Hon Chair, the Public Audit Excess Fee Bill hereinafter referred as the Bill, sets out to provide that the specified excess of the audit fee of certain categories of organs of state payable to the Auditor- General, as envisaged in the Public Audit Act 25 of 2004, is,
if the stated conditions are complied with, a direct charge against the National Revenue Fund and to provide for matters connected therewith. The National Treasury reported that the proposed direct charge for the audit fees in excess of 1% against the National Revenue Fund, NRF, was a result of a joint proposal from the Auditor-General and the National Treasury to the Standing Committee on the Auditor-General during the liberations on the 2018 Public Audit Amendment Bill.
The audit fees are used to cover the Auditor-General's, AG, expenses, finance the fixed assets and generate a surplus which ranges from 1% to 4% for working capital and general reserve requirements. Unpaid fees therefore deprive the AG of the needed cash flow to support the execution of its constitutional mandate. However, the National Treasury reported that 10% of the AG's client base falls under the financially distressed category comprising a substantial amount of revenue. These auditees are predominantly low capacity municipalities and small auditees such as museums, trust and boards.
The Treasury further submitted the currently section 23(6) of the Public Audit Act provides that if the audit fees is in excess of 1% of the current and capital expenditure of the auditee, then the excess must be defrayed from the National Treasury's budget if it is of the view that the auditee has financial difficulty to pay the excess. It
was also reported that historically, the excess audit fees is to be paid from the National Treasury's Budget Vote, which was substantially higher than the amount appropriated and thus resulted in shortfalls.
What are the provisions in this amendment Bill? Clause 1 provides that the excess of any audit fee, envisaged in section 23(6) of the Public Audit Act of 2004, as amended by section 10 of the Public Audit Amendment Act of 2018, is a direct charge against the National Revenue Fund. Clause 2 contains the short title of the Bill and stipulates that it takes effect on a date to be determined by the Minister of Finance by notice in the Gazette. The Select Committee on Appropriations having considered the Public Audit Excess Fee Bill, B7-2019, as referred to it, and classified by the Joint Tagging Mechanism as section 77 Bill reports that it has agreed to be Bill without amendments. The DA objected to the Bill. I table this report for consideration by the House and this is my last report in the Fifth Parliament of South Africa. Thank you. [Applause.]
Debate concluded.
Declaration(s) of vote: