Models of mandate in public audit: An examination of Australian jurisdictions

ABSTRACT

This paper examines, compares and contrasts three competing models of the performance audit mandate in public audit in Australia, namely the traditional organizational model, the public functions model and the follow the money model. The paper discusses the application of those models in Australian jurisdictions and raises legal issues pertinent to their effectiveness and scope and considers how they enhance accountability for the expenditure of public funds.

IMPACT

The way governments deliver public services is constantly changing and evolving, particularly through the use of third-party providers. These changes have ramifications for the ability of public audit to hold governments accountable for the expenditure of public funds in the performance audit context. In considering how to enhance accountability, policy-makers should consider the effectiveness of public audit legislation which utilizes a model based on auditability of public money rather than public organizations. This paper examines the legislation in Australian jurisdictions which use this model, and the variations within those models. These models may be instructive in determining the effectiveness of this approach.

KEYWORDS:

• Australia
• mandate
• models
• public audit

Notes

1 Section 3(e), definition of ‘public body’.

2 R v Panel on Takeovers and Mergers; Ex Parte Datafin [1987] QB 815.

3 See Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190 (2010) 78 NSWLR 393; (2010) 272 ALR 750; Khuu and Lee Pty Ltd v Corporation of the City of Adelaide (2011) 110 SASR 235.

4 Such as State of Victoria v Master Builders’ Association [1995] 2 VR 121.

5 Masu Financial Management Pty Ltd v Financial Industry Complaints Service Ltd (No 2) (2004) 50 ACSR 554 and Grocon Constructors v Planit Cocciardi Joint Venture (No 2) [2009] 26 VR 172.

6 See for example Kyrou J approved Master Builders in CECA Institute Pty Ltd v Australian Council for Private Education and Training (2010) 245 FLR 86 [2010] 30 VR 555, stating that Datafin applied in Victoria at 576.

7 Section 6(3)(b) states that a public authority includes any person certain of whose functions are ‘functions of a public nature’. ‘Functions of a public nature’ are not defined. The public function issue was considered in Hampshire County Council v Graham Beer [2003] EWCA Civ 1056, Aston Cantlow Parochial Church Council v Wallbank [2004] 1 AC 546 and YL v Birmingham City Council [2007] 3 WLR 112.

8 For example, the High Court has referred to ‘normal and essential functions’ of state governments in considering whether the Australian states are bound by Commonwealth legislation: Melbourne Corporation v Commonwealth (State Banking Case) (1947) 74 CLR 31, 66 per Rich J.

9 Section 6(4).

10 R v Commonwealth Conciliation and Arbitration Commission; Ex Parte Association of Professional Engineers (1959) 107 CLR 208, 274-75.

11 South Australia v Commonwealth (Uniform Tax case No 1) (1942) 65 CLR 373 at 423 per Latham CJ.

12 SA, NT do not have a provision.

13 For example, NSW and the ACT require requests and the ACT follow-the-money provision is also limited to property only. See Public Finance and Audit Act 1983 (NSW) s 27B and Auditor-General Act 1996 (ACT) s 13C and 13D.

14 In particular section 51.

15 Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129.

16 Constitution section 109.

17 The report can be accessed at www.aph.gov.au.

18 A search of the Victorian legislation database yielded only six hits.

19 Section 18(2)(c).

20 Financial Accountability Act 2009 (Qld), Schedule 3.

21 Acts Interpretation Act 1954 (Qld), Schedule 1.

22 Refer to the discussion about section 16C above.

23 See www.audit.vic.gov.au.