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The following is issued on behalf of the Audit Commission:
With reference to recent reports in the media concerning Chapter 3 "Development of a site at Sai Wan Ho" of Report No. 45 of the Director of Audit and the Report of the Independent Committee of Inquiry (ICI) on the Sai Wan Ho Development on Inland Lot No. 8955, the Director of Audit has issued the following statement today (May 16):
Value for money audits are carried out in accordance with the guidelines in the Paper presented to the Provisional Legislative Council by the Chairman of the Public Accounts Committee (PAC) at the meeting on February 11, 1998, on Scope of Government Audit in the Hong Kong Special Administrative Region - 'Value for Money Audits'. According to Article 58 of the Basic Law of the Hong Kong Special Administrative Region, the Audit Commission functions independently and is accountable to the Chief Executive. In carrying out audit investigations, the Director of Audit is not subject to the direction or control of any other person or authority.
In accordance with the value for money audit guidelines, the Audit Commission carries out examinations into the economy, efficiency and effectiveness with which any audited body has discharged its functions. After the tabling of the Director of Audit's Report in the Legislative Council, the PAC selects the value for money audit subjects which the Committee considers necessary to conduct public hearings, and to obtain evidence, information and explanations from the parties concerned to assist the Committee in drawing its own conclusions and recommendations. Audit reports examine the systems and operations of the audited body to identify areas for improvement. The objective of the whole exercise of the PAC is such that the lessons learned from past experience and the Committee's comments on the performance of public officers concerned will enable the Government to improve its control over the expenditure of public funds, with due regard to economy, efficiency and effectiveness. The conclusions and recommendations of the PAC's report facilitate the public to get a better understanding of the Director of Audit's report. This helps to achieve the aim of public accountability.
The Director of Audit, Mr Benjamin Tang, said: "Audit reports are forward looking. They aim to make suggestions to help audited bodies achieve economy, efficiency and effectiveness. The subjects of audit reviews are the work and systems of audited bodies and not the incumbent officers or their predecessors. In other words, audit reports focus on the work and systems, not individuals."
The audit review of "Development of a site at Sai Wan Ho" was carried out in accordance with the value for money audit guidelines to examine the development project at the Sai Wan Ho site. The audit report made a number of recommendations to the Administration on a number of topics, including the following:
(i) pre-tender enquiries on gross floor area (GFA) calculation;
(ii) development intensity of the Sai Wan Ho site;
(iii) provision of Government Accommodation;
(iv) site classification;
(v) granting of exemption areas; and
(vi) granting of bonus areas.
The terms of reference of the ICI were, among others, to examine the procedures in approving the site classification and GFA exemption for the Public Transport Terminus (PTT), and to review whether the Building Authority's discretionary powers had been exercised properly. The objective, scope, focus and remit of the audit review were different from those of the ICI.
There are similarities in the recommendations of the ICI Report and those of the audit report. For example, both parties have recommended:
(i) specifying explicitly in the lease of a site whether PTTs would be included in the GFA calculation, so as to increase the transparency in land sale; and
(ii) specifying maximum GFA in Outline Zoning Plans and leases as a control measure.
As regards the "financial implications" mentioned in the audit report, this was an estimated amount, in money terms, of the GFA concerned, and was derived from the Lands Department's reserve price assessment made before the award of the tender. During the PAC's public hearings, the Director of Audit also clarified this viewpoint. The PAC considered that the Building Authority's decision to exclude the PTT from the GFA calculation of the Site had negative financial implications. The ICI was looking at the "financial implications" from a different perspective.
"After the submission of the audit report to the Legislative Council in the morning of November 16, 2005, the PAC held six public hearings, received evidence from 17 witnesses and held 19 internal meetings to discuss Chapter 3 'Development of a site at Sai Wan Ho' of the audit report, so as to establish the relevant facts," Mr Tang said. "Audit staff attended all the public hearings and provided the PAC with the required information. The PAC made its independent judgement, and its conclusions and recommendations were detailed in the PAC Report. According to the Government Minute dated May 10, 2006, in response to the PAC Report, the Government has accepted the recommendations made by the Director of Audit and endorsed by the PAC, and has already taken positive steps to implement them, including those concerning site development intensity, pre-tender enquiries, site classification, and granting of GFA exemption and bonus areas. The Audit Commission supports the PAC in urging the Administration to fully implement the recommendations of the PAC."
The Audit Commission conducts value for money audits in an independent, professional and impartial manner. Audit work focuses on the systems of the audited bodies with a view to identifying room for improvement. Audit observations are based on strong evidence, and audit recommendations are constructive and forward-looking. Most of the recommendations are accepted by the audited bodies and the PAC. Both the public and the Administration attach great importance and value to Audit's work. Mr Tang considers that the credibility of the Audit Commission will not be affected by the report of the ICI. The Audit Commission will continue to uphold professionalism and impartiality in carrying out its mission of providing quality public sector auditing services to Hong Kong.
Ends/Tuesday, May 16, 2006
Issued at HKT 15:40
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