XN000022-1995-05-24 — Page 39

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As regards the Authority's power to borrow, Clause 28(4) of the Bill provides that the Governor may direct the Authority not to borrow above a particular level without the prior written consent of the Financial Secretary.

As regards delegation and sub-delegation of the Authority's functions, the White Bill already provided that some powers of the Authority could not be delegated. These include the power to delegate, the power to form or acquire a subsidiary, the power to acquire or dispose of shares in a subsidiary and the power to make bylaws. The White Bill also provided that the Financial Secretary would be given powers to revoke any delegation made and irrevocable delegations have to be approved by him in advance. In the Bill we have put before Members today we have included one additional residual safeguard. Clause 9(3) of the Bill provides that the Financial Secretary may direct the Authority not to delegate functions except with his prior consent. This would ensure that in effect, Government could at any time forbid the delegation of any function of the Authority.

Auditing

On auditing of the affairs of the Authority, we have received divided views. There was strong support for strengthening the auditing functions of the Authority. Some have said that since a considerable proportion of the Authority's funds comes from the public purse, the Director of Audit should be given the power in the Airport Authority Ordinance to initiate value for money audits on the Authority. Some felt that the Director of Audit should also audit the annual accounts of the Authority. On the other hand, others were content to leave the regular annual auditing functions in the hands of private sector professional auditors. Some also felt that, as long as the Director of Audit could carry out value for money audits on the Authority, Clause 29(6) of the White Bill already provided adequate powers.

It is clearly most important that the activities of the Authority are subject to rigorous and effective audit procedures. With this object in mind we have decided to strengthen the mechanism for audit within the Authority by providing in the Bill that the Authority must establish an Audit Committee. Clause 31 of the Bill provides that the functions of the Audit Committee are to consider matters relating to the financial affairs or audit of the Authority as it considers necessary or desirable and any other matters referred to it. It further provides that neither the Chief Executive Officer nor any other employees of the Authority could be a member of the Audit Committee and that its chairman shall be a member of the Authority. The Committee is expected to play a pro-active role and may instigate value-for-money studies in any area where it considers the Management approach may be made more cost-effective and efficient.

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