|Value-for-money audits usually draw immense
media and public interest
The Public Accounts
Committee (PAC) plays the role of watchdog over public
expenditure. It is heavily armed with formal statutory
powers. PAC ensures that the findings contained in the
Director of Audit's (D of A) reports on the accounts
and the results of value-for-money audits of the Government
and any organisations which receive income from public
moneys are properly considered.
PAC was established by a LegCo resolution on 10 May
1978. It is a standing committee consisting of a chairman
and six members appointed by the President upon nomination
by LegCo's House Committee. LegCo members, through a
process of internal lobbying and election ensure that
PAC is representative of all parties.
PAC then elects its own Chairman and nominates him
to the President for appointment. As you are probably
aware, your LegCo representative is the current Chairman
of PAC. This is perhaps a reflection that LegCo holds
the professional of accountants in high esteem.
The D of A submits three reports to the President of
LegCo each year. The first tabled in April relates to
value-for-money audits; the second and third, tabled
in November, relate to the audits of the Government's
annual statements of accounts and value-for-money audits.
Value-for-money audits usually draw immense media and
public interest. Public hearings on value-for-money
audits are a crucial part of PAC's work. The purpose
of these public hearings is to explore the back-ground
and the facts surrounding the issues raised in the D
of A's report. The proper approach should be fact-finding
and problem-solving rather than merely laying blame
or expressing opinions.
Under LegCo Standing Order 60A, the practice of procedure
of the Committee should be determined by the Committee'.
In practice, value-for-money audits are carried out
under a set of guidelines tabled in LegCo on 19 November
1986. The guide-lines were agreed between the PAC and
the D of A and were accepted by the Administration.
In essence, the D of A is given great freedom in presenting
his reports though he must not question the merits of
Government's policy objectives. He may however, question
the economy, efficiency and effectiveness of the means
used to achieve them.
If he reasonably believes that at the time decisions
were made and policy objectives were set, that there
may have been a lack of sufficient relevant and reliable
data, financial or otherwise, available upon which to
base such decisions and policy objectives and that the
critical underlying assumptions are not explicit, he
may carry out an investigation as to whether his beliefs
are well founded. If it appears that they are, he should
bring the matter to the attention of LegCo with a view
to further inquiry by PAC.
The agreed guidelines were put to a serious test recently
due to an assertion in one of the D of A's reports that
Hospital Authority (HA) staff received more housing
benefits than their civil servant counterparts. This
assertion was disputed by the Administration and the
During the course of PAC's investigation, it transpired
that the process of formulating the HA package may have
lacked clarity and precision. If that was the case,
both the D of A and the HA could quite legitimately
adopt different assumptions in interpreting the open-ended
'cost comparability' principle and thus come up with
very different cost projections.
PAC decided that it was not its proper role to decide
or adjudicate Government policy objectives where the
Administration's own policy is silent. However, it is
clearly our role to make further inquiries into what
data, financial or otherwise, the Executive Council
(Exco) based its policy objectives on and whether the
disputed underlying assumptions were made explicit.
The subsequent public hearings held to investigate
the matter drew equally conflicting evidence. In particular,
both the D of A and the Administration selectively cited
authorities from Exco papers which PAC did not normally
have access to PAC members felt the only way of knowing
the 'truth' was to read the Exco papers ourselves. I
therefore entered into correspondence with the Chief
Secretary to request the relevant Exco papers on behalf
In my letters to the Chief Secretary, I stressed that
1. The essential function of PAC is to carry out an
independent evaluation of the D of A's reports and that
the scope of our investigation must not be constrained
by selective evidence and secondary information provided
2. PAC will accept the Government's reason for non-disclosure
if the requested documents are classified confidential
on specific security or diplomatic grounds, ie a'content
3. it is not PAC's wish or intention to make Exco papers
public and that we believed that the Exco papers requested
only relate to a policy with little political sensitivity.
The request however was rejected by the Administration
on the grounds that in the overall public interest,
the proceedings of Exco should remain confidential and
that Exco papers and records of discussions which are
the equivalent of cabinet papers should not as a class
be made public.
PAC members were naturally dissatisfied that the Administration
could alone decide what and how much information and
documentation we need to perform our statutory duty.
Although we could in theory, invoke the PAC's special
LegCo powers to summon a Government official to produce
such documents, the idea was dropped as counter-productive.
Our in-house legal advice supported the view that the
official would almost certainly come up empty-handed
and any subsequent punitive action (contempt of order
under-Chapter 3812 of the Legislative Council (Power
and Prioilege) Ordinance taken against him or her would
simply escalate the political conflict between the Legislature
and the Administration.
The 'truth' was to remain hidden. Subsequently, PAC
decided to support the well-publicised motion debate
I sponsored on 24 April 1996 to condemn the Government
for its lack of co-operation in this matter. The motion
was passed by LegCo with an over-whelming majority.
This matter may be over for the time being but the
real problem is still unresolved, I have no wish personally
to devalue the reputation of our Government and, in
reality, valid criticism cannot possibly damage its
However, I still firmly believe that since our Government
is not an elected institution and therefore irreplaceable,
it is very important for it to remain highly transparent
and accountable on a voluntary basis.