledge and wisdom

Honorable Chair

Mr. Tanvir Ali Agha - The Auditor General of Pakistan

Mr. Sardar Ayaz Sadiq -MNA and PPAC Member

Mr. Khwaja Asif in Lahore - MNA and PPAC Member

Ms. Yasmin Rahman - MNA and PPAC Member

Ms. Rubina Faisal – DG Audit PT&T in the AG’s office

Mr. Tahir Hanfi - DG Library and Research and Joint Secretary PPAC, National Assembly

Mr. Khan Ahmed Goraya - Executive Director of PIPS

Mr. M.A. Soomro - DS PPAC Branch

Mr. Sharafat Ali – Section Officer, PPAC Branch

Mr. Khaleey Ahmed – Section Officer PPAC Branch

Mr. Fayyaz Hussain Shah – Section Officer PPAC Branch

Mr. H. U. Beg - Former Chairman of PAC

Mr. Ayub Tarin - Acting Secretary of Finance Ministry

And for their generous guidance, support and hospitality, gratitude is expressed to:

Mr. Christopher Shields – Director, USAID-PLSP

Ms. Carmen Lane – Deputy Director, USAID-PLSP

Mr. Aizaz Asif – Legislative Oversight Advisor, USAID-PLSP

Acronyms

AGP Auditor General of Pakistan (used for both the Person and the Institution)

CFAO Chief Finance and Accounts Officer

CGA Controller General of Accounts

DAC Departmental Accounts Committee

DG Director General

FM Financial Management

FR Fundamental Rules

FTR Federal Treasury Rules

GFR General Finance Rules (issued by the MoF)

MNA Member of the National assembly

MoF Ministry of Finance

NA National Assembly

PACs Public Account Committees (i.e. used in reference to Public Accounts Committees in general)

PAD Pakistan Audit Department

PAO Principal Accounting Officer

Para’s Audit Report Paragraphs (which are put before the PPAC for its attention)

PLSP Pakistan Legislative Strengthening Project

PPAC Pakistan Public Accounts Committee (of the National Assembly)

PPAC Branch - Pakistan Public Accounts Committee staff unit

PPR Public Procurement Rules (issued by MoF)

SAI Supreme Audit Institution

SR Supplementary Rules

1.1.  EXECUTIVE SUMMARY

The Public Accounts Committee of the National Assembly of Pakistan (hereafter referred to as PPAC) is proving to be the most active committee in all of Pakistan’s Assemblies. The Chair and its members are lauded for their continued seriousness and hard work to oversee the government’s fiscal activities. However, the PPAC is operating under considerable constraints, including years of backlog of audits and without the size or depth of staff assistance that other comparable parliaments may have. Accordingly, the Chair and key Members of this Committee welcomed assistance from the USAID-funded Pakistan Legislative Strengthening Project (PLSP) to undertake a comprehensive needs assessment of PPAC.

The goals of the assessment were to:

1)  Report on existing PPAC capacity, outlining strengths and weaknesses in key areas with the aim of improving the Committee’s oversight role and general effectiveness;

2)  In cooperation with PLSP, develop a proposed “short-term” workplan for the following eight months of activities (until May 2010 when the project ends) with PPAC to address some of the issues raised in point 1; and

3)  Provide Recommendations for longer-term assistance to PPAC, which could be taken on by the PPAC directly and/or a subsequent USAID project or by other interested donors.

The assessment took place in Islamabad from 1 July through 13 July 2009. Consultants Dr. Gavin Woods and Mr. Mohsin Khan interviewed a number of interested individuals, including Members and staff from PPAC; the Auditor General and select staff; Ministry of Finance officials; PLSP project officers and other key stakeholders.[1] (A full list of interviewees is attached in Annex I.) The consultants and PLSP staff observed several PPAC sub-committee hearings and reviewed a number of constitutional and legal resources..The consultants also undertook an assessment of the new PAC module of the National Assembly Secretariat’s Management Information System (a separate report is contained in Annex II).

Following is an amalgamation of key findings and recommendations:

·  The PPAC Mandate. A review of the National Assembly Rules of Procedure regarding the Committee shows that these rules empower the PPAC to perform as an efficient and effective Public Accounts Committee. However, the consultants recommend a number of important changes in the Rules to further strengthen the role of the PPAC, especially with regard to its relationship with the Auditor General’s Office and its ability to fully evaluate the outcomes of government spending.

·  Financial Reform Environment. PPAC Members and staff should be fully informed about the financial management reform programs being undertaken by the government of Pakistan, led by the Ministry of Finance. These reforms, which include such initiatives as supply chain procurement practices, departmental strategic planning exercises, Medium-term Budgetary Frameworks (MTBF) and conversion to performance-based budgeting, offer the PPAC an increasing responsibility and opportunity to measure the outcomes of government spending. The PPAC should regularly engage the Ministry, the Auditor General, and outside financial experts on the process and progress of reform.

·  Legal Environment. The Financial Management systems and other related reforms currently being developed should be codified into law (as per international practice). While this is not the direct responsibility of the PPAC, the report recommends the Committee hold discussions on the issue with the Ministry of Finance and the Auditor General, in light of a proposed Financial Management Law’s relevance to accountability and oversight arrangements and obligations.

·  Transparency. The PPAC is praised for regularly opening its deliberations/hearings to the media, and media coverage over the last months shows the PPAC as a tough, rigorous and effective PAC in the making. For this media interest to be sustained and heightened, the PPAC will increasingly need to add substance to its sharp public utterances and activities by demonstrating a deeper understanding of the issues and its ability to probe and dig out factual evidence to reveal specific shortcomings in government.

·  PPAC Independence. The assessment exercise clearly indicates that the PPAC maintains an appropriate distance between itself and the Executive and senior government officials. However, the consultants recommend that the PPAC, once some of its immediate capacity issues are addressed, reduce its reliance on the Auditor General for guidance and staff assistance, especially after the annual audit report is submitted. Through informational and training sessions, which the assessment lays out, PPAC Members should increase their own expertise over time. The PPAC Branch also should employ some of their own financial management experts.

·  Workload and the backlog. Examining years of backlog of audit paras causes an overall workload which far exceeds the PPAC’s current work capacity. There are currently more than 20,000 outstanding audit observations dating back to 1994, all of which the PPAC’s sub-committees are trying to review. The report recommends that PPAC, with National Assembly legal advisors, revisit the legal requirement and considerations to see if it is possible to attend only to those matters which have a high probability of recovery of monies for the State. In the meantime, the PPAC should engage temporary staff to review and summarize recommendations, and to deal with some through correspondence with the Ministries in question.

·  Communication between Members and Staff. There appear to be weaknesses in this area. For example, an important function of the PPAC is to ensure there is follow-up on the directives they issue to the government. While the PPPAC Members felt there was poor follow-up in this area, the PPAC Branch was able to demonstrate a follow-up system that they used and which they felt was largely effective. It seemed the Members were unaware of some of the resources they do have at their disposal.

·  Strategic Planning. At present there is no formalized criterion by which the PPAC plans and manages its work performance. The assessment recommends that the Committee conduct an annual strategic planning process, whereby the Committee agrees to its overall output and outcome objectives (both quantitative and qualitative), and against this establishes its performance criteria and goals. The PPAC Branch would participate in monthly meetings to discuss regular progress.

·  Annual Reporting. The Committee should produce an Annual Report about its performance – both in terms of its National Assembly mandate and the specific objectives it set in the strategic plan. Such a report – ideally available to the parliament and the public – would contain a Chairman’s letter in which he gives an overview of the Committee and its highlights over the year.

The report emphasizes that should the PPAC endeavour to undertake some or all of the recommendations, all PPAC members be actively involved in its review.

.

1.1  Background Perspectives

The two inter-related background perspectives are presented to keep in mind universally accepted perspectives throughout this PPAC assessment and the related formulation of recommendations.

1.1.1.  The nature and extents of Legislative Oversight

“The review, monitoring, and supervision of government and public agencies, including the implementation of policy and legislation. From this definition the key functions of parliament oversight can be described as:

·  To detect and prevent abuse, arbitrary behavior, or illegal or unconstitutional conduct on the par of government and public agencies. At the core of this function is the rights and liberties of the citizens.

·  To hold government to account in respect of how taxpayers money is used. It detects waste within the machinery of government and public agencies. This can improve the economy, efficiency and effectiveness of government operations.

·  To ensure that policies announced by government and authorized by parliament are actually delivered. This function includes monitoring the achievement of goals set by the legislature and the governments own programmes.

·  To improve the transparency of governments operations and to enhance public trust in the government which is in itself a condition of effective policy delivery.[2]

1.1.2.  The nature and extents of the PAC oversight role

Within the wider Legislative Oversight ambit (explained above), the PAC provides a vitally important oversight function in the legislative committee system. In many countries it is recognized as the predominant oversight committee. Its objective is to improve the efficiency and effectiveness of all government and public agencies, by:

·  Providing a credible and independent review process of public spending and governments control of public funds through the examination of appropriation accounts (and financial statements) and audit reports;

·  investigating the use of public assets, resources and funds;

·  ensuring the process of enquiry is focused on evaluating financial management performance (rather than on policy);

·  using its powers and authority to ensure its report, directives and recommendations are influential: and,

·  challenging the adequacy of the corporate governance arrangements.[3]

PART 2.

2.1. The Assessment Approach

2.1.1. Approach and Methodology

In order to carry out the assessment, it was necessary to collect a sufficiently comprehensive body of relevant and representative information about the PPAC. This information, which was identified in terms of a predetermined ‘framework of understanding’ as to what would be required to meet the assignment’s sought-after outcomes, was gathered through empirical and secondary sources – through person-to-person interviews and a wide range of relevant existing documents. While some of the information used in the assessment was of a factual nature, other was the considered opinions of key players in the greater PAC and PPAC scheme-of-things.

Interviews conducted

Interviews with a few current Members of the PPAC were held because of their political seniority, their representation across the political parties, the active role they play in the PPAC and their considered opinions around PAC matters. Members were also encouraged to express any other views regarding the effectiveness of the AGP and the Committee’s PPAC Branch. The Members were also generally forthcoming with proposed solutions to perceived PPAC problems. .