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PIFC Taking stock and looking ahead

PIFC Taking stock and looking ahead. Robert Gielisse, CIA,CGAP, Head of PIFC Department, DG Budget European Commission. Croatia June 2013. PIFC Croatia – It has been a long and windy road. First PIFC Policy Paper – September 2004 PIFC law - January 2007

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PIFC Taking stock and looking ahead

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  1. PIFC Taking stock and looking ahead Robert Gielisse, CIA,CGAP, Head of PIFC Department, DG Budget European Commission Croatia June 2013

  2. PIFC Croatia – It has been a long and windy road • First PIFC Policy Paper – September 2004 • PIFC law - January 2007 • Accession negotiations June 2007 - June 2011 • Joining the EU – July 2013

  3. Scope of PIFC • PIFC refers to the execution of the National Budget. • PIFC does not refer to the management of EU funds (although the same underlying principles apply).

  4. PIFC Implementation – The initial challenges faced • Lack of understanding of managerial accountability – managers tried to control every detail. • Lack of (clear) delegation procedures did not allow middle managers to manage. • Internal Audit was seen as additional layer of control. • Internal Audit was not sufficiently independent – auditors were scared to tell managers the truth.

  5. PIFC today - a greater foundation for democratic society in Croatia • At national level - an updated legal basis with transparent mandates for all key internal control actors (Ministry of Finance, External Audit, Central financial inspection). • At entity level - Managerial accountability for delivering higher quality public services with effective, efficient and economic use of public money.

  6. PIFC - a framework for the defence of public finance and for good governance Public Entity Ministry of Finance National Layer 1 Financial Management and Control systems Layer 2 Internal Audit (IA) Layer 3 Centralised Budget Inspection (Complaint- driven function to investigate cases of fraud and serious irregularity) Layer 4 SAI (EA) Layer 5 Parliament CHU FMC CHU IA

  7. PIFC and the Supreme Audit Institution – both on the same road to Good Governance Good Governance ahead The SAI provides an independent assessment to Parliament of: • Reliability and accuracy of financial reports • Value for money in the use of public resources External Audit P I F C

  8. PIFC and budget inspection – both on the same road to good governance Good Governance ahead • Budget inspection will act to investigate cases of financial irregularity • Budget inspection must not interfere with a manager's responsibility to establish an effective control environment within the organisation Financial Inspection P I F C

  9. Croatia is about to join the EU - Is the PIFC road ahead straight? • Further implementation of the PIFC development plan 2012- 2013 • Overall PFM Strategy 2012-2016,currently being prepared • Embedding of Fiscal Responsibility law • Further enhancement of Internal Audit capacity

  10. The challenge for managers The risks to your organisation will not disappear on 1 July! • Maintain an organisational culture to support middle-managers in freely admitting to the risks that they face. • Ensure on-going monitoring to ensure the quality of internal control performance. • Consider managerial self-assessment tools. • No "comfort" zone!

  11. Continued European Commission assistance • Acceding countries benefit from continued assistance under a 3-year transition facility. • DG Budget will continue to monitor PIFC implementation, particularly through drill-down quality review assessments, at central and local levels, as well as with state-owned enterprises.

  12. After Accession, the State Audit Office will be guardian of the PIFC system • The SAO is encouraged to play a full role in monitoring the application of the internal control system throughout the Croatian public administration. • The SAO and the Parliament are encouraged to deepen cooperation; in particular, with consideration to establishing a specific committee to deal with external audit reports.

  13. Internal Control and the EU Member States • Croatia will become a full member of the EU-27 Public Internal Control Network. • Regular Conferences and initiatives aimed at sharing best practices and peer learning. • The CHU will be invited to attend the next full Conference – June 2014 in the Hague. • The Network is currently steered by a Working Group of 7 Member States.

  14. Congratulations go to the CHU staff LjerkaLinzbauer 2004-2008 Marela Knezevic Present Danijela Stepic2008-2013

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