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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 - PowerPoint PPT Presentation
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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
• Accession negotiations June 2007 - June 2011
• Joining the EU – July 2013
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).
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.
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.
PIFC - a framework for the defence of public finance and for good governance
Layer 1
Financial Management and Control systems
Layer 2
Internal Audit (IA)
Layer 5
Parliament
Layer 4
SAI
(EA)
Layer 3
Centralised Budget Inspection
(Complaint- driven function to investigate cases of fraud and serious irregularity)
Public Entity Ministry of Finance National
CHU FMC
CHU IA
PIFC and the Supreme Audit Institution – both on the same road to Good Governance
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
AuditPIFC
Good Governance ahead
PIFC and budget inspection – both on the same road to good governance
• 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
PIFC
Good Governance ahead
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
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!
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.
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.
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.
Congratulations go to the CHU staff
Ljerka Linzbauer 2004-2008
Danijela Stepic 2008-2013
Marela Knezevic Present