Minutes of Aseansai Rules and Procedures Commmittee Meeting No. 2/2012

MINUTES OF ASEANSAI RULES AND PROCEDURES COMMMITTEE MEETING NO. 2/2012

Date and Time: Tuesday, 11 September 2012, 09:15hrs

Venue: Orchard Hotel Singapore, Nutmeg Room Level 2

In Attendance: Ms Mabel Watt (Chairman) Assistant Auditor-General, SAI of Singapore

Ms Lau Joe-Ann Assistant Director, SAI of Singapore

DK Siti Norbaya PG Shahminan Acting Senior Assistant Auditor General, SAI of Brunei

Ms Hajah Hartini Haji Abdul Halim Acting Assistant Auditor General, SAI of Brunei

Mr Anousith Soukhathammavong Chief of International Relations Division, SAI of Lao

Mr Thanouthong Sophavandy Technical Staff, SAI of Lao

Ms Zainun binti Taib Deputy Director, SAI of Malaysia

Mr Thanapol Komarakul Na Nakorn Director of Legal Office, SAI of Thailand

Mr Pannuchit Posayanonda Legal Officer, SAI of Thailand

Ms Vivien Wee (Secretary) Senior Audit Officer, SAI of Singapore

Representatives from ASEANSAI Secretariat Mr Bahtiar Arif Head of International and Public Relations Bureau

Ms Juska Meidy Enyke Sjam Head of International Relations Division, SAI of Indonesia

1. Address by Chairman

1.1 On behalf of the Auditor-General of Singapore, Mr Lim Soo Ping, Ms Mabel welcomed all members of the Rules and Procedures Committee and representatives from the Secretariat of ASEANSAI to Singapore. She also thanked all members for their active contribution to the drafting of the rules and procedures for their allocated parts. She then briefed the members on the two-day programme from 11th to 12th September 2012 as well as the meeting agenda for the day (Annex A).

2. Confirmation of Minutes

2.1 The minutes of the ASEANSAI Rules and Procedures Committee Meeting No. 1/2012 was confirmed with no amendments (Annex B).

3. Comments on draft ASEANSAI Rules and Procedures

3.1 Chairman recapped the outline of the draft rules and procedures and informed the meeting that she would be going through each part of the draft rules and procedures (Annex C). Chairman also invited members to give their comments during the meeting.

Discussion on Draft Rules and Procedures by Individual Parts

Preamble

3.2 Ms Zainun suggested that the preamble should include the objectives of the four ASEANSAI committees. The meeting discussed and agreed that it would be neater for the objectives of the Committees to continue to be covered under the respective Committee’s Terms of Reference.

The Assembly

3.3 Ms Juska suggested that there should be rules and procedures on the membership of ASEANSAI so as to be in line with Article 4 of the ASEANSAI Agreement.

3.4 Ms Zainun added that the members of ASEANSAI should be listed in the rules and procedures.

3.5 With regard to Mr Pannuchit’s query on whether decisions of the Assembly require consensus of all members of ASEANSAI or only members present at the meeting, the meeting agreed that consensus should be obtained from all members of ASEANSAI since the Assembly is a body consisting of all members. Ms Zainun suggested that for clarity, the decision-making paragraph of the Assembly should state that decisions made by the Assembly should be based on consensus of all members of ASEANSAI.

3.6 Mr Arif suggested that for consistency with the other parts of the draft rules and procedures, the Assembly’s functions should include the approval of the financial statements of ASEANSAI and semi-annual reports of the Committees (including the Executive Committee).

(Afternote: Approval of the financial statements of ASEANSAI was not included as one of the functions of the Assembly as this function is undertaken by the Executive Committee instead.) Chairman and Vice Chairman of ASEANSAI

3.7 Ms Juska opined that the rules and procedures should address the issue of who should represent ASEANSAI in the event that ASEANSAI is invited to be represented at an event of an external organisation.

3.8 The meeting deliberated and agreed that the Head of the SAI which is the Chairman of ASEANSAI should represent ASEANSAI at events of an external organisation. In the event that the Head of the SAI is unable to attend the event, the Head of SAI which is the Vice Chairman of ASEANSAI shall represent ASEANSAI in attending the event.

(Afternote: In addition to the above provisions, the SAI of Singapore has, in the revised draft, proposed provisions relating to the mechanism for making decisions on accepting invitations to events from external organisations.)

The Executive Committee

3.9 Mr Pannuchit commented that where the term “Chairman” is used, it should be more specific, i.e. to state whether it referring to the Chairman of ASEANSAI or Chairman of the Committee/Executive Committee.

3.10 As regards the decision-making mechanism of the Executive Committee, Ms Siti commented that where consensus cannot be reached, the matter should be dropped since the Executive Committee only comprised two members.

3.11 Mr Anousith commented that, for better clarity, the reporting period of the reports to be prepared by the Executive Committee should be specified for e.g. the semi-reports should cover the period Jan to June and Jul to Dec.

[The meeting adjourned for tea break at 10:30hrs and resumed at 10:50hrs. Mr Arif and Ms Juska left the meeting for a visit to the Auditor-General’s Office of Singapore. The visit was arranged at the request of the SAI of Indonesia.]

The Committees

3.12 For conciseness, the meeting agreed to combine paragraph 4.1 (on determination of committees to be formed) and 4.3 (on composition of the committees), and paragraph 4.2 (on formation of committees from among members of ASEANSAI) and 4.5 (on size of each committee).

3.13 The meeting agreed that the decision-making process of amending a Committee’s Terms of Reference should be placed in the same paragraph as amendments to the terms of reference for better flow.

3.14 Mr Anousith suggested that the term “Chairman” in the draft rules and procedures be replaced with the more general term “Chairperson” to cover the situation where the position of the Head of the SAI which is the chair of ASEANSAI is assumed by a female. The meeting discussed and agreed that the term used in the rules and procedures should follow that in the ASEANSAI agreement i.e. “Chairman”. This issue could be raised for discussion with Assembly at the next opportunity to revise the ASEANSAI Agreement.

ASEANSAI Summits and Assembly Meetings

3.15 Mr Pannuchit commented that an additional section on “Chairing of Meetings” should be inserted to address the situation where the Head of SAI which is the Chairman of ASEANSAI is unable to chair the Summit or Assembly meeting. The meeting agreed that the ASEANSAI Summit and Assembly meeting should be chaired personally by the Head of SAI which is the Chairman of ASEANSAI and that in circumstances where the he is unable to do so, the Head of SAI which is the Vice Chairman of ASEANSAI shall chair the Summit or Assembly meeting.

Executive Committee Meetings

3.16 In response to Chairman’s query on whether there is a need to specify the frequency and timing of the Executive Committee meetings, the meeting agreed that there is no need to so prescriptive. The Executive Committee should be given the flexibility to decide on the frequency and timing of its meetings.

3.17 For notice of Executive Committee meetings, Ms Siti commented that for planning purposes of the SAI which is the Vice Chairman of ASEANSAI, the Chairman of ASEANSAI should notify the Vice Chairman of the date of meeting and the agenda at least one month in advance, instead of three weeks. The meeting agreed that the notice period should be amended to one month.

3.18 With regard to the chairing of and attendance at Executive Committee meetings, the meeting agreed that the Chairman and Vice Chairman of ASEANSAI should be represented by the respective Heads of SAI. If any of the Heads of the SAI are unable to attend the meeting at a specified date, the meeting should be rescheduled to fit the schedules of both Heads of SAI.

3.19 Mr Pannuchit added that if a meeting of the Executive Committee is to be held in another country (other than the Chairman’s country or Vice Chairman’s country), the Executive Committee should seek the agreement of the host SAI.

Committee Meetings

3.20 Similar to the notice period set out for Executive Committee meetings, the meeting agreed that the Chairman of the Committees should inform members and the ASEANSAI Secretariat of the date of meeting and the agenda at least one month in advance, instead of three weeks.

3.21 The meeting noted that the Secretariat of ASEANSAI may be invited to meetings of the Committees, however attendance is not compulsory.

3.22 With regards to the funding of expenses for Committee meetings, the meeting agreed that the host country should bear the cost of transportation within the country in which the meeting is held. The meeting also noted that this has been the current practice. The meeting also agreed that if a Committee meeting is to be held in another country other than that of the Committee members, the Committee should also seek the agreement of the host SAI.

(The meeting adjourned for lunch break at 12:15hrs and resumed at 14:10hrs. Mr Arif and Ms Juska returned and joined the meeting.)

The ASEANSAI Secretariat

3.23 In response to Mr Arif’s comments that paragraphs 5.5 (on requiring the Secretariat to report regularly to the Chairman of ASEANSAI) and 5.10 (on requiring the Secretariat to report to the Assembly through the Executive Committee) are similar, the meeting agreed that paragraph 5.5 should be deleted. The meeting also agreed that the reporting process of the Secretariat should be in line with that of the Committees.

Financial Rules and Procedures

3.24 Mr Arif suggested having a clearer definition of the term “contribution”. Chairman responded that the contributions, as defined in paragraphs 9.2 and 9.3 of the draft Rules and Procedures, would consist of a member’s annual contribution of US$700 and any voluntary contributions in addition to the annual contributions. The meeting agreed that the costs incurred by members of ASEANSAI for hosting meetings would not constitute contributions to the ASEANSAI Fund.

3.25 Ms Zainun commented that the provisions on contributions and donations should be in the same section, for better clarity, as both are inflows into the ASEANSAI Fund.

3.26 Mr Pannuchit raised concerns that there may be a situation where an external organisation offering donations to ASEANSAI has a conflict of interest with a member of ASEANSAI. In this regard, Chairman emphasised that the goals of the donor organisation should be similar to those of ASEANSAI, as stated in the draft Rules and Procedures. Furthermore, the Assembly’s approval is required before ASEANSAI may accept any donations from external organisations.

3.27 The meeting agreed that the Secretariat shall be responsible for any follow-up actions required after the Assembly approves the donation from external organisation. Such follow-up actions may include the drafting of donor agreement and circulating the draft for the Assembly’s approval. The meeting also agreed that the Chairman of ASEANSAI shall represent the Assembly to be the signatory of the donor agreement.

3.28 With regard to the bank account maintained by the Secretariat, the meeting agreed that bank charges for opening, maintaining and closing the account shall be borne by the ASEANSAI Fund.

3.29 Chairman explained that the provisions for an interim budget was included as members would start to pay annual contributions to the ASEANSAI Fund from beginning of year 2013 and the interim budget would cover the period from 1 January to 31 December 2013 to facilitate the allocation of resources during 2013.

3.31 With regard to the provisions for an interim budget to be prepared, Mr Arif suggested that the section should be shifted to the end of the draft Rules and Procedures, to facilitate removal of these provisions which would no longer be needed beyond 2013. The meeting agreed that these provisions can be classified as “Transitory Provisions” and be included at the end of the Rules and Procedures.

(Afternote: The provisions on the preparation of interim budget have been shifted to the end of the draft Rules and Procedures and classified as “Transitional Provisions”.)

3.32 The meeting agreed that paragraph 9.26 (on bearing of travel expenses by Chairman, Secretariat and members of committees) may be deleted as it has the same meaning as paragraph 9.24 (on not charging to the ASEANSAI Fund, all costs incurred for hosting and attendance of ASEANSAI Summits, Assembly meetings and committee meetings).

3.33 With regards to transactions made in currencies other than the US dollars, Mr Pannuchit queried on the exchange rate that is to be applied for the purpose of maintaining the accounting records. Chairman opined that the exchange rate depends on the accounting policy, which should be proposed by the ASEANSAI Secretariat.

(The meeting adjourned for tea break at 15:35hrs and resumed at 15:50hrs)

3.34 The meeting agreed that a set of financial statements should be prepared by the Secretariat annually and submitted to the Executive Committee for approval. In this regard, the meeting deliberated on whether the financial statements should be approved by the outgoing Executive Committee (which would have discharged its duties) or the newly appointed Executive Committee (which was not involved in financial management during the period covered by the report). As the meeting did not reach a conclusion on this matter, Chairman informed that SAI of Singapore would propose a solution to members for consideration after the meeting.

(Afternote: In an email to members on 19 September 2012, SAI of Singapore proposed that the two-year term of the Executive Committee be tied to two financial years, each beginning on 1 January. This means that the new Chairman’s and Vice Chairman’s two- year term would begin on 1 January in the year following their appointment at the ASEANSAI Summit held in December. (The ASEANSAI Summit may have to be held in December instead of November). After the end of its term, the outgoing Executive Committee would then approve the annual financial statements covering each of the financial years during its term. The term of the Executive Committee would be indicated in the financial statements.)

3.35 In relation to the reappointment of auditor, the meeting agreed that a member of ASEANSAI may be appointed or reappointed as auditor if it is not part of the Executive Committee during the period covered by the financial statements. 3.36 The meeting deliberated on whether the financial statements should be audited yearly or once every two years. Mr Arif explained that the intention during the ASEANSAI Senior Official’s Meeting was for the statements to be audited once every two years as ASEANSAI is a new organisation and the amount of funds it manages is relatively small. Furthermore, a significant cost has to be incurred by the member of ASEANSAI appointed as auditor each time an audit is to be carried out. Ms Juska also added that the contributions by members are currently intended for training seminars/workshops only, hence there is a low risk of mishandling of funds.

3.37 The meeting noted that the financial statements of INTOSAI are audited yearly, while the financial statements of ASOSAI are audited once every three years (internal audits are conducted yearly).

3.38 As there were diverse views on the frequency of audit to be carried out on the ASEANSAI accounts, Chairman proposed that the meeting take a vote on this matter and each member SAI was entitled to one vote. A simple majority of votes was obtained for the ASEANSAI accounts to be audited annually. In this regard, Chairman mentioned that the committee would highlight this matter to the Assembly when the draft Rules and Procedures are submitted.

3.39 The meeting noted that the auditor is to render an audit report on the ASEANSAI accounts to the Assembly no later than six months after the close of financial year. In view of this, the meeting agreed that the report to be prepared by the Secretariat (which contains, among other things, a set of audited financial statements) should be submitted to the Assembly no later than seven months, instead of six months, to give the Secretariat ample time to consolidate the report.

(Afternote: SAI of Singapore has proposed in the email dated 19 September 2012 to members that the deadline for the auditor to submit his audit report be set at six months so that the Secretariat would have enough time to prepare the final report.)

3.310 For conciseness, the meeting agreed to delete paragraph 9.45 (on the deadline for the notification of readiness of accounts served by the Secretariat to the auditor) and word it in paragraph 9.47.

3.440.1 Mr Arif suggested that ASEANSAI adopt the International Standards of Supreme Audit Institutions (ISSAIs), instead of the International Standards on Auditing, when auditing its accounts. The meeting agreed that the ISSAIs should be adopted where it is applicable to financial statements audit.

4. Follow-up Actions

4.1 Chairman informed the meeting that SAI of Singapore would amend the draft Rules and Procedures and incorporate all matters discussed and agreed during the meeting. The revised draft would be sent to members for comments. (Afternote: On 19 September 2012, SAI of Singapore sent the revised draft (Annex D) to all members of the Committee, including the Secretariat, for comments.)

5. Any Other Matters

5.1 There being no other matters, the meeting ended at 17:30hrs.