Reforming Public Internal Control: Lessons (Not) Learned
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Reforming Public Internal Control: Lessons (Not) Learned Raymond Hill, CGAP European Commission DG Budget. Content. European Commission's long tradition of coaching PIC development Challenges in reforming PIC Lessons not learned Conditions for successful reforms.

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Reforming Public Internal Control: Lessons (Not) Learned

Raymond Hill, CGAP

European Commission

DG Budget


Content
Content

  • European Commission's long tradition of coaching PIC development

  • Challenges in reforming PIC

  • Lessons not learned

  • Conditions for successful reforms


2009 pic conference in brussels
2009 PIC Conference in Brussels

  • Purpose: To review and learn lessons from the implementation of PIC in the recently-joined EU Member States

  • Delegates provided positive feedback on:

    • Comprehensiveness of the PIC reform model

    • Our coaching on the sequencing of reform steps

    • Our guidance on the competency requirements of key staff in the PIC environment


Many challenges to pic implementation were identified
Many challenges to PIC implementation were identified

  • Absence of hard law: only reliance on non-binding international standards

    • Various good practices: no definition of best practice

  • Long time needed for reforms

    • Political pressure for fast visible results

    • Short term nature of technical assistance

  • Reforms were sometimes pushed too fast by the donor community: outstripping national absorption capacity

  • Management traditions and resistance


Managerial traditions and resistance
Managerial Traditions and Resistance

  • Sometimes the top manager tries to control every detail

    • Lack of understanding of Managerial Accountability

  • Sometimes there is no manager!

    • Unclear delegation procedures do not allow to identify the task manager

  • Managers have a fear of transparency

    • Transparency is often only seen as highlighting negative aspects: however it can also serve to highlight good performance

  • Better internal control is not the same as more controls


Pic reform lessons not learned
PIC Reform – Lessons (not) learned

  • Policy before Prescription

  • A revised legal framework is not a reform

  • A hasty legal transplant leads to problems at implementation

  • Plan ahead for sufficient resources

  • Avoid excessive segmentation – keep an eye on the big picture

  • Internal Control should match the PFM system


Lesson 1 policy before prescription
Lesson 1: Policy before Prescription

  • A government approved Reform Policy should set the direction for Internal Control reforms

  • Pilot Projects are an effective way to test a new approach

  • Pilot Projects should come before legal prescription

    • There is no point in adopting a law and then testing its application through Pilot Projects!


Lesson 2 a revised legal framework is not a reform
Lesson 2: A revised legal framework is not a Reform

  • As well as a solid legal foundation, fundamental public sector reform requires a long term change management strategy for modernising administrative culture

  • Change management strategy includes:

    • Visible political leadership

    • Reasoning for the change

    • Milestones: champions and role models

    • Feedback and a learning perspective

    • Encourage civil society interest in public governance


Lesson 3 a hasty legal transplant leads to problems at implementation
Lesson 3: A hasty legal transplant leads to problems at implementation

  • Law-making takes time

  • New laws require wide consultation of stakeholders

  • New laws should be developed in line with the national administrative culture and national cost/benefit analysis. National ownership is required.

  • Non democratic law-making can move quickly but it will often break down at implementation


Lesson 4 plan ahead for sufficient resources
Lesson 4: Plan ahead for sufficient resources

  • Reforms take time. Allow for plenty.

  • Need for skilled, motivated and empowered staff at central level

  • Need for sustainable training facilities

  • Seek agreement for medium/long term Technical Assistance support


Lesson 5 excessive segmentation not seeing the big picture
Lesson 5: Excessive segmentation – Not seeing the big picture

  • Excessive segmentation can produce hyper-focussed approaches that ignore systemic problems and fail to add up to an integrated effective whole.

  • Co-ordination and sequencing of all related PIC reforms (especially Public Administration reform, Budgeting and Accounting reform) is required – at strategic level.


Lesson 6 internal control should match the pfm system
Lesson 6: Internal Control should match the PFM system

There are 3 basic stages of Public Financial Management development:

Stage 1: Enforce basic financial compliance

Characterized by traditional input controlled budget

Stage 2: Ensure fiscal stability over the medium term

Characterized by medium term budget frameworks

Stage 3: Attain policy objectives in efficient/effective way

Characterized by “performance budgeting/management”



Pic reform conditions for success
PIC Reform: Conditions for success

  • Ownership:

    • Political commitment: politicians lead, technicians follow

    • Top managers accept that reform is necessary

  • Ensuring change in administrative culture:

    • Understanding that law-making and adherence to legal rules is not enough but that there is a need for managerial accountability and real delegation

  • Sufficient resources:

    • An adequately resourced and skilled Central Harmonisation Unit to drive the change and face stakeholder expectations


Pic reform conditions for success cont
PIC Reform: Conditions for Success (cont)

  • An integrated approach:

    • PIC is not a stand-alone, technical fix but part of the overall public Finance Management and Public Administration reforms

    • A comprehensive reform is better than piecemeal changes

    • Long-term project management

  • Ongoing and sustainable training for all


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