Transparency International Sri Lanka (TISL) Challenges the National Audit (Amendment) Bill
Transparency International Sri Lanka (TISL) filed legal action on Tuesday 22 July 2025, in the
Supreme Court challenging the National Audit (Amendment) Bill which was published in the
gazette on 23 rd June 2025. The Bill is to amend the National Audit Act No. 19 of 2018. The
petition has been filed in public interest.
The National Audit Act is one of the key legislative tools to uphold financial accountability and
combat corruption within the public sector. It empowers the Auditor-General to audit public
institutions and hold officials accountable for misuse or mismanagement of public funds. This is
done particularly through its provisions on imposing surcharges as penalties. Surcharge is
designed to ensure that public officers are accountable for losses or mismanagement of public
resources due to fraud, negligence, misappropriation, or corruption. In the proposed amendment,
there are several provisions that weaken this framework and risk undermining the independence,
authority, and effectiveness of the public auditing process.
One of the most concerning features of the Bill is the proposed removal of “negligence” as a
basis for surcharge under Sections 19 and 23 of the principal enactment. This lowers the standard
of responsibility for public officials, potentially shielding them from being held liable even
where losses to the state are caused by careless or reckless duty of care. This contradicts the
public trust doctrine and weakens constitutional safeguards for citizens against mismanagement
of public funds.
The bill introduces a “Surcharge Review Committee” to make decisions on recommendations on
imposing a surcharge made by the Auditor-General. The power to make final decisions on
surcharging and the amounts to be recovered is vested in the “Surcharge Review Committee”
appointed by the President. The Petition flags concerns over the absence of a mechanism to
ensure that the decisions taken by the Surcharge Review Committee are open, fair, and
accountable.
TISL also raises concerns over the lack of clear timelines and sanctions for non-compliance with
the complaint mechanism on audit findings to law enforcement. The proposed amendments
allow the Auditor-General to notify, where reasonable grounds to believe that any fraud,
corruption or misappropriation in any transaction has been committed, the Chief Accounting
Officer in terms of the auditee entity or Secretary to the Cabinet of Ministers when such
allegation is against the Chief Accounting Officer, to act “immediately”, thereby placing the
obligation of making a complaint to law enforcement. However, absence of defined timeframes
or penalties for non-compliance opens this process to arbitrary delay, inaction, or political
influence – seriously weakening enforcement.
Sri Lanka’s own Governance Action Plan and the National Anti-Corruption Action Plan
2025–2029, along with the IMF Governance Diagnostic Assessment, call for stronger public
audit frameworks and robust enforcement. However, the Bill’s proposed amendments inhibit
these national and international commitments. Instead of strengthening institutional oversight, it
dilutes accountability and compromises timely legal action on audit findings.
At a time when Sri Lanka is attempting to restore public confidence in state institutions and meet
its anti-corruption reform pledges, it is imperative that the Auditor-General’s independence and
enforcement powers are preserved – not curtailed.
TISL’s petition urges the Supreme Court to determine that the relevant clauses of the Bill are
inconsistent with key provisions of the Constitution, including the sovereignty of the people, the
right to equal protection of the law, and the proper exercise of public power.
