National Audit Act

Arrangement of Sections

1. Short title and date of operation.

2. Applicable law pertaining to audits.

PART I

Scope of audits carried out by the Auditor-General

3. Scope of audit in relation to auditee entities.

4. Public to notify Auditor-General.

5. Applicable auditing standards.

PART II

Powers, duties and functions of the Auditor-General

6. Duties and functions of the Auditor-General.

7. Powers of the Auditor-General in carrying out an audit.

8. Powers, duties and functions to be solely carried out by the Auditor-General.

9. Non-disclosure of information.

PART III

Submission of reports and statements by the Auditor-General

10. Auditor-General to submit a report to Parliament annually.

11. Summary Report and Annual Detailed Management Audit Report.

12. Content of the Auditor-General’s Report pertaining to corporations and companies.

13. Special Reports.

14. Triennial Reports.

15. Submissions of the financial statements of the Government to the Auditor-General.

16. Annual financial statements of audited entities.

17. Annual report of a public corporation or company.

18. Audit fees.

PART IV

Imposition of Surcharge

19. Audit Service Commission to impose a surcharge.

20. Appeals to be made to the Surcharge Appeal Committee.

21. Appointment of the Surcharge Appeals Committee.

22. Crediting of moneys paid as surcharge.

23. Proceedings for recovery before a Magistrate.

PART V

Audit Service Commission

24. Establishment of an Audit Service Commission.

25. Powers, duties and functions of the Commission.

26. Meetings of the Commission.

27. Leave from the discharge of functions as a member of the Commission.

28. Commission to appoint, promote & c. officers and staff.

PART VI

Establishment of the National Audit Office and the Sri Lanka State Audit Service

29. Establishment of the National Audit Office.

30. Establishment of the Sri Lanka State Audit Service.

31. Resignation of a member of the staff of the Audit Office.

32. Appeals to the Administrative Appeals Tribunal.

33. Stationing of the officers.

34. The Commission to submit annual budget estimates for incorporation in the national budget.

35. The Auditor-General to submit annual work programme.

36. Power to appoint an independent qualified auditor to audit the Audit Office.

37. Audit Fund.

PART VII

Responsibilities of a Chief Accounting Officer and Accounting Officer

38. Responsibilities of a Chief Accounting Officer or an Accounting Officer.

39. Chief Accounting Officer & c., to consider the Detailed Management Audit Report submitted by the Auditor-General.

40. Internal audit.

41. Audit and Management Committees.

PART VIII

Offences and Penalties

42. Failure to assist the Auditor-General to be an offence.

43. Influencing or attempting to influence a decision of the commission or any officer of the Sri Lanka state Audit Service & c. to be an offence.

44. Offences by bodies of persons.

45. Other offences.

46. Convicted persons to be punished for other offences in the process.

PART IX

General

47. Establishment of a Centre for Public Audit Training and Development.

48. Power of the Commission to make rules.

49. Auditor-General to give directions.

50. Protection from law suits.

51. Members of the Commission, officers and staff of the Audit Office deemed to be public servants.

52. The Audit Office deemed to be a Scheduled Institution within the meaning of the Bribery Act.

53. Repeal of Act, No. 26 of 1958.

54. Transitional provisions.

55. Interpretation.

56. Sinhala text to prevail in case of inconsistency.

SCHEDULE

19 of 2018.

AN ACT to provide for the powers, duties and functions of the audit service commission; the establishment of the office of the national audit office and the Sri Lanka state audit service; to specify the role of the Auditor-General over public finance and to make provision for matters connected therewith or incidental thereto.

[Date of Commencement: On Notice]

1. Short title and date of operation.

(1) This Act may be cited as the National Audit Act.

(2) The provisions of this Act shall come into operation on such date as the President may appoint by Order published in the Gazette (hereinafter referred to as the “appointed date”).

2. Applicable law pertaining to audits.

The provisions enshrined in Articles 153, 153a, 153b, 153c, 153d, 153e, 153f, 153g, 153h and 154 of the Constitution, the provisions of this Act and any other written law, as may be applicable, shall apply to audits of auditee entities and matters connected therewith.

part I

Scope of audits carried out by the Auditor-General

3. Scope of audit in relation to auditee entities.

(1) The Auditor-General shall—

(a) audit all income received to the Consolidated Fund and all expenditure from the Consolidated Fund;

(b) ascertain whether the moneys shown in the accounts of auditee entities as having been disbursed were legally available for and applicable to, the services or purposes to which they have been applied for or charged with;

(c) determine whether the expenditure conforms to the authority which governs it; and

(d) in each audit, examine income, expenditure, transactions and events.

(2) The scope of an audit carried out by the Auditor-General includes examining the accounts, finances, financial position and prudent management of public finance and properties of auditee entities.

(3) The Auditor General shall be responsible to Parliament in carrying out the provisions of this Act.

4. Public to notify Auditor-General.

Subject to the provisions of section 3, the Auditor-General may examine any matter relating to an auditee entity brought to his notice by any member of the public in writing along with substantial proof of the matters asserted, and report thereon to Parliament.

5. Applicable auditing standards.

(1) The Sri Lanka Auditing Standards determined by the Auditing Standards Committee established under the Sri Lanka Accounting and Auditing Standards Act shall be applicable to audits undertaken by the National Audit Office established under section 29.

(2) Where there are no auditing standards specified in the Sri Lanka Auditing Standards for performance audits, environmental audits, technical audits and any other special audits, the Audit Service Commission may, by Order published in the Gazette, specify the provisions of the International Standards of the Supreme Audit Institutions determined by the International Organisation of Supreme Audit Institutions which shall apply to such audits, with necessary amendments to suit local requirements.

PART II

Powers, duties and functions of the Auditor-General

6. Duties and functions of the Auditor-General.

(1) The Auditor-General or any person authorised by him in carrying out an audit shall—

(a) inspect accounts of any auditee entity including treasuries and initial or subsidiary accounts of such auditee entities;

(b) require that any accounts, books, papers and other documents which deal with or form the basis of or is otherwise relevant to the transactions to which his duties extend, shall be sent to such place as he may appoint for his inspection;

(c) question or make such observations as he may consider necessary, from the chief Accounting Officer of the auditee entity and call for such information as he may require for the preparation of any account or report;

(d) ensure that the set of financial statements presented for audit by the auditee entity­—

(i) is in accordance with the applicable financial reporting standards;

(ii) have been designed to present a true and fair view of the affairs of the auditee entity for the year under review;

(iii) is consistent with the preceding year; and

(iv) includes any recommendations made by the Auditor-General in the previous year.

(2) The Auditor-General shall assist the Committee on Public Accounts and the Committee on Public Enterprises to carry out their functions more efficiently and effectively. The Auditor-General shall assist all other Committees of Parliament when such assistance is required.

(3) Notwithstanding the provisions of subsection (1) of section 3, the Minister in charge of any public corporation, business or other undertaking vested in the Government under any written law and companies registered or deemed to be registered under the Companies Act in which the Government or a public corporation or a local authority holds fifty per centum or more of the shares of that company directly or indirectly may, with the concurrence of the Minister assigned the subject of Finance and in consultation with the Auditor-General, appoint a qualified auditor or auditors to audit the accounts of such auditee entity. Where such appointment has been made by the Minister, the Auditor-General may, in writing, inform such auditor or auditors that he proposes to utilise his or their services for the performance and discharge of the Auditor-General’s duties and functions in relation to such auditee entity and thereupon such auditor or auditors shall act under the direction and control of the Auditor-General.

7. Powers of the Auditor-General in carrying out an audit.

(1) In addition to the powers and functions conferred on the Auditor-General under Article 154(5) of the Constitution, the Auditor-General or any person authorised by him may exercise the following powers in respect of an audit of an auditee entity—

(a) access or call for any written or electronic records or other information relating to the activities of an auditee entity;

(b) call any person whom the Auditor-General has reasonable grounds to believe to be in possession of information and documents, as he may consider necessary to carry on the functions under this Act, to obtain written or oral statements and require the production of any document, from any person, who may be either in-service or otherwise;

(c) examine and make copies of or take extracts from any written or electronic records and search for information whether or not in the custody of the auditee entity;

(d) after obtaining permission from the relevant Magistrate’s Court, examine and audit any account, transaction or activity of a financial institution, of any person, where the Auditor-General has reason to believe that money belonging to an auditee entity has been fraudulently, irregularly or wrongfully paid into such person’s account;

(e) require any officer of financial institution to produce any document or provide any information relating to an account, transaction, dealing or activity of person referred to in paragraph (d) and to take copies of any document so produced, if necessary;

(f) obtain the views from the governing body of each auditee entity, on the results of the audit carried out by such officer;

(g) pay rewards and incentives out of the Audit Fund; and

(h) do all other matters connected or incidental thereto to achieve the purposes of this Act.

(2) Any information relating to national security of Sri Lanka the disclosure of which is prejudicial, shall be audited personally by the Auditor-General with the concurrence of the Minister assigned the subject of Defence.

(3) Every person shall comply with the provisions of this section, and such compliance shall not be considered as a violation of any written law pertaining to secrecy, confidentiality or non-disclosure.

(4) Where any person is called, by the Auditor-General or any person authorised by him, for the purposes of paragraph (b) of subsection (1) and such person is unable to appear in person due to unavoidable circumstances, he may nominate with the consent of the Auditor-General a person conversant on the subject to appear before the Auditor-General or any other person authorised by him, on that behalf.

(5) In the performance and discharge of the duties and functions, the Auditor-General or any officer authorised by him shall not be subject to interference or influence by any person or authority.

8. Powers, duties and functions to be solely carried out by the Auditor-General.

The Auditor-General shall himself exercise, perform and discharge the following powers, duties and functions—

(a) the appointment of a qualified auditor or an institution having technical, professional or scientific expertise under Article 154(4) of the Constitution;

(b) reporting to Parliament on the performance and discharge of his duties and functions under Article 154(6) of the Constitution;

(c) administering the Audit Fund.

9. Non-disclosure of information.

(1) The members of the Audit Service Commission, any person appointed to any office under this Act or any other person assisting any such person for the purpose of carrying out the provisions under this Act or a qualified auditor engaged by the Auditor-General for such purpose, except in the performance of his duties under this Act, shall not disclose any information received by him in the performance of his duties under this Act, and shall—

(a) not be compelled by any person to disclose any information except on a request of Parliament or by an Order of court or subject to paragraph (b) to give effect to the provisions of any written law;

(b) not disclose any information under any law requiring the disclosure of information without prior consent given in writing of the relevant person or institution providing such information and until the report or statement prepared by the Auditor-General relating to such information has been presented in Parliament, as may be required; and

(c) not enter upon the duties of his office until he makes and subscribes an oath of secrecy as set out in the Schedule hereto. The members of the Audit Service Commission shall subscribe an oath of secrecy before the Speaker of Parliament, while all other persons specified herein shall subscribe the said oath before the Auditor-General.

(2) Subject to the provisions of subsection (1) of this section, any such member or person or qualified auditor who communicates any such matter to any person or suffers or permits any unauthorised person to have access to any books, papers or other records relating to any such matter, commits an offence.

PART III

Submission of reports and statements by the Auditor-General

10. Auditor-General to submit a report to Parliament annually.

(1) The Auditor-General shall, after the closure of each financial year submit a report to Parliament, within the time limits specified under written law, on the results of the audits carried out by him during the year. The Auditor-General shall include in such report any observation expressed by any auditee entity in regard to his findings.

(2) The submission of the report to Parliament in respect of a particular year shall be completed by the Auditor-General within the time limits specified under written law.

(3) The report under subsection (1) may be made available by the Auditor-General through the official website of the National Audit office, after such report has been submitted to Parliament.

11. Summary Report and Annual Detailed Management Audit Report.

(1) The Auditor-General shall issue a Summary Report within five months after the closure of each financial year to an auditee entity in respect of any financial statement or any account submitted by such entity, other than an entity referred to in section (12).

(2) The Auditor-General shall present an Annual Detailed Management Audit Report to the governing body of each auditee entity within the five months after the end of each financial year with a copy each to the Minister to whom the respective auditee entity is assigned and the Minister assigned the subject of Finance.

12. Content of the Auditor-General’s Report pertaining to corporations and companies.

The Auditor-General shall, within three months of the receipt of the approved annual financial statement and other relevant documents and information of a public corporation or a company in which the Government or a public corporation holds fifty per centum or more of the shares, present a report to the Chairman of the governing body of such public corporation or company for publication in its annual report, and such report shall state—

(a) whether the relevant information and explanations have been obtained reasonably, which in the opinion of the Auditor-General were necessary for the purpose of the audit;

(b) whether the financial statements have been prepared in accordance with the Sri Lanka Accounting Standards as may be determined by the Auditing Standards Committee, or Sri Lanka Public Sector Accounting Standards, as the case may be, so as to give a true and fair view of the financial position of the entity and the financial performance and the cash flows thereof;

(c) whether the consolidated financial statements have been prepared in accordance with the Sri Lanka Accounting Standards as may be determined by the Auditing Standards Committee or Sri Lanka Public Sector Accounting Standards, as the case may be, so as to give a true and fair view of the financial position of the entity and its financial performance and the cash flows of such entity and of its subsidiaries and associates as may be applicable;

(d) whether any member of the governing body of such entity has any direct or indirect interest in any contract entered into by such entity, and if so, the nature of such member’s interest and the Auditor-General’s own views and comments thereon;

(e) the reasons for expressing a qualified, disclaimer, adverse or similar audit opinion on the annual financial statements examined by the Auditor-General;

(f) whether the auditee entity has or has not complied with any applicable written law or other general or special directions issued by the governing body of the auditee entity;

(g) whether the auditee entity has performed according to its powers, functions and duties;

(h) whether the resources of the auditee entity had been procured and utilised economically, efficiently and effectively within the time frames and in compliance with the applicable laws; and

(i) any other matter the Auditor-General considers necessary to achieve the purposes of the Act.

13. Special Reports.

The Auditor-General shall report to Parliament on any audit carried out during any financial year and may make such report publicly available through the official website of the National Audit Office and shall not publish the report if he has or intends to provide any report, information, document, book, record or computer generated transcript obtained in the course of the audit to the law enforcement authorities.

14. Triennial Reports.

The Auditor-General shall table in Parliament the Status Report of every auditee entity, within nine months after the end of each period of three financial years. The report shall include the major deficiencies identified, recommendations made by him and preventive measures taken by the auditee entity and the position thereon as at the submission of the report to the Parliament.

15. Submissions of the financial statements of the Government to the Auditor-General.

(1) The Secretary to the Treasury shall submit the financial statements of the Government to the Auditor-General not later than three months after the close of each financial year of the Government.

(2) The annual report of the Ministry of Finance along with the audited financial statements of the Government and the Auditor-General’s opinion thereon shall be tabled in Parliament by the Minister assigned the subject of Finance before 31st May of the following financial year.

(3) For the purposes of this section—

(a) “financial statement of the Government” shall include—

(i) the statement of financial performance during the financial year, a statement of financial position showing the assets and liabilities of the Government and a cash flow statement for the financial year, accounting policies applied and notes thereto, together with a performance report for such year;

(ii) any other documents which the Auditor-General may require to express his opinion on the said financial statement; and

(iii) a statement listing of the auditee entities considered in the said financial statement;

(b) “Government” means the Government Institutions for which funds are being allocated by the annual Appropriation Act. The President may declare by Order published in the Gazette any other institution which may be considered as the Government for the purpose of this section;

(c) “Performance report” shall include the objectives achieved, future goals, key performance indicators and progress in the use of resources.

16. Annual financial statements of audited entities.

(1) Every auditee entity shall maintain proper books and records of all its income, expenditure, assets and liabilities, to enable annual and periodic financial statements to be prepared in respect of such entity.

(2) Annual financial statements including the annual appropriation account, the revenue account and the accounts relating to Advance Account Activities in respect of each Ministry, Department, and any other specified institution and Commission and the annual financial statements in respect of every other auditee entity, shall be submitted by the Chief Accounting Officer to the Auditor-General along with the annual performance reports, within such period as may be provided by rules.

17. Annual report of a public corporation or company.

Every public corporation or company in which the Government or a public corporation or a local authority holds fifty per centum or more of the shares of that company, shall include in its annual report—

(a) the report presented by the Auditor-General under section 12 to the Chairman of the governing body of such entity;

(b) the performance report for the relevant year;

(c) annual audited financial statements of the entity for the relevant year; and

(d) a future projection report, based on sustainable development, which may include details of activities to safeguard the environment and mitigate any negative impact on the environment and where necessary include environment and disaster impact assessment analysis.

18. Audit fees.

(1) The Auditor-General shall charge a fee for conducting an audit from the following auditee entities—

(a) public corporations and statutory Funds or Boards;

(b) businesses and other undertakings vested in the Government by or under any written law; and

(c) any company registered or deemed to be registered under the Companies Act in which the Government or a public corporation or local authority holds fifty per centum or more of the shares of that company.

(2) The fee to be charged shall be determined by the Auditor-General in consultation with the Secretary to the Ministry of the Minister assigned the subject of Finance with the concurrence of the Secretary to the relevant Ministry of the Minister assigned the respective auditee entity.

(3) The fee received by the Auditor-General under this section shall be credited to the Consolidated Fund after having deducted the costs incurred in carrying out the audit.

(4) An auditee entity shall settle the accounts for audit fees within thirty days from the date of invoice.

(5) If an auditee entity defaults on the payment of audit fees the Auditor-General shall promptly notify the Ministry of Finance and where applicable, the relevant Provincial Council to recover such fees.

(6) The Secretary to the Treasury or the Chief Secretary of the relevant Provincial Council, shall after consulting the relevant parties, direct that the audit fees recoverable from an auditee entity, be defrayed from a vote on the national or a provincial budget identified by the Treasury or relevant Provincial Council.

PART IV

Imposition of Surcharge

19. Audit Service Commission to impose a surcharge.

(1) —

(a) Unless otherwise specifically provided for, in any other written law, the Audit Service Commission shall report the amount of any deficiency or loss in any transaction of an auditee entity where the Audit Service Commission has reasonable grounds to believe that such transaction has been made contrary to any written law and has caused any deficiency or loss due to fraud, negligence, misappropriation or corruption of those involved in that transaction to the Chief Accounting Officer of the auditee entity for imposition of a surcharge on the value of the deficiency or loss in every transaction of such auditee entity.

(b) Any person involved in causing the deficiency or loss referred to in paragraph (a) shall hereinafter be referred to as the “person who is responsible for the deficiency or loss”.

(2) The Chief Accounting Officer of the auditee entity shall charge the surcharge under subsection (1), against any person who is responsible for the deficiency or loss, either jointly or severally, followed by a formal disciplinary action by the Disciplinary Authority or a judicial process.

(3) The Chief Accounting Officer of the auditee entity shall, in charging the amount to be recovered, adopt the following procedure—

(a) issue a notice to each person in respect of whom the surcharge is to be imposed specifying the reasons for such imposition, and afford an opportunity for each such person to make representation to show cause, in writing in respect of subsections (1) and (2), within a period of twenty one days from the date of receipt of the Notice. The Chief Accounting Officer shall report thereof to the Audit Service Commission;

(b) consider the representations made under paragraph (a) prior to making a decision on the surcharge to be imposed;

(c) where no representations have been made within the time specified, the Chief Accounting Officer of the auditee entity shall proceed to make a decision on the surcharge to be charged;

(d) the surcharge shall be decided on the cumulative of the amount of the deficiency or loss and such interest as may have accrued, as charged on the rates for Treasury bills when the deficiency or loss arose;

(e) the decision of the Chief Accounting Officer of the auditee entity under paragraphs (b) and (c) shall be communicated forthwith to each person who is responsible for the deficiency or loss by issuing a Surcharge Certificate, specifying the following—

(i) the reasons for surcharging;

(ii) the amount to be charged, which includes the deficiency or loss of the transaction, the surcharge decided and any interest percentage, as may be determined, for any delay of payment of the said amounts exceeding two months from the date of payment specified;

(iii) the action contemplated for its recovery;

(iv) the date on or before which the amount specified under item (ii) is to be paid;

(v) the details of the manner in which payment shall be made.

(4) The Chief Accounting Officer of the auditee entity shall charge the amount specified under subsection (3)(e)(ii) from the person who is responsible for the deficiency or loss who may be in-service or not in-service at the time of the audit, within one month of the date of payment as specified in the Surcharge Certificate.

20. Appeals to be made to the Surcharge Appeal Committee.

(1) Any person aggrieved by a decision made by the Chief Accounting Officer of the auditee entity under section 19 may, within one month from the date of receiving the Surcharge Certificate, appeal against such decision to the Surcharge Appeal Committee appointed under section 21.

(2) The said Surcharge Appeal Committee may—

(a) allow the appeal;

(b) amend, alter or vary the decision; or

(c) disallow the appeal.

(3) —

(a) The decision referred to in subsection (1) shall be communicated in writing to the appellant and the Chief Accounting Officer of the auditee entity and the Chairman of the Audit Service Commission through the Chairman of the Surcharge Appeal Committee.

(b) The Chief Accounting Officer of the auditee entity shall immediately execute the decision and report back to the Audit Service Commission in writing, within one month from the date of issue of such communication.

(4) Where any person is dissatisfied by the decision of the Committee, he may appeal to the Court of Appeal within thirty working days from the date of issue of the communication under subsection (3)(b) of this section.

(5) The Order of the Court of Appeal shall be communicated by the Chief Accounting Officer of the auditee entity, in writing to the Chairman of the Audit Service Commission.

21. Appointment of the Surcharge Appeals Committee.

(1) There shall be a Surcharge Appeal Committee (hereinafter referred to as the “Committee”). The Constitutional Council shall appoint the Committee and its Chairman. The Committee shall consist of not less than five members, from among those having experience in the fields of auditing, law and public finance management, public administration and engineering, to hear and determine appeals of any person aggrieved by a decision referred to in section 20.

(2) No member of the National Audit Office and the Sri Lanka State Audit Service shall be a member of the Committee. The Auditor-General shall not be a member of the Committee. The Committee shall act independently of the Auditor-General.

(3) The said Committee shall determine the appeal procedure and rules pertaining to appeal, which shall be published in the Gazette.

22. Crediting of moneys paid as surcharge.

The Chief Accounting Officer of the auditee entity shall credit, all such sums of money collected as surcharge and interest accrued, if any, under section 19(3)(e)(ii), to the Consolidated Fund:

Provided that where the surcharge is related to a transaction made in respect of a Provincial Council or a local authority, the sum collected as surcharge shall be credited to the Provincial Fund of such Provincial Council or the Fund of the relevant local authority, as the case may be.

23. Proceedings for recovery before a Magistrate.

(1) Where any sum to be charged under section 19(3)(e)(ii) has not been paid within the time specified and where the Audit Service Commission is satisfied that immediate action is necessary for the recovery of such sum, unless an appeal is pending before the Committee under section 20(1), in the Court of Appeal under section 20(4), the Audit Service Commission may issue a certificate containing particulars of such sum to be recovered and the name and last known place of employment or residence of the person who is responsible for the deficiency or loss, to a Magistrate having jurisdiction in the division in which such place is situated within a period of ninety working days.

(2) —

(a) The Magistrate shall thereupon summon such person who is responsible for the deficiency or loss to show cause as to why further proceedings for the recovery of the sum to be recovered shall not be taken against him.

(b) Where the person who is responsible for the deficiency or loss fails to show sufficient cause, the sum to be recovered shall be deemed to be a fine imposed by a sentence of the Magistrate on such person who is responsible for the deficiency or loss for an offence punishable with fine only and not punishable with imprisonment.

(3) —

(a) The certificate issued by the Audit Service Commission shall be conclusive proof that the sum to be recovered has been duly assessed and is in default in any proceeding before the Magistrate under subsection (1).

(b) The proceeding under this section shall be conducted within thirty days from the date of issue of the certificate under subsection (1) unless an appeal has been made to the Surcharge Appeal Committee under section 20(1) or to the Court of Appeal under section 20(4), as the case may be.

(4) The provisions of Chapter XXIV of the Code of Criminal Procedure Act, shall mutatis mutandis apply in relation to default of payment of a fine, and in addition the Magistrate may make any direction which, he could have made at the time of imposing such sentence.

(5) Nothing in subsections (2) to (5) of section 291 of the Code of Criminal Procedure Act, shall apply in any case referred to in subsection (1).

(6) In any case referred to in subsection (2), where in default of payment of the fine, the person who is responsible for the deficiency or loss shall be sentenced to imprisonment for a period not exceeding one year. The Magistrate may allow time for the payment of the amount of that fine or direct payment of that amount to be made in instalments.

(7) Where a Magistrate directs that the payment be made in instalments and default is made in the payment of any one instalment, proceedings may be taken as if default had been made in payment of all the instalments then remaining unpaid.

(8) Any person aggrieved by the decision of the Magistrate may appeal to the High Court established under Article 154p of the Constitution not later than thirty days from the date of such decision.

(9) Wherever the Audit Service Commission issues a certificate under subsection (1), he shall at the same time issue to the person who is responsible for the deficiency or loss, whether resident or non-resident, a notification thereof by personal service, registered letter sent through the post or tele mail service; and the non-receipt of such notification by the person who is responsible for the deficiency or loss shall not invalidate proceedings under this section.

(10) For the purpose of Part IV of this Act, in the event the Audit Service Commission finds that the Chief Accounting Officer of the auditee entity has caused or has been involved in causing any deficiency or loss due to fraud, negligence, misappropriation or corruption in a transaction made contrary to any written law, the Secretary to the Treasury shall charge the amount as referred to in subsection (3)(e)(ii) of section 19 from the Chief Accounting Officer of the auditee entity.

PART V

Audit Service Commission

24. Establishment of an Audit Service Commission.

(1) There shall be an Audit Service Commission (hereinafter referred to as “Commission”) established under Article 153a(1) of the Constitution consisting of the
Auditor-General and four other members appointed by the President on the recommendation of the Constitutional Council.

(2) The Commission shall have its own Secretariat.

25. Powers, duties and functions of the Commission.

In addition to the powers and functions of the Commission as set out under Article 153c of the Constitution, the Commission shall—

(a) appoint Committees to assist in the affairs of the Commission;

(b) introduce schemes to enhance the quality of performance of the staff of the National Audit Office referred to in section 29; and

(c) make rules for which specific provision has been given in this Act.

26. Meetings of the Commission.

(1) The Chairman of the Commission shall preside at all meetings of the Commission and, in his absence, a member elected by the members present from among themselves shall preside at such meeting.

(2) The quorum for a meeting of the Commission shall be three members. All decisions of the Commission shall be made by a majority of the members present at the meeting. In the event of an equality of votes, the member presiding at the meeting as Chairman shall have a casting vote.

(3) The Commission shall have power to act notwithstanding any vacancy in its membership, and no act, proceeding or decision of the Commission shall be or deemed to be invalid by reason only of any such vacancy or any defect in the appointment of a member thereof.

(4) The Commission shall meet at least once in a month.

(5) In the event a written request is made by at least three members to summon an urgent meeting of the Commission, the Chairman of the Commission shall summon such meeting as soon as possible, but in any case not later than ten days after the receipt of such request.

(6) There shall be a Secretary to the Commission who shall be appointed by the Commission. The Secretary shall be responsible for proper recording and maintenance of minutes of the meetings of the Commission and the common seal of the Commission and its custody.

27. Leave from the discharge of functions as a member of the Commission.

(1) The President may grant any member of the Commission leave from the discharge of his functions as a member of the Commission for a period not exceeding two months and shall for the duration of such period, on the recommendation of the Constitutional Council and having regard to the provisions of Article 153a(1) of the Constitution, appoint a person to be a temporary member of the Commission, for the period of such leave.

(2) A member of the Commission who without obtaining leave from the President is absent from three consecutive meetings of the Commission, shall be deemed to have vacated office with effect from the date of the third of such meetings, and shall not be eligible thereafter to be reappointed as a member of the Commission.

28. Commission to appoint, promote & c. officers and staff.

(1) The appointment, promotion, transfer, disciplinary control and dismissal of the members belonging to the Sri Lanka State Audit Service recruited by the Commission shall be vested in the Commission.

(2) The Commission may appoint a qualified Secretary and such other officers and Non-Audit Staff to the Commission and to the National Audit Office on such terms and conditions as may be determined by the Commission.

(3) The salaries and other allowances and any other benefits of persons recruited by the Commission, except those who have been attached to the National Audit Office from the Combined Services, shall be determined by the Commission, after having obtained the views of the Salaries and Carders Commission, and shall be charged on the Consolidated Fund.

PART VI

Establishment of the National Audit Office and the Sri Lanka State Audit Service

29. Establishment of the National Audit Office.

There shall be a National Audit Office (hereinafter referred to as the “Audit Office”) to assist the Auditor General in the discharge of his duties and functions, which shall consist of the Auditor-General and a staff comprising the members belonging to the Sri Lanka State Audit Service established under section 30 of this Act and the Non-Audit Staff (hereinafter referred to as the “staff of the Audit Office”).

30. Establishment of the Sri Lanka State Audit Service.

(1) There shall be established a service known as the Sri Lanka State Audit Service.

(2) The members of the Sri Lanka Audit Service and the Audit Examiners’ Service serving on the date immediately prior to the date of operation of this Act, shall be deemed to be members of the Sri Lanka State Audit Service as at the date of operation of this Act.

31. Resignation of a member of the staff of the Audit Office.

Any member of the staff of the Audit Office recruited by the Commission may resign his office by writing under his hand, addressed to the Chairman of the Commission.

32. Appeals to the Administrative Appeals Tribunal.

A person aggrieved by the decision of the Commission in the exercise of its powers under section 28, may appeal against such decision to the Administrative Appeals Tribunal as specified under Article 153g.

33. Stationing of the officers.

(1) The Auditor-General may deploy any of the officers of the Sri Lanka State Audit Service or qualified auditor or any other person lawfully engaged by him, to carry out any audit of an auditee entity in any part of Sri Lanka.

(2) All auditee entities shall cooperate with the Auditor-General and any officer deployed by him and shall provide a safe and secure working environment to facilitate the carrying out of an effective audit.

34. The Commission to submit annual budget estimates for incorporation in the national budget.

The Commission shall prepare the annual budget estimates of the Audit Office within the period as specified by the Minister assigned the subject of Finance. The said estimates shall be submitted to the Speaker on such date as may be decided by the Speaker after consultation with the said Minister of Finance and the Chairman of the Commission. The Speaker shall table the said estimates in Parliament for its review with the observations of the Minister assigned the subject of Finance, who shall provide his observations to the Speaker within ten working days from its receipt of such annual budget estimates from the Speaker. The Parliament shall after having reviewed the annual budget estimates of the Audit Office forward the estimates to the Minister assigned the subject of Finance for incorporation in the national budget with such modifications, if any, as Parliament thinks fit.

35. The Auditor-General to submit annual work programme.

(1) At least sixty days before the beginning of each financial year, the Auditor-General shall prepare and submit to the Speaker a draft annual work programme that describes the Auditor-General’s proposed work programme for the forthcoming year.

(2) The Speaker shall cause the draft annual work programme to be reviewed by a committee of Parliament established under the Standing Orders calling for any comments or amendments including the programme priorities. The Speaker or the said committee may be required to forward the said comments or amendments within thirty days from the date of receipt of the work programme. The Speaker shall forward the same to the Auditor-General.

(3) Where there are no reviews made under subsection (2) the Speaker shall directly table the work programme submitted by the Auditor-General in Parliament.

(4) Where there are reviews made under subsection (2), the Auditor-General may, after considering any comments or amendments, amend the work programme as suggested by the Speaker or the said committee.

(5) The Auditor-General shall present a completed annual work programme to the Speaker before the beginning of each financial year and the Speaker shall then table the work programme in Parliament.

36. Power to appoint an independent qualified auditor to audit the Audit Office.

(1) Notwithstanding the provisions in any other law to the contrary, the Speaker shall appoint an independent qualified auditor to carry out the audit of the financial statements, accounts and other information relating to the financial year of the Audit Office and for this purpose the Audit Office shall be deemed an auditee entity under this Act. Any reference to an auditee entity and the Auditor-General shall, mutatis mutandis apply in relation to the Audit Office and the independent qualified officer.

(2) The appointment of an independent qualified auditor under subsection (1) shall be subject to such terms and conditions as the Commission may determine, including the remuneration to be paid to such auditor, which shall be defrayed as part of the expenses of the Audit Office.

(3) On completion of the audit, such independent qualified auditor shall be required to submit such report thereon to the Commission, and the Commission shall cause such report to be tabled in Parliament together with any observations or views that the Auditor-General may have expressed on such audit at the time of carrying out the same by the independent qualified auditor.

(4) The report of the independent qualified auditor shall include—

(a) the audited financial statements prepared in accordance with section 5 of this Act and in compliance with any other written law; and

(b) an account of the implementation of the annual work programme required under section 35.

37. Audit Fund.

(1) There shall be established a fund to be known as the Audit Fund (hereinafter referred to as the “Fund”).

(2) There shall be paid into the Fund—

(a) fifteen per centum of the moneys collected by the Auditor-General as Audit fees;

(b) all payments credited by the Government, with the concurrence of the Parliament;

(c) any cost recovered in any suit or prosecution under section 50.

(3) There shall be paid out of the Fund—

(a) any expense incurred in any suit or prosecution under section 50;

(b) all expenses incurred in the administration of the Fund;

(c) all payments given as rewards or incentives in accordance with the rules made in that behalf to persons who have shown exceptional performance in the discharge of their duties under this Act;

(4) Any sum not utilised within the financial year shall be credited to the Consolidated Fund.

(5) The accounts of the Fund shall be audited under section 36.

PART VII

Responsibilities of a Chief Accounting Officer and Accounting Officer

38. Responsibilities of a Chief Accounting Officer or an Accounting Officer.

(1) Unless otherwise specified in the provisions of this Act or any other written law, the Chief Accounting Officer or an Accounting Officer of an auditee entity, for the purpose of this Act shall—

(a) be the Officer responsible within the auditee entity to co-ordinate with the Auditor-General to successfully carry out the audit of such entity;

(b) ensure that financial planning, internal controls, maintenance of proper books and accounts, financial management and a mechanism for providing management information, are effectively in place;

(c) ensure that an effective internal control system for the financial control exists in each such entity and carry out periodic reviews to monitor the effectiveness of such systems and accordingly make any alterations as required for such systems to be effectively carried out;

(d) ensure the timely preparation and submission of annual and other financial statements and in addition the Chief Accounting Officer shall be required to submit annual reports to Parliament pertaining to the auditee entity;

(e) ensure that all audit queries be answered within the specified time as required by the Auditor-General;

(f) ensure that an effective mechanism exists to conduct an internal audit;

(g) ensure that adequate office space and facilities necessary for the officers authorised by the Auditor-General, be provided to discharge their duties in a proper manner; and

(h) upon receipt of a notice by the Auditor-General of any apparent fraud or any criminal activity, he shall without delay make a complaint to a law enforcing authority.

(2) The review to be carried out by a Chief Accounting Officer referred to in paragraph (c) of subsection (1) shall be in writing and copies of the same shall be made available to the Auditor-General.

39. Chief Accounting Officer & c., to consider the Detailed Management Audit Report submitted by the Auditor-General.

(1) The Chief Accounting Officer of a Ministry, the Accounting Officer of a Department, or the governing body or the Head of any other auditee entity concerned shall, on receipt of the Annual Detailed Management Audit Report of the Auditor-General referred to in section 11, consider such report and inform the Auditor-General, the Secretary to the Treasury and the appropriate Minister, of the concerns and remedial actions proposed.

(2) The remedial actions referred to in subsection (1) shall be submitted to the Auditor-General within three months from the submission of the reports to the auditee entities, giving reasons for the ability or inability, if any, to take action on any of the matters pointed out in such Detailed Management Audit Report.

40. Internal audit.

(1) The Chief Accounting Officer of a Ministry shall appoint an Internal Auditor to such Ministry and the Accounting Officer of each Department coming under such Ministry shall appoint a competent auditor to carry out the Internal Audit of such Department, and every other auditee entity shall have its own Internal Auditor, who is to perform an internal audit duly appointed by the governing body of such auditee entity.

(2) Where an Internal Auditor has not been appointed under subsection (1), such appointment shall be made within a period not exceeding two years from the date of operation of this Act.

(3) An Internal Auditor appointed under subsection (1) shall directly report to the Chief Accounting Officer, the Head or the governing body of such auditee entity, as the case may be, for the purposes of this Act.

(4) Copies of all reports submitted by the internal auditors under subsection (3) shall be forwarded to the Department of Management Audit.

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