APPENDIX D
Speech by the Chairman of the Public Accounts Committee the Hon Allen LEE Peng-fei, O.B.E., J.P.
In the Legislative Council on 19 November 1986
Scope of Government Audit in Hong Kong 'Value for Money' Studies
Sir, laid on the table today is a set of guidelines for the future conduct of value for money studies by the Director of Audit.
In paragraph 8.2 of the Public Accounts Committee's Eighth Report issued in January 1986 the Committee noted that whilst the Director of Audit does have a remit to examine and report on policy implementation, the boundaries of that remit, particularly in relation to value for money studies, have not been clearly defined. The Committee recommended that early action be taken to resolve this grey area.
There has now been consultation between the Committee, the Administration and the Director of Audit regarding this aspect, and a set of guidelines on value for money studies, has been drawn up. They are set out in full in the paper laid on the table today. These guidelines have now been agreed between the Committee and the Director of Audit and are, I understand, acceptable to the Administration.
The main features are:-
firstly, the Director of Audit should have great freedom in presenting his reports to the Legislative Council. He may draw attention to any circumstance which comes to his knowledge in the course of audit, and point out its financial implications. Subject to the guidelines, he will not comment on policy decisions of the Executive and Legislative Councils, save from the point of view of their effect on the public purse;
secondly, in the event that the Director of Audit, during the course of carrying out an examination into the implementation of policy objectives, reasonably believes that at the time policy objectives were set and decisions made there may have been a lack of sufficient, relevant and reliable financial and other data available upon which to set such policy objectives or to make such decisions, and that critical underlying assumptions may not have been made explicit, he may carry out an investigation as to whether that belief is well founded. If it appears to be so, he should bring the matter to the attention of the Legislative Council with a view to further inquiry by the Public Accounts Committee. As such an investigation may involve consideration of the methods by which policy objectives have been sought, the Director should, in his report to the Legislative Council on the matter in question, not make any judgment on the issue, but rather present facts upon which the Public Accounts Committee may make inquiry;
thirdly, the Director of Audit may also consider as to whether policy objectives have been determined, and policy decisions taken, with appropriate authority;
fourthly, he may also consider whether there are satisfactory arrangements for considering alternative options in the implementation of policy, including the identification, selection and evaluation of such options;
fifthly, he may also consider as to whether established policy aims and objectives have been clearly set out; whether subsequent decisions on the implementation of policy are consistent with the approved aims and objectives, and have been taken with proper authority at the appropriate level; and whether the resultant instructions to staff accord with the approved policy aims and decisions and are clearly understood by those concerned;
sixthly, he may also consider as to whether there is conflict or potential conflict between different policy aims or objectives, or between the means chosen to implement them;
seventhly, he may also consider how far, and how effectively, policy aims and objectives have been translated into operational targets and measures of performance and whether the costs of alternative levels of service, etc. have been considered, and are reviewed as costs change; and
finally, he may also be entitled to exercise the powers given to him under section 9 of the Audit Ordinance.
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