dr prem yapa associate professor in accounting sarath ukwatte phd candidate in accounting

The oversight committees in developing countries – Public financial control and the expectations gap – Some empirical evidence from Sri Lanka

Dr Prem Yapa

Associate Professor in Accounting

Sarath Ukwatte

PhD Candidate in Accounting

RMIT University©2008 Information Technology Services 2

Content

Background& Motivation

Objectives

Research Questions

Methodology

Theoretical Framework

Findings

Concluding Remarks


Background of the Study

Sri Lanka was a colony of Britain for nearly 150 years. [1796 - 1947]. independence in 1948.

The parliamentary institutions in Sri Lanka began to develop with the introduction of the Legislative Council in 1833 based on Colebrooke and Cameron recommendations (British government).

The Public Accounts Committee (PAC) in Sri Lanka is an institution of parliamentary control similar to that of countries where Westminster model of parliamentary government is practiced.


Motivation

• Sri Lanka, as a democratically elected government, exercises oversight function in the financial performance of public institutions through Committee on Public Accounts (COPA) and the Committee on Public Enterprises (COPE).

• The oversight committees in Sri Lanka have existed more than a century and it is, therefore, an opportune time to explore how these committees have secured good governance.

• First empirical study on oversight functions in the public financial management performance.


Motivation of the Study

Previous Study on oversight committees Author/s Year Paper Loney, P. 2004 Beware the Gap! – Parliamentary Oversight or Parliament

Overlooked?” A paper for Association of Public Accounts Committees Conference, Nelspruit, South Africa

McGee, D 2002 The Overseers: Public Accounts Committees and Public Spending, Pluto Press, London.

Nage, J 2000 The Emergence of the Public Sector Expectations Gap, International Conference on Accounting, Auditing and Management in Public Sector Reforms Zaragossa Spain

Saward, M 1996 Democracy and Competing Values”, in Government and Opposition,

Victoria, V 2000 Report of the Public Accounts and Estimates Committee on Commercial in Confidence


Objectives

• To what extent the oversight committees fulfilling the expectations of the Stakeholders of the public sector in Sri Lanka.

• To understand the relationship between oversight committees and the legislature.

• To understand to what extent that the COPA & COPE can use their authority (power) to implement their recommendations.

• To understand the appropriateness of the actions of public institutions within the socially constructed systems.

• To assess the efficiency and effectiveness of the oversight functions.


Research Questions

• Main Question • Whether it is possible to implement an active financial controls through public

oversight committees and establish public sector accountability and transparency (Good governance) as expected by the general public in the Democratic Socialist Republic of Sri Lanka?

• Sub Questions

• Do oversight committees have power to summon persons and documents?

• Do oversight committees have sufficient power to summon officers?

• What documents are summoned before the oversight committees?

• Do oversight committees allocate sufficient time for hearings and follow up procedures?

• What role does Auditor General play?


Methodology

Primary data for this paper was gathered from two sources. 1. Semi-structured interviews were conducted with senior public officers to gain

insights into oversight committee practices. The interviewees consisted of COPA and COPE committee membership, senior officers from the Ministry of Finance and the Treasury Department in Sri Lanka.

2. Similar interviews were conducted with some parliamentarians on the oversight aspect in the public sector. These respondents expressed their comments and opinions based on their experiences and present positions in their respective departments or ministries.

3. In total twenty five interviews were conducted and five meetings attended to collect primary data for this study.

Secondary Data

4. Secondary sources such as annual reports, journal articles websites, legal records, refereed journal publications, books and acts of parliament.

5. The records of national archives.


Theoretical Framework

Application of Stakeholder theory ( Mitchell et all, 1997. Identification Typology)

Construct Definition Source Stakeholder Any group of individual who can affect or is affected by the achievement of the

organization objective Freeman, 1984; Jones 1995; Kreiner & Bhambri, 1988

Power

influence

Bases

A relationship among social actors in which one social actor , A, can get another social actor, B, to do something that B would not have otherwise done.

Coercive – Force/threat , Utilitarian – material/incentives and Normative – symbolic influences

Weber, 1947; Dahl,1957; pleffer,1981

Etzioni,1964

Legitimacy

relationship

Bases

A generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, definitions.

Individual, Organizational and Societal

Weber, 1947, Suchman, 1995

Wood, 1991

Urgency

claim

Bases

The degree to which stakeholder claims call for immediate action

Time sensitivity – the degree to which managerial delay in attending to the claim or relationship is unacceptable to the stakeholder.

Criticality – the importance of the claim or the relationship to the stakeholder

Merrian-Webster Dictionary

Eyestone, 1978; Wartick & Mahon, 1994

Hills & Jones, 1992 Williamson,19985

Salience “most noticeable or important” The degree to which managers give priority to competing stakeholder claims.

Merrian – Webster Dictionary , Oxford Dictionary


Role of Oversight Committees

COPA (Committee on Public Accounts)

The COPA (formally named as PAC) is the oldest oversight committee in Sri Lanka. This committee’s task is to probe the managerial efficiency and financial discipline of the Government Ministries, Departments, Provincial Councils and Local Authorities.

COPE (Committee on Public Enterprise)

The second oversight committee (i.e. COPE) has been established in 1979 to ensure the observance of financial discipline in Public Corporations and other Semi Governmental bodies in which the Government has a financial stake.


General public Parliament

MOPClG

F/Minist

er

Ministers

Provincials

F/Ministry

Ministries

Local Au

Pra Saba

PEsDepartments F/

Depts

Auditor Ge

COPA/COPE


Role of Oversight Committees Conti….

Role of the Committee on Public Accounts and Committee on Public Enterprises

Parliamentary OrdersStanding ordersActs., PoliciesReports

COPA &COPE

Power to summonPersons & documents

Performance Evaluation

Public Enterprises-Reports-AG’s

-Dept. PE

AG’s Reports-Ministries

-Departments.Public Enterprises etc.

Resources-Financial-Human

Composition-Ruling

- Opposition


Findings • In terms of the article 154 of the constitution, AG has been given the power to audit almost all

the government institutions written under the Law of the State and the mandate is beyond the financial Audit (Power to influence the firm).

• The Finance Act No. 38 of 1971 empowers the AG to examine, accounts and finances, property of public corporations, organisations, systems and procedures, compliance with laws, rules and regulations, economy and efficiency aspects, and any other matters the AG deemed necessary (Legitimacy of the Stakeholder’s relationship with firm).

• Each report of the AG is referred to the COPA or COPE for further examination and investigation. It reveals that the COPA or COPE is the only channel through which Parliament can directly examine the public institutions about their management of public funds (Power & Urgency)

• Majority of the membership of the COPA and COPE is vested with the ruling party (political power over the stakeholder power)

• There is no approved methodology to determine public institutions that are to be summoned before committees. The AG’s Department does not have sufficient staff to carry out various audit examinations associated with the numbers of institutions involved in the scrutiny process (dysfunctional urgency).

• Despite the summons were sent to some public institutions, they did not appear before oversight committees. For example, Sri Lankan Airways, Telecom (Lanka) refused to give evidence or to appear before oversight committee indicating that they were not falling under the category of public sector (interview 15, 16) (Identification of firms).


Findings Conti……

• Parliamentarians are exceptional persons cannot be summoned under any conditions ( Power, Authority and Urgency).

• The public officers responsible for fraudulent acts are transferred or retired before the completion of hearings of oversight committees (Urgency).

• Lack of professionals involvement in the whole process. Therefore, reservations and concerns are raised very often in regard to inadequacy of professionalism and lack of dynamic involvement coupled with deficient knowledge and awareness among those interacted with good governance, accountability issues and control aspects (Urgency).

• Both oversight committees, as a device of Parliamentary control, face many criticisms from the stakeholders. As in the case of many reports tabled in the Parliament, the reports of the oversight committees are not debated in Parliament and most of times it disappears without any notice (Urgency).


Concluding Remarks • The public oversight committees have been described as the ‘ultimate

institutional judge’ in the ‘ex-post’ process of assurance in parliament regularity, propriety and ‘value for money.’ They are fulfilling public expectations (stakeholders) on pubic money as important guarantors of ‘good governance’.

• Have these oversight committees contributed to the good governance?

• Some recommendations:

• The members of Parliament (including Cabinet ministers) are to be summoned before the oversight committees during the investigations.

• The opposition party membership (as stakeholders) in the oversight committee ought to be increased for better transparency on matters relating to various investigations

• Reduce undue delays of summoning people and documents for further investigations.


Thank you &

QS Please

• ,,

dr prem yapa associate professor in accounting sarath ukwatte phd candidate in accounting

Documents

public oversight committees

oversight functions

oversight aspect

general public

study sri lanka

oversight committee

public accounts copa

senior public officers