PERFORMANCE AUDITING „new perspectives“

7/30/2019 PERFORMANCE AUDITING new perspectives

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Dr.sc.Ibrahim Okanovi, Auditor General

Audit Office for the Instittions of FBiH

PERFORMANCE AUDITING

new perspectives

The Role of Perform ance Audi t in the

Effic ienc y and Effect iveness of Management of

Publ ic Finance in the Federat ion of Bosnia and

Herzegovin a (FBiH)

The authors views expressed in this presentation do not necessarily reflect the views of theUnited States Agency for International Development or the United States Government


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AIM AND PURPOSE OF PERFORMANCE AUDITINGCOMPARED WITH TRADITIONAL FINANCIAL AUDITING

IN BIH

Make auditing public

Deal with difficult questions

Challenge bad practice

Initiate change

Promote responsibility

Assist in prevention of fraud and corruption Serve a democracy and an open society

Partnership for Advancing Reforms in the Economy (PARE)


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MODERN SOCIETY REQUIRES MORE THAN TRADITIONAL FORMSOF CONTROL AND AUDITING

Complexstructures andmulti-layerreforms

Weak inherentincentive to

change

Continuousimprovementand education

Public financevs requirements

of citizens

Conditions andrequirementsthat change

rapidly



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PERFORMANCE AUDITING AS A MECHANISM TOMEAUSRE THE SUCCESS OF PUBLIC SECTOR

IMPLEMENTATION of development projects;

IMPLEMENTTION of economic development strategy;

ECONOMY of budget funds investments

LACKof efficient mechanism for monitoring of results of

the work of the Government.

EVALUATION OF EFFICIENCY of implementation of

Government regulations( rules, decisions, conclusions)

INCONSISTENT implementation of the prescribed

procedures for public procurement in BiH


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Influence of government policies and progra

Efficiency of programs and

management

Implementation

Effectiveness of agency

programs

Financial management

Transactions

Accounts

Internal control

Coordination

Financial auditing (FA) Performance auditing (PA)

Economy

Outcome report



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PUBLIC SECTOR PERFORMANCE AUDITING(BEST VALUE FOR MONEY)

Market mechanism and company profit (private sector)

Replacement for market mechanism (public sector)

Performance auditing - investigative, almost scientific

approach to methodology (extensive investigations).

Performance auditing-serves forcreation of the betterthanwhat is available.



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STARTING POINTS OF PERFORMANCEAUDITING


Has publicmanagement setcleargoals?

Has publicmanagementselectedappropriatepriorities?

Has publicmanagement

selectedappropriate way ofutilization of publicresources?


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THE FOLLOWING AUDITS HAVE BEENCONDUCTED IN THE FEDERATION OF BiH1. High education planning in FBiH

2. Efficiency of responsible institutions in the process of

incentives to primary agricultural production3. Time management in the process of expropriation of real estate

during the construction of a highway

4. Concessions management in FBIH

5. Management of primary medical care in FBiH

6. Youth Employment Program management

7. Flood prevention in FBiH

8. Support to the development of SMEs in FBiH



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SELECTION OF AUDITS WAS MADE AFTERINDICATIONS FROM THE ENVIRONMENT AND POOR

RESULTS BY THE GOVERNMENT

Issues of economy, efficiency and effectiveness of

government programs or public services,

Issues that have negative impact on society,

Issues as a consequence of government activities.

Poverty is a social problem. Auditing monitors the government

activities such as poverty reduction programs. They can be more or

less economic, efficient, and effective.



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Our experiences in BiH, Federation of BiH.....

Conclusions

Recommendations

Results



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HIGH EDUCATION PLANNING IN FBIH

Audi t conc lus ions :

Enrolment of students is made per usual practice, with no enrolment policy

There is no practice of coordination between cantons and universities on the

required number of students..

Information on high education planning and market requirements are not adjusted.

Aud i t recommendat ions:

Develop the system of planning of student enrolment based on anticipated

requirements for cadre with high education in relation to labor market..

Improve the quality of information and access to information, and equalize the

Bologna process.

Encourage cooperation among all direct and indirect participants in high education

at all levels.



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EFFICIENCY OF RESPONSIBLE INSTITUTIONS INTHE PROCESS OF INCENTIVES TO THE PRIMARY

AGRICULTURAL PRODUCTION

Audit conclusions:

The system of award of incentives is inefficient and is frequently changing.

The system of planning and execution of budget is not timely and does not

function efficiently.

The existing system of control and audit is not in the function of efficiency

nor in the function of incentive process.

Audit recommendations:

Improve the flow and distribution of information on changes in regulations.

Establish a system of a more efficient control and inspections based on

risk estimate.

Simplify application forms.



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TIME MANAGEMENT IN THE PROCESS OF EXPROPRIATIONOF REAL ESTATE DURING CONSTRUCTION OF A HIGHWAY

Audit conclusions:

Expropriation procedures are neither timely nor efficient.

Unsolved ownership issues (no possibility for agreements on transfer of

ownership).

Lack of transparency and supervision (system development not

possible).


That the user of expropriation follows the information on current prices

in the real estate market

To ensure fair and realistic offers to land owners when making an

agreement on transfer of ownership.

That the stakeholders improve mutual exchange of information.

That the responsible Ministry ensures that the user of expropriation

may solve complex cases, including the issue of ownership. Tat the user of ex ro riation submits dis uted cases to the court.


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CONCESSIONS MANAGEMENT IN FBIH

Audit conclusions:

The concessions system is not managed efficiently and the system does not

function.

Award of concessions is not timely. No transparency. Administrative and other obstacles impede the realization of contracts.

Audit recommendations.

Make an analysis of obstacles that lead to weak efficiency and apply the

procedures of award of concessions that are likely to be subject to long

processing.

Consider a possibility of establishment of a working body that would proposemeasures for improvement of the system of concessions management.

Change legal framework and organizational procedures.



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MANAGEMENT OF PRIMARY HEALTH CARE INFBIH Audit conclusions:

Management of primary health care in FBIH is not efficient.

Policlinics do not provide equally accessible services of primary health care.

Ministry of health of FBiH has not developed continuous monitoring andevaluation.


That health insurance units establish the system of planning and distribution of

funds on the basis of monitoring of performance of policlinics in order to ensure

equal access to primary health care.

That Cantonal Ministries develop the function of strategic and long-termplanning to ensure equal access to primary health care.

That the Federation Ministry of Health develops continuous monitoring and

evaluation system to make the primary health care efficient and with equal

access for all citizens of FBiH.



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YOUTH EMPLOYMENT PROGRAM MANAGEMENT

Audit conclusions:

The program did not help the most vulnerable categories of young unemployed

people.

The goal is not clearly defined. Too wide criteria resulted in the program notoriented toward the most critical categories of youth.

Supervision system was neither established nor implemented in order to make

corrections and improve the system of program management.


The program should have been preceded with a systematic and detailed

planning process based on labor market data and on the analysis of previousexperiences in the implementation of similar programs.

It is necessary that all institutions participating in the implementation of the

program have a common vision and apply equal procedures (cantons,

companies, institutes).



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FLOOD PREVENTION IN FBIH

Audit conclusions:

Damages from flood were 100 Million KM in 2010.

Not well defined legal framework, insufficient supervision, lack of networking in

inspection (incomplete and unclearly distributed responsibilities). No analysis of distribution of funds; insufficient funds.


Establish clear responsibilities at the Federation level and adjust all activities per

priorities and timelines.

Water agencies should set goals and performance indicators to quantify effects

of measures taken.

Cantonal Ministries should pay more attention to flood prevention and ensure

the flood protection measures in accordance with policies and documents at the

Federation level.



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SUPPORT TO THE DEVELOPMENT OF SMEs INFBIH Audit conclusions:

The measures taken have not contributed to the significant improvement of conditions for

the development of SMEs.

The existing supervision does not ensure adequate basis for evaluation of the effect of

incentives.

Award of the incentive funds could be more efficient.


Government of FBiH must analyze the support it provided so far and reconsider the

possibilities of more significant support to the development of SME sector in the future.

In creation and implementation of SME support programs, give priority to general measures

directed toward creation of better conditions for opening of new and development of existingSMEs.

Determine criteria for award of incentives and appropriate evaluations to enable

that the funds are directed to the projects that stimulate the development of

SMEs, and insure transparent award of incentives at all stages.



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IMPACT OF PERFORMANCE AUDITS

Audits had impact on the changes to the laws in various fields.

50% of recommendations have on average been implemented.

Non-implementation of recommendations is caused by variousfactors (slow process of taking of measures, lack of legal

framework adjustment, political environment etc.).

Public reactions to performance audits in FBiH are very positive

Supreme audit institution in FBiH is faced with the need for the

development of performance auditing but lack of resources(financial and human) affect the number of audits.



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CHALLENGES OF IMPLEMENTATION OFPERFORMANCE AUDITS IN FBIH

Evaluates impact on community

Evaluates impact on beneficiaries

Reports on results (3E)



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CONCLUSION:

Who has the right, the information, and the

capability to oppose bureaucracy, inefficiency,ineffectiveness, and dysfunctional regulations?

AUDITORS CAN MAKE CHANGE



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Thank you for your attention!Questions?


PERFORMANCE AUDITING „new perspectives“

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