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Assessment of human resources employed in debt contracting

This report discusses the assessment of human resources employed in debt contracting, focusing on the relevance and impact on the proper reporting and management of public debt. It includes the objectives, expected outcomes, and the use of internal controls as input to define the assessment required for human resources in debt contracting.

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Assessment of human resources employed in debt contracting

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  1. WorkingGrouponPublicDebt Kyiv, Ukraine October 7 - 8, 2009 Assessment of human resources employed in debt contracting ProgressReport Mr. Tevita Bolanavanua Acting Auditor General Office of the Auditor General of Fiji

  2. Assessment of humanresourcesemployed in debtcontracting Sub-group: • Leader: • Office of the Auditor General of Fiji • MemberSAIs: • Superior Audit Office of Mexico • Office of the Auditor General of Zambia • TBA

  3. Assessment of humanresourcesemployed in debtcontracting INTRODUCTION • Proper reporting and sound management of public debt • Matters of great relevance to INTOSAI members • SAIs  responsible for their encouraging. • Factors challenging and pressing SAIs: • current global financial crisis, • volatility of global financial markets, • lack of transparency in debt reporting, • need for proper assessment to debt sustainability, etc. • SAIs’ increasing interest in public debt matters • Creation of the Working Group on Public Deb (WGPD): 1991 • Objective  to publish guidelines and information materials to be used by SAIs. • 7 INTOSAI products. • Surveys, case studies, and diverse specialized papers • Opportunity for more detailed information on Public Debt Managers.

  4. Assessment of humanresourcesemployed in debtcontracting INTRODUCTION • Proposed investigation theme: • “Assessment of Human Resources Employed in Debt Contracting”. • Primary input : WGPD’s previous work and INTOSAI products: • “Guidance for Planning and Conducting and Audit of Internal Controls of Public Debt” (WGPD) • “Public Debt administration and fiscal vulnerability, tasks for SAIs” (WGPD) • “An Exercise of Reference Terms to Carry Out Performance Audit of Public Debt” (WGPD) • INTOSAI Code of Ethics (INTOSAI) • Guidelines for Public Debt Management (The World Bank Treasury and International Monetary Fund)

  5. Assessment of humanresourcesemployed in debtcontracting OBJECTIVES • To present to the Working Group members the relevance of this theme and its impact on public debt proper reporting and management, • To consider and approve it as a Working Group’s mid-term project, and • To receive from the membership the corresponding feedback to define the project scope and to better focus the investigation.

  6. Assessment of human resourcesemployed in debtcontracting EXPECTED OUTCOMES • The sub-group’s membership integration, • The definition of this investigation scope, • The identification of the most appropriate methodologies to gather relevant information for the investigation theme, according to the scope defined, and • The preparation of the project’s reference terms, including objectives, sub-group’s final membership, work plan with specific deadlines, and tasks assignation among member SAIs.

  7. Assessment of humanresourcesemployed in debtcontracting • INTERNAL CONTROLS AS INPUT TO DEFINE • THE ASSESSMENT REQUIRED FOR HUMAN RESOURCES • Internal controls: • Set of procedures and tools that help managers achieve operational, financial, and compliance objectives • A continuous process designed to provide reasonable assurance that the entity’s objectives are being achieved in the following categories: • Operations are effective and efficient; • Financial, budget and program assessment reports are relevant and reliable, and • Responsible officials comply with applicable laws and regulations. • Periodic evaluations to internal controls of debt operations do not provide absolute assurance, but they increase the likelihood of achieving a sovereign entity’s operational, financial, and compliance objectives with regards to debt management

  8. Assessment of humanresourcesemployed in debtcontracting • INTERNAL CONTROLS AS INPUT TO DEFINE • THE ASSESSMENT REQUIRED FOR HUMAN RESOURCES • SAIs must decide which components of internal controls to examine and the depth of analysis for each component. • SAIs could share a common interest to evaluate specifically the performance of agents and officials responsible for public debt contracting. • SAIs could find a similar path to evaluate them • complex public debt transactions and • Agents’ performance impact on fiscal and monetary operations.

  9. Assessment of human resourcesemployed in debtcontracting INTERNAL CONTROLS AS INPUT TO DEFINE THE ASSESSMENT REQUIRED FOR HUMAN RESOURCES • SAIs could define the scope of debt audits by using the five components of a system of internal control: • control environment • risk assessment • control activities • information and communication • Monitoring • Control environment: • leads auditors to examine sovereign debt management’s attitude, awareness, and actions concerning controls. • is the foundation of internal controls due to its influence on the conduct of public debt personnel.

  10. Assessment of humanresourcesemployed in debtcontracting INTERNAL CONTROLS AS INPUT TO DEFINE THE ASSESSMENT REQUIRED FOR HUMAN RESOURCES • Need to define the ideal investigation approach on the theme • An assessment could be carried out in different spheres: • Integrity and ethical values • Human resources policies • Organizational structure • Computer-based debt information systems • Laws, regulations, and practices • External factors

  11. Assessment of humanresourcesemployed in debtcontracting ASSESSMENT APPROACHES 1. Integrity and ethical values • Staff involved in debt management should be subject to a code-of-conduct and conflict-of-interest guidelines regarding the management of their personal financial affaire. 2. Human resources policies • competence levels and financial skills (knowledge on financial instruments and market risks) • public policy skills, and • correct assignation of employees with appropriate skills to each task.

  12. Assessment of humanresourcesemployed in debtcontracting ASSESSMENT APPROACHES 3. Organizational structure • identification and assessment of the different management functions and reporting responsibilities at two levels • high-level functions and • operational functions. • verification that organizational framework for debt management is well specified and ensures that mandates and roles are well articulated. • examination of the relationship and communication flows among debt managers, fiscal policy advisors, and central bankers. 4. Computer-based debt information systems • accurate and comprehensive management information system with proper safeguards at disposal to debt management activities. • public debt personnel ‘s IT expertise

  13. Assessment of humanresourcesemployed in debtcontracting ASSESSMENT APPROACHES • 5. Laws, regulations, and practices • acquisition of knowledge on the respective legal framework and actual debt procedures in each country. • verification that written procedures are followed in practice. • examination on how public debt estimates are programmed into the budget as a use and source of budget resources. • examination on how public borrowing is used to fund temporary cash operating deficits (close communication: cash-debt management staff) • verification that appropriate legal advise is provided to debt managers • examination on sound legal features incorporated to transactions undertaken by debt managers • 6. External factors • External sources of information affecting the government’s ability and willingness to service its debt.

  14. Assessment of humanresourcesemployed in debtcontracting APPROACH PROPOSAL: HUMAN RESOURCES • Justification: • An institution must be able to hire the most competitive people, and maintain the highest performance level of its human resources • Assessment: human resources policies and the willingness to attain a high competitive level. • Efforts made by many governments to strengthen and plan their activities have given more attention to their employees’ development, training and welfare. • Assessment: Civil Service • Public servants, integrity and ethical values are essential to maintain the effectiveness of the internal controls • Assessment: Code of Ethics and adoption of the International Code of Conduct for Public Officials.

  15. Assessment of humanresourcesemployed in debtcontracting APPROACH PROPOSAL: HUMAN RESOURCES • Justification: • Competence, knowledge and capacities, schooling, training, experience, and responsibilities must be all reflected and defined in a catalogue of positions and post profiles. • Assessment: • every post counts on the adequate legal framework (duties and responsibilities), and • every public servant satisfies the profile. • Performance measurement of debt managers is a developing area, despite the advances registered. • Assessment: convenience to evaluate debt managers based on tendencies shown by the debt regarding costs, terms, currencies, interest rates, and contracted instruments.

  16. Assessment of humanresourcesemployed in debtcontracting FINAL CONSIDERATIONS • An analysis has already been carried out in 2000 by the WGPD members  ISSAI 5410: “Guidance for Planning and Conducting and Audit of Internal Controls of Public Debt”. • This project would result in a more specialized investigation theme: • Focus on internal control component “control environment” • Address in detail the section “Human Resources behavior” (WGPD product “An Exercise of Reference Terms to Carry Out Performance Audit of Public Debt”). • To further develop this investigation: • Working Group’s comments and suggestions to define this project’s scope. • Documentary research as the most appropriate methodology • Participation of SAIs joining our sub-group. • The SAI of Fiji (project leader) will define this project terms of reference and will report accordingly to the sub-group members and to the WGPD Chair. • A revised version of this draft project will be presented during the next meeting of the Working Group in 2010.

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