Public Management Forum No. 6, Volume V,...

P M FPublic Management Forum

The development of effective financial control in the European Union (EU) candidatecountries is an issue high on the agenda in the current Member States, the EuropeanCommission, the European Parliament and in the candidate countries themselves. In anticipation of the EU’s expansion, all are concerned about the ability of aspiringMember States to protect the Union’s financial interests when managing EU funds,and to do this within the framework of adequate financial control systems coveringthe entire national budget. The Berlin 1999 European Council on Agenda 2000, and reports by the Committee of Independent Experts and the European Court of Auditors, have also emphasised the need for more effective management andcontrol of EU funds.

A Bimonthly Newsletter for Public Administration Practitioners in Central and Eastern Europe

Protecting the Financial Interests of the State and of the European Union

ΣSIGMA

Vol. V - N° 6November/December1999

How the Netherlands Controls and Audits

EU Funds

Forum Focus

Financial Control:Definitions

and European Models

Working TowardsFiscal Transparency

in Hungary

Latvia Aims to Improve

Internal Audit

New Training Modules For Procurement

Officials

Continued on page 3 �

by Kjell Larsson and Johannes Stenbæk Madsen

Imag

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Ant

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Edw

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■ Financial Control usually refers to the financialaspects (whether administrative, managerial orbudgetary) of management/internal control. Suchcontrols may be either ex-ante (controls in advanceof expenditure) or ex-post (controls after expen-diture).

■ Management/Internal Control refers to all theprocedures and means making it possible to meetobjectives and to comply with the budget and therules in force, to safeguard assets, ensure the accu-racy and reliability of accounting data and facilitatemanagement decisions, in particular by makingfinancial information available at the appropriatetime.*

■ Audit refers to ex-post reviews of a body’s activi-ties, operating systems and outputs to ensure that these are in accordance with objectives, budgets, laws and standards. The aim of suchreviews is to identify, at regular intervals, deviationsin performance that might require corrective action.*

■ Internal Audit indicates a department within anentity, entrusted by its management with carryingout checks and assessing the entity’s systems andprocedures in order to minimize the likelihood offraud, errors and inefficient practices. Internal auditmust be independent within the organisation andreport directly to management. The term can alsoindicate an activity.*

■ External Audit means audit carried out by abody which is external to and independent of theauditee, the purpose being to give an opinion onand report on the accounts and financial state-ments, the regularity and legality of operations,the financial management and performance.*

*Adapted from the nine language glossary of termsGlossary: Selection of Terms and Expressions Used in theExternal Audit of the Public Sector by Patrick Everard andDiane Wolter. © 1989 Court of Auditors of the EuropeanCommunities, Luxembourg.

In the context of the screening of EU candidate countries and preparing the European Commission’sRegular Reports on progress, the Commission associates slightly different terms with “financial con-trol”. In this context, “financial control” covers bothwhat the Commission terms “internal financial con-trol” and “external financial control”. The former issynonymous with what is usually referred to as finan-

cial control, and the latter being synonymous withwhat is usually referred to as external audit. As usedby the European Commission, the key differencebetween the terms financial control and audit is thatfinancial control includes both ex-ante and ex-postcontrols, whereas audit exclusively covers ex-postcontrols (see also article on page 4 by Robert deKoning, DG-AUDIT).

Σ - Public Management Forum

TABLE OF CONTENTS

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PMF is published six times a year bySIGMA, the Programme for Supportfor Improvement in Governance andManagement in Central and EasternEuropean Countries.

Views expressed herein do not neces-sarily represent the official views ofthe European Commission, OECDMember countries, or the central andeastern European countries partici-pating in the Programme.

Written submissions are welcome.Story ideas, humour and letters to theeditor should be sent to the addressbelow. The editors reserve the right toedit submissions for clarity, style, gram-mar and space on the basis of, interalia, the OECD Style Guide.

ΣHead, SIGMA Programme

Bob Bonwitt

Editor-in-ChiefBart W. Édes

Managing EditorBelinda Hopkinson

Production AssistantPatricia Prinsen-Geerligs

French versionBernard Cazes, translator

François-Roger Cazala, technical reviserHalima Benlatrèche, copyeditor

DesignAIRE, Cergy, France

PrinterLes Presses de Brévannes, Limeil-Brévannes,

France

Public Management ForumSIGMA-OECD Information Services2, rue André-Pascal, 75775 Paris Cedex 16, FranceTel: (33.1) 45.24.79.00 - 45.24.13.76Fax: (33.1) 45.24.13.00e-mail: [email protected] Website: http://www.oecd.org/puma/sigmawebISSN Number: 1024-7416Copyright OECD, 1999

Permission to reproduce or translate all or parts ofthis newsletter for non-commercial purposes isgranted free of charge provided that the source isduly mentioned as follows: “© OECD.Reproduced by permission of the OECD” andthat the author’s name and PMF volume, num-ber, and date are listed. Please send a vouchercopy of any reprinted article to SIGMA at theaddress above.

Public Management Forum is printed on recy-clable paper.

P M FP u b l i c M a n a g e m e n t Fo r u m

■ Protecting the Financial Interest of the State • Public Internal Financial Control (PIFC) in the Context of EU Enlargement 4• Baseline for Financial Control in Candidate Countries 6• Basic EC Legislation on Financial Control 8• Ensuring Good Financial Management in the UK 9• Forum Focus: Financial Control and Audit of EU Funds in the Netherlands 10• Portugal’s Financial Control System 12• New Public Management Techniques Challenge the Flemish Model of Budgetary

and Financial Control 13• Latvia Establishes a New Internal Audit System 14• SIGMA Activities on Internal Financial Control 17

■ Managing the Public Purse• Fiscal Transparency in Hungary Since the Beginning of Transition 15• New Training Package for Procurement Officials 16

■ Governance and EU Integration• Latvia Consults with Interest Groups on European Accession 18

■ Ethics in the Public Sector• Ethics Training Programme for Public Sector Managers 19

■ On the Agenda 20

GLOSSARY OF TERMS

HOW THE EUROPEAN COMMISSION CURRENTLY USESTHE TERM “FINANCIAL CONTROL”

For the candidate countries, EU acces-sion depends explicitly on the adop-tion of and the ability to apply the

existing body of EC legislation, the acquiscommunautaire, including the requirementsfor internal financial control. At a time whenthe institutional capacities of the Union arethe subject of intense discussions, an effectiveadoption of the acquis appears more thanever to be decisive for the candidate countries’accession to the Union. Moreover, improvingfinancial control structures, organisations,procedures and methods within the government administration, and bringingthem in line with good European practices,is essential not only to achieve Europeanaspirations but also to promote better valuefor money for the national taxpayer.

The Key Concepts of Financial ControlThe last issue of PMF (Vol. V, No. 5, Sept/Oct1999) focused on the functioning of externalaudit institutions. This issue focuses on thestructures, organisations, procedures andmethods of financial control within the gov-ernment administration, or simply, internalfinancial control. It is essential to distinguishbetween these two related control functions.Still, a prerequisite for effective financial con-trol within the administration is the existenceof effective external audit, and it may in factbe argued that the opposite is equally true. Many of the key concepts in articles andbooks on financial control are not clearlydefined. In some cases, they may be welldefined and understood by accountants andauditors in one country, but are then usedwith very different meanings in other countries. In other cases, as in many of the candidate countries, generally recognisedconcepts to distinguish between, for example,control and audit do not exist. This createsconfusion and misunderstandings, and it hasmade the reform work in many countriesmore difficult and time-consuming than itwould have been had there been a commonunderstanding of the key concepts. We thinkit would be a good step forward if some “unification” of concepts could be achieved. In this context, the European Commission services involved in the process of EU enlarge-ment have an important role to play in defining the key concepts of financial control. Towards this end, we are pleased to publishin this issue of PMF an article by Robert deKoning of the Commission’s DG-AUDIT,explaining his service’s use of the concept“public internal financial control” in thecontext of EU enlargement (pages 4 and 5).

The Acquis Communautaire on Financial ControlThe acquis communautaire sets few obliga-tions for external audit but delineates manyspecific requirements for internal financialcontrol. These requirements address suchterms as sound financial management andcontrol, audit trails, internal control, internalaudit, paying and implementing agencies,accreditation, certification and internation-ally accepted auditing standards. Some ofthe key EU regulations on internal financialcontrol are described on page 8. In this issue, Kjell Larsson and JohannesStenbæk Madsen, of SIGMA’s Audit andFinancial Control unit, explain the conceptsunderlying the “Baseline on financial control”, which was developed by SIGMAwhen requested by the Commission to assessthe situation of internal financial control inthe candidate countries. In addition, SuzanneBrom and Hans van der Wielen of the DutchMinistry of Finance, share their experienceson the audit of EU funds in a Member Stateon pages 10 and 11.

European Models of InternalFinancial ControlThe way in which internal financial controlis practised varies considerably from oneEuropean country to another. Traditionallyspeaking, two broad approaches can be iden-tified among the EU Member States. Oneapproach, found in countries such as France,Portugal and Spain, is sometimes referred toas the “third party ex-ante approach”. Theother approach, found in countries such asthe Netherlands and the United Kingdom,emphasises the responsibility of the officialauthorising expenditure and that of the headof the line ministry, which could be referredto as a “management responsibility approach”. In Member States employing the “third partyex-ante approach”, the ministry of financenot only plays a key role in budgeting andallocating funds to line ministries, but also inintervening directly with an ex-ante controlby its own staff placed in the line ministries.In Member States using a “managementresponsibility approach”, each line ministrytakes full responsibility for spending its ownbudget and for ensuring appropriate checksand safeguards.

Specialised Internal Financial ControlOrganisationsEuropean models for specialised internalfinancial control organisations correspondto the two approaches referred to above. The

Portuguese model is similar to that of othercountries traditionally employing a “third partyex-ante approach”. Portugal has a centrallyplaced Inspectorate General for Finance(IGF), which reports directly to the Ministerof Finance and is responsible for ex-post finan-cial control of all public expenditure and revenue of the government administration.In addition to the IGF, line ministries havetheir own control organisations (InspectoratesGeneral). By contrast, and as an example ofthe “management responsibility approach”,the Internal Audit Service of the UnitedKingdom’s Ministry of Finance is not respon-sible for financial control of public expendi-ture and revenue as such, but rather forensuring that management/internal controlsystems in the line ministries, including theministries’ own specialised financial controlorganisations (Internal Audit units), ensureeffective financial control. Many central andeastern European countries have until nowhad no specialised internal financial controlorganisations as such, but some have a “con-trol office”, which inter alia investigates com-plaints against staff from the public. Manyof these control offices also investigate alle-gations of irregularities and fraud before turn-ing the cases over to the courts. Most centraland eastern European candidate countries aretransforming such functions into genuinefinancial control organisations. The followingpages feature three articles exemplifying thedifferent approaches to internal financial con-trol and specialised internal financial con-trol organisations. On page 9, Chris Butlerof the UK’s Treasury describes the evolutionof internal audit in the United Kingdom.On page12, Vitor Caldeira, Deputy InspectorGeneral of the Portuguese InspectorateGeneral for Finance, explains how theInspectorate General operates in that coun-try. Finally, on page 13, Paul van Sprundeland his colleagues of the Flemish section of theBelgian Interfederal Corps of the Inspecorateof Finance describe some of their experiencesin carrying out a fundamental reform of theirorganisation. As an example of the recent positive developments in EU candidate coun-tries, Dace Nulle of Latvia’s Ministry of Financereports on the background and context of anewly prepared regulation on internal auditand recent developments in the establishmentof a new internal audit system (page 14).

Technical Assistance in Preparing for AccessionAn essential part of all SIGMA projectson financial control and audit is the trans-

PROTECTING THE FINANCIAL INTEREST OF THE STATE

Vol. V - N°6 - November/December 1999 - 3 Σ

Continued from page 1 �



In this article, Robert de Koning ofthe European Commission’sFinancial Control DirectorateGeneral, abbreviated as DG-AUDIT, defines his service’sconcept of “public internalfinancial control” in the context ofEuropean enlargement. He alsopresents the various meanings ofthe term “financial control” asused by different Member Statesand the European Commission inorder to arrive at a general globaldefinition of its components.

The Context of EU Enlargement

Definitions and terminology are a matter of convention. They are the result of an agreement to

be as precise as possible about issues of common interest between institutions (andtheir individuals) trying to define certainconcepts of common activities. It is there-fore important to define the institutionsas well as their activities. But first of all we have to define the framework in whichthese institutions deal with public inter-nal financial control (PIFC) work.This framework would seem to be the issueof enlargement of the European Unionwith the new applicant countries, soprominent now in activities within andoutside the European Commission. Forour purpose we have to direct our focusto public administration reform and evenfurther to developing new (or improvingexisting) systems of public financial controlin the applicant countries. The aim of this activity is to achieve adequatelyfunctioning organisations that guaranteethe principles of economy, efficiency andefficacy in dealing with public funds. Bydoing so, we should take into account the strengths (but not the weaknesses) ofexisting financial control systems in theMember States and the EuropeanCommission, as well as the definitions

and recommendations of institutions thatexternally consider and assess such systems. We also should take into accountthe background of existing control systemsin applicant countries in as far as this sup-ports the principles mentioned above.From the outset, it should be noted thatthe European Commission could in noway impose a specific model of publicfinancial control on any sovereign state.EU Member States all have different models and no ideal model seems to exist;even the system used in the Commissionis not a “model” ; it is presently the subject of much discussion on how toreform it. However, the Commission iscalled to assess the existing control systemsin applicant countries and this is to bedone on a regular basis. These assessmentsform part of the advice given to theCouncil on the state of advancement ofpublic administration reform relating to the public internal financial controlfunction in the applicant countries. The

need for this task follows not only fromthe obligation to safeguard the proper useof Community funds, but, in a muchwider sense, is a logical result from thedesirability to preserve the benefitsobtained from transforming centrallyplanned to market oriented economies.Before we can start describing the princi-ples that provide the pillars for moderntheories of adequate public control func-tions, it is necessary to first agree on the terminology and scope of financial controlas used in the framework mentioned above. With so many actors in the field of advising applicant countries (to mentionbut a few: the EC, the European andnational Courts of Auditors, MemberStates, Phare consultants, SIGMA, etc.), itis no surprise that there exists some confusion about the proper terminologyused when describing the various functionsand limitations of “financial control”.

What is “Public Internal Financial Control”?Based on its experience in all of the applicantcountries, it has become common practicenow in DG- AUDIT to talk about “publicinternal financial control (PIFC) systems”:

Public Internal Financial Control (PIFC) in the Context of European Union Enlargementby Robert de Koning

4Σ - Public Management Forum

From the outset, it should benoted that the European

Commission could in no wayimpose a specific model of

public financial control on anysovereign state. EU Member

States all have different models and no ideal model

seems to exist; even thesystem used in the Commission

is not a “model” ; it ispresently the subject of much

discussion on how to reform it.However, the Commission iscalled to assess the existingcontrol systems in applicant

countries and this is to be doneon a regular basis.

Public, covering control activities in thepublic sector as opposed to controls andaudits in the private sector;

Internal, covering controls exercised bycentral and decentralised government agencies as opposed to external controlexercised by a body outside the government,e.g. the National Court of Auditors or theParliament;

Financial, to stress the financial (whether-administrative, managerial or budgetary)character of the activities to be checked;

Control, meaning all activities to overseethe entire field of financial management,enabling the government to be “in control”of its finances (therefore comprising all control tools like ex-ante control and ex-postaudits); and

Systems, covering institutions, staff, training,methodology, reporting, responsibilities,sanctions and penalties.

Various Understandings of the Term “Financial Control”Some clarifications need to be elaboratedhere. Within the European Union, theterm “financial control” is used in differentways. In certain Member States, “financialcontrol” refers to a concept of control, as anoverall system of organisations, controls,rules, procedures and regulations set up toprovide reasonable assurance of economic,efficient and effective use of financialmeans. This system includes the wholegamut of ex-ante controls, internal and exter-nal audits, systems audits, performance andinformation technology (IT) audits, etc.,and covers a variety of organisations andfunctions.In other Member States, the term “finan-cial control” is more restricted to a specificorganisation performing certain aspects of the overall control function, e.g. a centralised ex-ante financial control organi-sation, an inspectorate general, treasury orexternal audit service, or a specific proce-dure (ex-ante control or internal audits).It is evident from a point of view of advice,that the Commission will have to assess theentire "financial control" system in an appli-cant country rather than one specific control organisation or procedure. It is, however,interesting to see how the term of “financialcontrol” is developing; most prominentlythese days within the Commission. The specific “ex-ante financial control function by an independent centralised body”(as was and still is the case in the Commission)is presently under heavy scrutiny. The reasons are relatively straightforward. The sheer existence of a body called to giveso-called “ex-ante approvals” to managementdecisions involving financial consequencesseemed to take away financial responsibilityfrom the manager to the “financial controller”.At the same time the huge and increasingnumbers of financial transactions togetherwith static work forces in the financial controlorganisation did not seem to improve theawareness of financial responsibility at thatend, despite the much necessary introduc-tion of modern sampling and reporting tech-niques. It is therefore not amazing that the call for“financial re-responsibilisation” of programme

(project) management is becoming louderand that the accent is shifting away from ex-ante approvals (having an “antediluvian feel”as quoted by the Second Report on Reformof the Commission, Vol. II, Sept. 1999) bya centralised organisationtowards de-centralised ex-ante controls built intomanagement systems(albeit functionally inde-pendent from the man-agement itself ) andaudited by a centralisedand equally functionallyindependent internalaudit organisation.In the context of EUenlargement, it is there-fore useful to define “finan-cial control” as being theentire system of financialmanagement and control(whether centralised orde-centralised) estab-lished by an entity havingbudgetary responsibilities,involving ex-ante approval,through sampling andreporting techniques, aswell as ex-post internalaudit systems, includingthe need to constantly feedback findings and recommendations by both systems withthe aim to provide a management tool forassuring economy, efficiency and efficacy inthe use of its financial means.

Refining the Components of the Term “Financial Control”With the above in mind it is therefore possible to make the following refinementsin the terminology of the various aspects of“financial control”:Public internal financial control refers tothe government's internal control systemsaimed at protecting the financial interestsof the government at large, while externalcontrol refers to financial control activitiesby external bodies (supreme audit institu-tion and the parliament, exercising demo-cratic control functions) whose task it is toscrutinise and assess the financial controlsystems of the government.

Third party ex-ante approval is the proce-dure whereby a functionally independentfinancial control organisation (whether cen-tralised or decentralised) checks and approvesmanagement decisions with financial reper-

cussions before such deci-sions can be taken. Thisprocedure provides forthe possibility of refusalby the controller, whichcan, however, be over-ruled under certain strictconditions (“passer-outre”procedure). It is impor-tant to check with theTreasury function of theMinistry of Financewhether certain functionsof the ex-ante approvalsystem are not alreadyautomatically taken intoaccount (e.g. checking theavailability of funds beforeapproving a contract orof committed fundsbefore making disburse-ments).Internal audit is the totalsphere of activities of ex-post verification by anorganisation (located

within the organisation to be audited butindependent of the management functionsof that organisation) of whether manage-ment and control systems comply withbudget specifications, objectives, rules andstandards and more generally to the princi-ples of sound financial management. Theseinternal audits include compliance and sub-stantive tests, systems audits, performanceaudits, information technology audits andany other kind of ex-post verification that theindependent internal organisation deems fitto ensure the compliance of managementwith financial rules and regulations. Animportant aspect is the establishment of anadequate feedback mechanism of the inter-nal audit findings and recommendations intothese rules and regulations. ■

Robert de Koning is Principal Administrator, DG-AUDIT,European Commission. He may be contacted at e-mail:[email protected].


Public internal financialcontrol refers to the

government's internalcontrol systems aimed atprotecting the financial

interests of thegovernment at large, whileexternal control refers tofinancial control activities

by external bodies(supreme audit institution

and the parliament,exercising democratic

control functions) whosetask it is to scrutinise and

assess the financial controlsystems of the government.


ciples and functioning of financial controlis a prerequisite for an appropriate financialcontrol system. This includes the consti-tution, laws or regulations on ministerialcompetencies, civil service, budgeting,accounting, external audit, internal con-trol/ audit. The EU specifically requiresthat countries receiving funds provide theCommission with relevant legal referencesand a list of the authorities and bodiesdesignated to manage and control EUfunds. In regards to the control itself, itis important that there is a legal base foran internal audit/control mechanism withthe mandate to audit all relevant funds,whether this is in the form of anInspectorate General of Finance (IGF)with overall responsibilities for financialcontrol, or an Internal Audit (IA) bodyresponsible for the audit of a ministry. As a point of departure, provisions regu-lating financial control should be passedand approved at an appropriate constitu-tional level, preferably as laws or regulationspassed by parliament. This will of coursedepend on the character of the provisions inquestions. Generally speaking a law carriesmore weight than a government decree.

2. Relevant management/internal controlsystems and procedures must be in place.

The existing system should be definedand have well-established and function-ing accounting and reporting standards,e.g. in a government Policy Paper onfinancial control describing weaknessesand recommendations for improvements.An accounting system, preferably com-puterised, should be in place. It shouldalso be considered here whether EU fundswill be channelled through a central treas-ury function, classified under the budgetclassification system and accounted for inthe budget accounting system, or, if not,how the treasury function will be oper-ated. In addition, a sufficient audit trail,by which the movement of data can betraced forwards and backwards in theaccounting system, should be defined anddescribed. This will enable auditors andmanagers to cross-refer each bookkeep-ing entry to its source and thus facilitatechecking accuracy or validity of claimsand payments. This is of particular impor-tance when it comes to the handling ofEU funds. Specific guidelines for thedevelopment of audit trails for EU fundsmanagement, are described in Regulation2064/97.

To meet requirements for financial controlof EU funds, an ex-ante control mecha-nism for the approval of commitmentsand payments needs to be in place. Ex-antecontrols are an explicit requirement whenit comes to the control of funds under the Common Agricultural Policy (CAP),where paying agencies must offer guaran-tees that the admissibility of claims andcompliance with Community rules arechecked before payment is authorised. ForStructural and Pre-accession funds, theex-ante control requirement followsimplicitly from the requirement for pre-vention and correction of irregularities,as mentioned in several Council regula-tions. In addition, a system for ensuringthat public procurement transactions are


Baseline for Financial Control in EU Candidate by Kjell Larsson and Johannes Stenbæk Madsen

The EU Jurisprudence on Financial Control

The Treaty of the EuropeanCommunities does not specify anypredetermined model of financial

control to be applied by Member States, butit establishes general obligations. It sets outthe responsibilities of the EuropeanCommission and establishes provisions forbudget and financial management and forthe European Court of Auditors (ECA). Inparticular, Article 280 of the Treaty providesfor the fight against fraud. Many otherdetailed requirements are set out in otherregulations and directives on how theprocesses of management and control of EUfunds and resources should be designed andfunction. Some of the regulations consid-ered in the baseline are listed on page 8.

The Four Baseline CriteriaSIGMA’s baseline identifies four basic criteria for (internal) financial control:• A coherent and comprehensive statu-

tory base defining the systems, princi-ples and functioning of financial control(management/internal control) systems,including mechanisms for internalaudit/inspectorates.

• Relevant management/internal controlsystems and procedures.

• A functionally independent internalaudit/inspectorate mechanism with relevant remit and scope.

• Systems to prevent and take action againstirregularities and to recover any amountslost as a result of irregularity or negligence.

Below, the criteria of the baselines are elaborated:1. A coherent and comprehensive statutorybase defining the systems, principles and func-tioning of financial control (management/inter-nal control) systems, including mechanisms forinternal audit/inspectorates, must be in place.A coherent and comprehensive set of lawsand regulations defining the systems, prin-

In the spring of 1999, the European Commission asked SIGMA to produce “baselines” or minimum institutionalrequirements for key areas of public management, including (internal) financial control. Prepared in co-operation with Commission services, these baselines were then used as yardsticks for assessingthe institutional situation in the ten central and eastern European candidate countries. SIGMA deliveredassessments in June 1999, and updates in September 1999. This article addresses formal EU requirements andgood European practices that are contained in the baseline on financial control.

The following systems and procedures are seenas the most basic:• Accounting and reporting standards/regulations.• Accounting systems.• A defined audit trail (showing the flow of funds

from the national budget/the EU and the rolesand responsibilities of the different nationalentities involved; this should include NationalFunds and Paying Agencies).

• Ex-ante controls of commitments and payments.• Procurement control (following Baseline on

Public Procurement Management Systems). • Control of state revenues (including future own

resources - customs, levies, Value Added Tax -VAT, Gross National Product - GNP).

carried out according to the national law –which should be based on EC Directives –and are also subject to financial controlarrangements that apply in other areas ofpublic expenditure needs to be put in place. Finally, for the proper handling of EU ownresources, competent national authoritiesmust perform checks in accordance withspecific provisions in the relevant parts ofthe EU jurisprudence (see page 8).

3. A functionally independent internalaudit/inspectorate mechanism with relevantremit and scope has to be in place.

To provide for an independent profes-sional control of public spending, anIGF/IA that functions independently of the authorising and implementing functions should be in place. The inde-pendence of the IA body is an explicitrequirement for the control of EU funds,when it comes to internal audit bodies of paying and implementing agencies. It is also a formal requirement for the bodyeventually designated to prepare a finalcertification of expenditure of EU pro-grammes (the certifying body) (for fur-ther details see page 8). For the internalaudit function of paying and implement-ing agencies as well as for the certifyingbody, the independence and the mandateto audit all relevant funds must beensured, both legally and in practicalterms. In the case that the internal audit func-tion is not performed by an IGF inde-pendent of the organisation being audited,one way of ensuring appropriate (func-tional) independence is to position the IAunit on a superior level in the organisa-tional hierarchy, reporting to e.g. the highest ranking civil servant of a ministryor the minister.

With regard to audit mandate, the IGF/IAmust have the possibility to assess thesoundness of the financial managementand control system as such. This is a specificrequirement for the control of EU funds.This normally implies that the IGF/IAhas the legal right and practical ability to assess the economy, efficiency and effectiveness of the financial managementsystem as such. Doing this, the IGF/IAmust apply internationally accepted orrecognised auditing standards, including performance audit standards. The require-ment to apply internationally acceptedauditing standards is specifically mentionedin the EU jurisprudence. Furthermore,specific EU requirements for the appliedaudit methodology, imply that the IGF/IAmust have the technology and compen-tence to perform and document appro-priate audit sampling and risk analysis.

Finally, a central body should be respon-sible for the co-ordination and the super-vision of the applied standards andmethodologies in the government admin-istration. This could for example be theMinistry of Finance.

4. Systems must be in place to prevent and take action against irregularities and to recover any amounts lost as a result ofirregularity or negligence.

In order for the financial control system tohave a preventive effect, mechanisms needto be in place to take action against irreg-ularities and to recover amounts lost as aresult of irregularities or negligence. Thisis a specific EU requirement. Also, a system to report on irregularities detectedas well as ongoing follow-up actions has

to be in place. Finally, an authority respon-sible for the co-ordination and co-operationof the fight against fraud and corruptionshould be designated. This could be a sepa-rate fraud fighting body or a financial control body in the government adminis-tration. The national authority should co-operate with the European Anti-FraudOffice (OLAF).

Using the BaselineAssessing the institutional situation in thecentral and eastern European candidatecountries against the baseline criteria provided SIGMA and the EuropeanCommission with valuable comparativeinformation. This has now been made available to the countries, e.g. via theCommission’s Regular Reports of October1999 on progress made by the candidatecountries in applying the acquis commu-nautaire. The information and the conclusions drawn in the SIGMA reportsalso serve as a strategic starting point forSIGMA’s own planning and program-ming of projects with the candidate countries. ■

Kjell Larsson heads SIGMA’s Audit and Financial Controlunit, in which Johannes Stenbæk Madsen serves asAdministrator. They can be reached in Paris at tel:(33.1) 45.24.83.68; fax: (33.1) 45.24.13.00; e-mail: [email protected].



Countries

This could have the form of one or several organisational entities, but should meet the following criteria:• Be functionally independent.• Have an adequate audit mandate

(in terms of scope and types of audit).• Use internationally recognised auditing

standards.Systems for the appropriate co-ordination andsupervision of the applied audit standards andmethodologies should also be established.

The criteria for assessment in this area are:• The extent to which existing systems are

preventive.• Actions must be taken.• Existing laws/regulations should make it

possible to recover amounts lost followingirregularities or negligence (as defined by regulation No. 2988/95).

It should also be considered whether appropriatestructures for fighting fraud and corruption existor whether this is handled via the normal insti-tutions of financial control or by a separateentity(ies).


Management and Control of EU Expenditure

■ Commission Regulation No. 1663/95: Containsdetailed guidelines for accrediting Paying Agencies(regarding accounts of the Guarantee Section of theEuropean Agricultural Guidance and Guarantee Fund- EAGGF (under the CAP)) (Annex). The regulationrefers to the implementation of Council Regulation729/70, which is repealed by 1258/1999. New imple-menting regulation can be expected.

■ Commission Regulation No. 2064/97: Specifies thecriteria for management and control systems andestablishment of audit trail for the handling ofStructural Funds (Annex). The regulation refers to theimplementation of Council Regulation 4253/88, whichis repealed by 1260/1999. New implementing regu-lation can be expected.

■ Council Regulation No. 1258/1999: Specifies basicrequirements for the establishment of Paying Agenciesfor Common Agricultural Policy (CAP) funds and general provisions for management of the CAP, including the requirement for Member States to provide a certification of EU accounts.

■ Council Regulation No. 1260/1999: Contains generalprovisions on the management of Structural Funds,including general requirements for financial control(Art. 38).

■ Council Regulation No. 1266/1999: Specifies basicrequirements for the management and control of allPre-accession instruments (Instruments for StructuralPolicies for Pre-Accession, SAPARD - Special AccessionProgramme for Agriculture and Rural Development,and Phare funds)(Annex).

■ Council Regulation No. 1267/1999: Specifies the basicrequirements for managing and controlling ISPA fundsand outlines the key aspects of Sound FinancialManagement and Control (Annex III).

Management and Control of EU Own Resources

■ Council Decision No. 88/376: Describes the systemof the Communities’ own resources (implementedby 1552/89).

■ Council Regulation No. 1552/89: Implements Decision88/376 on the system of the Communities’ ownresources.

■ Commission Regulation No. 386/90: Describes rulesfor unannounced physical checks, substitution checks,scrutiny of payments applications and co-ordination ofcontrols of agricultural products (customs).

■ Commission Regulation No. 3122/94: Describes riskanalysis criteria for selecting export declarations (customs).

■ Commission Regulation No. 2221/95: Describesrequirements for sampling for laboratory analysis,sound and fair marketable product quality (customs).

Regulations Concerning Institutionsfor Prevention and Recovering Lost Amounts

■ Council Regulation No. 595/91: Sets out reportingand recovery procedures to be followed in case ofirregularities and wrongly paid amounts in connec-tion with the financing of the CAP. The regulationrefers to the implementation of Council Regulation729/70, repealed by 1258/1999.

■ Council Regulation No. 1681/94: Sets out reporting andrecovery procedures to be followed in case of irregu-larities and wrongly paid amounts in connection with thefinancing of the structural policies. The regulation refersto Council Regulation 4253/88, repealed by 1260/1999.

■ Council Regulation No. 2988/95: General provisionson the protection of the European Communities finan-cial interests.

■ Council Regulation No. 2185/96: Regarding on-the-spotchecks and inspections carried out by the Commissionin order to protect against fraud and other irregularities.

■ Regulation (EC) No 1073/1999 of the EuropeanParliament and the Council: Concerns investigationsconducted by the European Anti-Fraud Office (OLAF)with standard co-operation agreement (Annex).

■ Council regulation No 1074/1999: Concerning inves-tigations conducted by the European Anti-Fraud Office(OLAF).

Basic EC Legislation on Financial Control

subject to firm multi-year limits. The Treasuryapproves these spending plans before pre-senting them to Parliament for approval.The UK’s public expenditure costs ofEuropean Community membership areall fully accounted for in Governmentplans. The Government thus ensures thattaxpayers and Parliament are informed ofthe use of Community funds, and controlsand audits these funds with the same careas it controls its own expenditure.The Treasury appoints an accounting officerfor each parliamentary vote, to managethe expenditure, ensure that money is usedfor the specific purpose intended byParliament, and account for it at the endof the financial year. Normally the account-ing officer is the most senior full-time official (e.g. the Permanent Secretary) ofthe department (the ministry). As part oftheir financial management duties, account-ing officers are responsible for obtainingprior approval from the Treasury for all expenditure. Regular spending does not need specific authorisation, but newspending, not covered by the approvedspending plans, requires Treasury approval.

Parliament and the AuditorsAuditors have a key role to play in accountingfor spending. The Comptroller and AuditorGeneral, the head of the National AuditOffice (NAO), is an officer of Parliamentand by virtue of his statutory position enjoysa high degree of independence. NAO staffaudit the accounts of departments (certifi-cation or attestation audit), and may alsoconduct value-for-money (VFM) examina-tions of economy, efficiency and effectivenessin the use of resources. These latter exami-nations may lead to a report to the PublicAccounts Committee of the Parliament.The Committee, when alerted by the Audit Office of a critical VFM report or aqualified audit report, cross-examines therelevant accounting officer. The hearings arepublished, and sometimes televised, addingto the discomfort of the accounting officer.In order to achieve good financial manage-ment, and hopefully reduce the likelihoodof an adverse hearing in the Public AccountsCommittee, the accounting officer isrequired by Treasury’s manual Government



Under the British system,department accounting officers inthe central administration areresponsible for obtaining priorapproval from the Treasury for allexpenditure. The National AuditOffice helps to account for spendingby auditing the accounts ofdepartments, and conducting value-for-money audits (VFM orperformance audits) orexaminations of economy, efficiencyand effectiveness in the use ofresources. The following articleaddresses these and other aspectsof the UK approach to ensuringsound financial management.

The United Kingdom maintains adecentralised system of controllinggovernment expenditure. The

Treasury, as Finance Ministry, plays severalkey roles within this system and has recentlyestablished a new regime for public expen-diture. Spending plans by departments(ministries) are divided into 1) “depart-mental expenditure limits,” which are fixedfor three years, and 2) “annually managedexpenditure,” which cannot reasonably be

by Chris Butler

The UK’s public expenditurecosts of European Community

membership are all fullyaccounted for in Governmentplans. The Government thusensures that taxpayers and

Parliament are informed of theuse of Community funds, and

controls and audits these fundswith the same care as it

controls its own expenditure.

Ensuring Good Financial Management in the United Kingdom

Accounting to have an internal audit serv-ice. The Treasury sets the standards andpractices in the Government Internal AuditManual which internal auditors must follow.

Internal Audit Gives AssuranceAll aspects of control, which concern theaccounting officer, the Treasury and Parlia-ment are covered by internal audit whichappraises the current controls over the:• Effectiveness of operations.• Economical and efficient use of resources.• Compliance with applicable policies, pro-cedures, laws and regulations.• Safeguarding of assets and interests fromlosses of all kinds, including those arisingfrom fraud, irregularity or corruption.• Integrity and reliability of information,accounts and data.Internal audit assures the accounting officeron all these aspects. The results of individualaudits are reported, and each year a summaryreport is issued with an audit opinion onthe adequacy and effectiveness of the inter-nal control system.A new requirement obliges accounting officers to state each year that internal finan-cial control has been reviewed within theirorganisation. This signed statement furtheremphasises the accountability of accountingofficers and underlines the role internalaudit plays in supporting them. In somecases, the accounting officer may be calledbefore the Public Accounts Committee ofParliament to account for the way in whichthe department’s resources have beenemployed in discharging its functions. After many years of development, internalauditors in central government are ready torespond to these growing demands. Britishexperience shows that the keys to makinginternal audit effective are to establish inter-nal audit standards and to encourage pro-fessional training in internal audit. TheTreasury’s Audit Policy and Advice teammaintains the standards and continues toencourage innovation and development ofbest practice. ■

Chris Butler is Head of Audit Policy and Advice, HM Treasury.He can be reached in London at e-mail: [email protected].

Governement offices viewed from Great George Street; Big Ben in background, London.

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EU Member States are obliged toimplement the Union budget andto assure its sound financialmanagement. In the Netherlands,audit departments in ministries ofthe central government help tofulfil tasks related to thisresponsibility by carrying outevaluative, ex-post audits.

An important feature of the EU systemof management and control is thatthe European Commission (EC)

is ultimately responsible for the proper useof EU funds. However, the principle ofsubsidiarity is increasingly being appliedto the actual implementation of EU policy.Subsidiarity implies that both the EuropeanCommission and the Member States have an

“own responsibility” for legal and regularimplementation of the EU budget andfor sound financial management. Theinvolvement of national authorities andbodies should be as wide as possible.

In many European countries and withinthe European Commission, the system ofcontrol is largely determined by the segre-gation between the duties of authorisingofficer, financial controller and accountingofficer. In that system, the financial controllerissues ex-ante approvals for all revenue andexpenditure. Such approval allows theauthorising officer to establish a commit-ment or entitlement. The system is differentin the Netherlands and Anglo-Saxon-oriented countries, where ex-ante controls(operational in character) are incorporatedinto the budget implementation process,and ex-post audits (evaluative in character)are carried out by the ministry audit

departments. This article addresses theaudit activities of these ministry auditdepartments.

Agricultural Guarantee ExpenditureAgricultural Guarantee expenditure en-compasses subsidies for farmers, especiallycontributions per hectare and per animal.In the Netherlands, the Member Stateresponsibility for Agricultural Guaranteeexpenditure lies with the Minister ofAgriculture. Advance payments are paid bythe European Commission to the Ministryof Agriculture. The daily management lieswith the paying agencies. In the period1998-1999, the Ministry of Agriculturedecided to reduce the number of payingagencies, in conformity with the wish of theEC to keep the number of paying agenciesas low as possible. Now, six paying agen-cies remain. Most of them are so-calledCommodity Boards (e.g. the Commodity

Financial Control and Audit of EU Funds in the Netherlandsby Suzanne Brom and Hans van der Wielen


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Board for Arable Products and the Com-modity Board for Dairy Products). TheseCommodity Boards are public bodies, andtheir legal status is laid down in the Law onPublic Business Organisation.

Physical on-the-spot checks and scrutinyof the commercial documents are mainlycarried out by the General InspectionService of the Ministry of Agriculture andby the Customs Service of the Ministry ofFinance. These two services consult witheach other on a regular basis to guaranteegood co-ordination of their verificationwork.

The paying agencies are designated by the Budget Directorate of the Ministry ofAgriculture. The EU criteria for accreditationrequire that the paying agencies providesufficient assurance concerning the properfunctioning of their administrative organi-sation and systems of internal control.

EU regulations also stipulate that withinthe Member State a department or bodythat is operationally independent of thepaying agencies must issue a certificateregarding the annual accounts of the payingagencies (attestation procedure). In theNetherlands, the Audit Department of theMinistry of Agriculture has been designatedas this certifying body. It must perform afinancial audit, resulting in a report statingwhether there is reasonable assurance thatthe accounts to be transmitted to theEuropean Commission are true, completeand accurate, and that the internal controlprocedures have operated satisfactorily.The certifying body has to conduct itsexamination according to internationallyaccepted auditing standards.

Structural Funds ExpenditureStructural Funds are deployed for activitiesand measures aimed at, for example, regionswhose development is lagging behind orare seriously affected by industrial decline,for combating unemployment, and for pro-moting rural development. EU operationsmust contribute to corresponding nationaloperations; this therefore implies MemberState co-financing.

Responsibility for Structural Funds at the supranational level in the Netherlandslies with the Minister for Economic Affairs(Regional Development Fund), the Ministerfor Social Affairs (Social Fund) and theMinister of Agriculture (Agricultural Guid-ance Fund). However, implementation ofoperations funded by the Structural Fundsis largely decentralised in the Netherlands.For the most part, money goes directly fromthe EC to regional, local or other authorities(often provinces). Accounting for StructuralFunds expenditure to the EC normallytakes place at the level of individual projectsor at the level of the responsible provinces.

The final beneficiaries under a StructuralFunds project are obliged to present theprovincial authorities with an audit certifi-cate regarding the final expenditure statement. Relying on these certificates, theexternal auditor of the province will subsequently perform his audit. In turn, theaudit department of the relevant ministrycarries out a regular assessment of the designand operating effectiveness of the manage-ment and control systems in order to assurethat the requirements set have been met. Inthis manner, the audit department reviewsthe work of the external auditors of theprovinces or the other designated authorities.

Such a review should assess whether thechecks and balances within the nationalmanagement and control systems on all lev-els provide sufficient conditions for legaland regular expenditure and in which areasthe main risks appear. In this respect, the audit department takes a system-orientedapproach to assessing task formulation,working standards and planning, implemen-tation and results of the audits performed.

If the ministry audit department, as a resultof its review, concludes that there are essen-tial shortcomings in the management andcontrol systems, it may be necessary toperform on-the-spot checks. In most cases,however, the ministry audit departmentwill demand that more substantive andcompliance tests (including on-the-spotchecks) are performed by the regionalauditor at the level of the designated

authority. The ministry audit departmentitself only performs on-the-spot checkson an exceptional basis.

In 1996, regarding the financial control ofStructural Funds, each of the three auditdepartments involved signed a protocol ofco-operation with the European Commission.These protocols state that the EuropeanCommission and the ministry audit depart-ments conduct their audits in line with acommon audit methodology statement.National inspections carried out on this basishave the same evidential value and enjoythe same status as inspections conducted bythe Commission’s Financial Controller. Toensure optimum coverage and to avoidduplication and overlap, the ministry auditdepartments and the Commission’s FinancialController consult each other twice a year ontheir working programmes.

Co-operation Among Audit BodiesThe Dutch Court of Audit (AlgemeneRekenkamer) makes extensive use of thefinancial audits carried out by the ministryaudit departments. The audits of both theDutch Court and the ministry audit depart-ments are system-based and analytical. Incontrast, audits carried out by the EuropeanCourt of Auditors are more data-orientedand substantive.

On behalf of the country’s Parliament, theDutch Court assesses the central govern-ment’s financial management of bothnational and EU funds. Over the past fewyears, EU activities have acquired a promi-nent place in the Court’s audit programme.The Dutch Court consults regularly withthe ECA, as well as with other national courtsof audit. When the European Court ofAuditors conducts audits in the Netherlands,the Dutch Court assists and accompaniesthe ECA representatives. In addition, thetwo audit bodies occasionally carry outjoint audits. ■

Suzanne Brom and Hans van der Wielen are auditors in theGovernment Audit Policy Directorate of the Dutch FinanceMinistry’s Directorate-General of the Budget. They can be reachedin The Hague at tel: (31.70) 342.73.62; fax: (31.70) 342.79.87;e-mail: [email protected]. For information on co-operationactivities between the Dutch Court of Audit and SIGMA, seePMF Vol. V, No. 5, Sept/Oct 1999, page 12.


FORUM FOCUS

In this article, the Deputy InspectorGeneral of the PortugueseInspectorate General of Financebriefly describes the system offinancial control. The Portuguesesystem is a modernised version ofan Inspectorate General of Financemodel, with emphasis on ex-postcontrols and co-ordination ofcontrols by a centrally placedgovernment body.

External Versus Internal Control

Portugal’s system of financial controlis based on a model that distinguishesbetween different types and levels of

control, including a clear separation betweenexternal and internal control functions. TheParliament exercises external control at thepolitical level, while the Court of Audit, in itscapacity as an independent, sovereign court,does so at the judicial level. In its capacity as the country’s supreme audit institution,the Court of Audit is at the same timeresponsible for performing the external auditfunction.

Internal control is carried out by bodies whichdetermine their own working methods,including the inspectorates general in eachministry and by other audit bodies whichare assigned internal control tasks. Thesetasks include the verification, follow-up,evaluation and provision of informationconcerning legality, regularity and goodmanagement of activities, programmes,projects, and operations carried out by public or private entities. Private entitieswhich receive national, EU or other publicfunds are subject to internal control.

Taking into account the portuguese control experience of the EU structural funds, a co-ordinated system for the internal control of the state financial administration was put inplace in 1998. This system covers budgetary,economic and financial domains as well as other assets, and aims to ensure clear,coherent control.

The system must guarantee that:• all areas are controlled; • none are subject to double examination;• each level of control respects its area of

competence; and • that common and accepted audit metho-

dology is used.

The Internal Control SystemThe organisation of internal control inPortugal is divided into three levels:1) micro level management2) sectoral control3) high level or horizontal control.

At the horizontal or high level of internalcontrol, there are three bodies: the Inspec-torate General of Finance, which is the control institution responsible for the overallfinancial control of all public revenue andexpenditure, the General Budget Directorate,responsible for the horizontal control of theimplementation of the state budget and theFinancial Management Institute of SocialSecurity, responsible for the social securitybudget horizontal control.

At the sectoral level of internal control,there is a network of audit bodies. Theseinclude those entities charged with organic,functional, or even regional internal control tasks, such as Inspectorates (forexample, the General Health Inspectorateor Regional Finance Inspectorates ofMadeira or Açores). Sectoral control con-centrates on assessing the soundness ofthe organisation, reliability, and activityof internal control at the micro level.

At this first (micro) level of the system,control occurs in operational units imple-menting management activities of publicfunds. The audit sections of these unitsperform the controls. The verification andfollow up of the management activitiesand decisions is the main task of theseinternal audit functions, which are fun-damental inputs to the work of the higherlevels of control.

The Inspectorate General of FinanceThe Inspectorate General of Finance enjoysa key position in the system. It reports

directly to the Minister of Finance and itfunctions, among other things, as thenational liaison body with the EuropeanCommission in the field of financial control.

It carries out three types of ex-post controls:

1) Financial control or audit. The objectiveis to give an opinion on the financial andaccounting systems and the procedures ofinternal control of entities under public law, such as public enterprises, and payingagencies for EU Agricultural Funds.

2) Control of legal conformity and financialregularity. The goal is to provide an assess-ment of legal and administrative conformity,regularity of administration and systems offinancing and financial management.

3) Financial management control or “per-formance audit”. This is an examinationof the extent to which public organisationsor agencies have used financial, human andother resources in an economic, effectiveand efficient manner in the implementationof their objectives.

The second and third forms of control arecarried out in a co-ordinated fashion acrossthe state financial administration.

With this system, Portugal has succeededin meeting the basic EU requirements onfinancial control and in introducing a moreefficient audit and financial control systemthat has improved the value-added of controlsof state budget funds. ■

Vitor Caldeira is Deputy Inspector General of Portugal’sInspecção-Geral de Finanças. He may be contacted in Lisbonat e-mail: [email protected]. Starting on 1 March2000, Mr. Caldeira will be Member of the European Courtof Auditors, Luxembourg, fax: (352) 43.98.46813.

Portugal’s Financial Control System

by Vitor Caldeira


Until recently, the Flemishfinancial and budgetary controlmodel, like that of Belgium,rested exclusively on thetraditional concept ofaccountability, that is primarilybased on ensuring regularity andpropriety in the use of the publicfinances. Initiatives to adoptmethods of public managementinspired by Anglo-Saxon andScandinavian practices have metwith mixed results.

The Government and the Minister ofthe Budget, assisted by the Inspec-torate of Finance, exert a central

control function with the aim of checking:• Legality (interpretation and application

of regulations for individual cases).• Regularity (compliance with a prescribed

procedural checklist, correctness).• Budgetary compliance (respecting the

expenditure limits per item as voted byParliament in the annual budget law).

• Economy of any policy proposal with afinancial consequence.

This budgetary control model is highlycentralised within a hierarchical organi-sation. The model exerts a priori (ex-ante)or preventive line-item control based oncompliance with regulations, proceduresand formal budget laws. It consists offinancial evaluation in the strictest sense,and has no systematic links between theevaluation of policy execution and budgetallocation decisions.

Developments in Policy MakingSince the early 1990s, the Governmentof Flanders has begun to adopt methodsof public management inspired by Anglo-Saxon and Scandinavian practices in whicheffectiveness and efficiency, alongsideeconomy, play a prominent role. Initiativeshave been taken to introduce performance

analysis; move towards performance budgeting; introduce an economic or costaccounting system; enlarge the autonomyof agencies; promote public and privatepartnerships; and outsource certain aspectsof policy execution.A central trait of these developments is achange in systems of accountability towardsgreater emphasis on performance measure-ment rather than line-item controls. Thesedevelopments greatly affect the position ofthe central controller in the budget processduring the stages of budget preparationand budget execution. While it has becomeless important for organisations to respecta strictly fixed line-item budget, they noware expected to achieve, to the best of theirability, an agreed level of performance.

New Initiatives to Strengthen ControlSteps have been taken to introduce per-formance analysis within the Flandersadministration on a global basis. Yet therehas been reluctance in some parts of theorganisation to adopt this new manage-ment technique. The same problems arosewith regard to output-budgeting. Althoughthere have been experiments with output-budgeting, the annual budget is still madeup on the basis of incrementalism andinput-budgeting, causing discouragementamong those services that have tried hardto create an output-budget.Another initiative is the introduction of thebudgetary implementation plan. Based onthe budget voted by Parliament, this plan isprepared by individual departments (ministries) and contains a detailed budget execution programme. The budgetary imple-mentation plan is intended to facilitate expen-diture management by assigning greaterresponsibility to the administrators concerned.However, due to reservations at the politicallevel this practice has not been widely adopted.Another initiative is the release of a circularprescribing that proposals presented to theInspectorate of Finance within the scope ofan a priori evaluation must comply withthe techniques and methodology of per-formance analysis. Also, beginning with the

1999 Budget, departments are obliged to drawup the explanatory note accompanying thebudget according to performance analysisprinciples. This obligation influences the waypublic officials look at performance analysis,and helps them to identify ways to introducethis methodology into their daily work.Recent experience has revealed that thefollowing problems are hindering the adop-tion of new practices in public management: • New public policy-making ideas are not

rooted deeply enough in the administration.• Interests at the political level and the

administrative level conflict. The politicallevel is mostly interested in efficiency,since responsibility for this lies with theadministrative management. The admin-istrative level, on the other hand, is espe-cially interested in the effectiveness ofthe policy for which the responsibilitylies at the political level.

• There still is no adequate instrument tomeasure effectiveness and efficiency.

These problems put the financial controlmodel in an ambiguous situation. In themeantime, those responsible for carryingout financial control are working to buildthe necessary bridges between today’s relianceon line-item control and the adoption ofmodern management and policy-makingtechniques giving more autonomy to administrators. ■The authors work for the Flemish section of the BelgianInterfederal Corps of the Inspectorate of Finance and can be reached in Brussels through Paul van Sprundel at tel:(32.2) 553.26.65; fax: (32.2) 553.26.95; e-mail:[email protected].



New Public Management TechniquesChallenge the Flemish Model of Budgetary and Financial Controlby Paul van Sprundel, Georges Stienlet and Albert Vanhoof

■ Input budgeting: budgeting based on thecosts of the input (staff, operational means)available without any link to performancesthat have to be delivered, effects or targetsthat have to be obtained.■ Output budgeting: budgeting based onthe costs of the output or performances thathave to be delivered to achieve effects andtargets government has defined.■ Principle of incrementalism: the quasi-automatic and mechanical calculation of theincrease of the budget whereby only the inputside is taken into account.

The European Commission's 1998Regular Report on ProgressTowards Accession identified anumber of shortcomings inLatvia's system of internal auditand financial control. Indeed, theinternal “revision” departments inplace at that time were weak –lacking personnel, soundmethodologies and capacities forco-ordination. Recognising theneed to strengthen financialcontrol, in February 1999 theGovernment charged the Ministryof Finance with the task of co-ordinating the establishmentand implementation of an internalaudit system in Latvia. This articlesummarises progress to date.

The establishment of a new systemof financial control in Latvia calledfor a series of policy discussions on

the scope of internal audit. This culminatedin the presentation of a policy paper to theCabinet of Ministers on 23 March 1999setting out the conceptual framework for

the development of a new, comprehensiveinternal audit system.

Following the adoption of the internalaudit concept in April 1999, the Ministryof Finance began to prepare a new regu-lation on internal audit. This proved to bea very time consumingprocess. Support forthe new regulation wasslow in coming. Someministries interpretedthe move as an infrin-gement on their inde-pendence.Others raised concernsabout the Ministry ofFinance’s co-ordinatingrole, voicing fears that,as a result, its scopemight be restricted toaudits of accounts alone. The Ministry ofFinance worked witheach ministry, at the State Secretary andexpert levels, to promotea common view of inter-nal audit as a manage-ment tool benefitingeach institution. TheMinistry of Financeendeavoured to limit itsco-ordination role tothe facilitation of knowledge and skill-sharing and to improving the capacity foraudit.

In June and July 1999, the Ministry ofFinance undertook a series of bilateral meetings with each ministry in order toassess their needs for extra resources in establishing strong internal audit units.This task was rendered even more difficult due to the fact that audit systemshave not yet been identified in ministriesand by the absence of risk assessments.

The agreement reached between the lineministries and the Ministry of Finance pro-vides additional resources to five ministriesin setting up their internal audit system. It also provides for the evaluation in all

ministers of additional needs for resourcesin mid-2000, once risk assessments, as wellas strategic and annual plans are in place.

Regulation on Internal AuditThe Cabinet approved the Regulation onInternal Audit on 5 October 1999. It

requires the introduc-tion of internal audit inall ministries, definesthe scope of internalaudit work and sets outthe principles for inter-nal audit (such as inde-pendence). The regula-tion also covers suchissues as the audit ofCommunity funds,annual statements ofassurance and report-ing of internal audit work, as well as the co-ordination of internalaudit within the publicadministration.

Under the new regula-tion, each ministry willset up internal auditunits that are function-ally independent of theministry. The head ofeach internal audit unitwill report to the state

secretary of the ministry. All subordinateand supervised institutions, as well as EUfunded projects, will be subject to internalaudit. Determining whether such institu-tions or projects are to carry out internalaudit directly or be subject to their respec-tive ministry’s internal audit unit, will bethe responsibility of the state secretary.

Strengthening the Decentralised System Latvia has embarked upon the process ofestablishing a decentralised internal auditsystem that will fulfil internal audit functionsfor all government and EU funded activitiesand significantly improve overall financialcontrol. The system builds on the strengthsof existing internal “revision” units while introducing new methodologies and key

Latvia Establishes a New Internal Audit System



Dace Nulle

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by Dace Nulle

Latvia has embarked uponthe process of establishing

a decentralised internalaudit system that will fulfilinternal audit functions for

all government and EUfunded activities and

significantly improve overallfinancial control. The system

builds on the strengths ofexisting internal revision

units while introducing newmethodologies and keystructures to ensure that

national and EU resourcesare managed

in a sound way.

MANAGING THE PUBLIC PURSE

Before Hungary’s transitionperiod, everything surroundingthe state budget process wasopaque. At the beginning of the1990s, however, Hungary beganto develop a fiscal systemappropriate to an emergingdemocracy. This included theintroduction of a new publicfinance law and an independentaudit organisation. In this article,former State Secretary of theMinistry of Finance, Csaba László,reviews measures taken andoutlines what remains to be doneto institute fuller fiscaltransparency.

In the early 1990s, Hungary’s new government introduced several measures to comply with minimum

legal standards for a democratic political system. In 1992, the Parliament approvedthe public finance law. It regulated the entirebudgeting procedure, including the alloca-tion of responsibilities among the differentplayers, and timetables. In comparison tothe pre-transition period, the budget becamevery detailed, and parliamentary discussionsbecame much longer and more serious. Theindependent state audit office started workin 1990.

Measures introduced to establish the legalframework of a market economy also led toincreased fiscal transparency. New laws onbankruptcy, accounting, banks and secu-rities forced restructuring of the bankingsystem. Although these reforms were verycostly, they eliminated most of the financialsector's hidden losses. By 1994, the insti-

tutional situation had improved dramati-cally, but it still did not comply with theminimum requirements of a transparentfiscal system from an economic point of view. Basic information was simplyunavailable in a form that could permitanalysis by decision-makers and the public.

Increasing Fiscal TransparencyBetween 1995 and 1999, the Governmentintroduced numerous measures to enhancethe transparency of the fiscal system. Overthe same period, the growing maturity andimportance of the Hungarian capital marketdemanded the availability of reliable andaccurate information about the public sector.The market's main players developed newresearch capacities with special focus on the public sector. As a consequence of thisexternal pressure, transparency in economicpolicy making became a question of government credibility. A list of achieve-ments during this period follows:


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Fiscal Transparency in Hungary Since the Beginning of Transitionby Csaba László

Chain Bridge and Danube, Budapest.

These are just the first of many steps towardsbuilding a strong internal audit system inLatvia. However, as the latest EuropeanCommission Regular Report, recognised, “someprogress has been made in 1999.” Given gov-ernment commitment, the willingness of stateinstitutions to adopt internal audit, and con-tinued support from Phare, the implementa-tion and development of internal audit isexpected to proceed at pace. ■

Dace Nulle directs the Internal Audit Department in Latvia'sMinistry of Finance, and may be contacted in Riga at e-mail:[email protected].



Fiscal Transparency in Hungary Since the Beginning of Transition

• Budget figures are consolidated; statisticscover all subsectors of government; andprivatisation revenues are clearly separatedfrom the other revenues.

• According to a pre-announced calendar,budget figures and the outstanding cashbalance of the treasury single account arepublished monthly.

• The structure of public sector has beensimplified through the elimination ofalmost thirty extrabudgetary funds andthe social security self-governments.

• Figures on the sustainability of the pensionsystem based on a fifty year forecast arepublished in budget documents.

• In 1999 the State became the sovereignborrower, taking over this role from thecentral bank. The central bank balancesheet was cleared in 1997 by transferringthe net foreign debt to the budget.

• Starting in 1999, the budget procedurebecame a two-step process. At the begin-ning of summer, Parliament must approvethe broad lines of the budget, includingthe deficit and some of the main charac-teristics of the coming year’s fiscal policy.The second step is the traditional parlia-mentary approval of the detailed budget.

• A new initiative requires the administrationto produce pre-election reports for the public on the local, ministry and nationallevels.

As a result of these changes, the Hungarianfiscal system has become one of the mosttransparent in Central and Eastern Europe.Nonetheless, more remains to be done toenhance transparency and to being thesystem fully into line with the norms ofEuropean Union Member States.

The Unfinished AgendaAt the beginning of the 1990s, Hungarianpoliticians and public servants were keento apply standards for fiscal transparencyof modern democracies. There was a clearconsensus that fiscal transparency is crucial to political transition, and this lead to the creation of a working groupto address this subject. Building up cred-ibility soon became so important that avery strong political will emerged toimprove transparency of economic policymaking. International organisations, such as theIMF, the OECD, and the World Bank,gave support to this process.Now, the top priority of the governmentis EU accession. Fiscal policy must fulfil the Maastricht criteria using an accurate information base in line with EUROSTATrequirements. Transformation of the entireaccounting and information system musttake place to be in alignment with EU standards.

Improving the effectiveness and efficiency ofthe public sector makes it necessary for performance indicators to be used in budgetdebates. Although this is a difficult processmethodologically, experience from otherOECD countries shows that this couldgreatly contribute to controlling expendi-ture. The gradual introduction of accrualaccounting in several areas of the publicsector is among the actions under con-sideration.Over the past ten years, Hungary has madesignificant strides in enhancing fiscal trans-parency. Nevertheless, the system still does not provide sufficient information to taxpayers and politicians about expenditureallocation and about the effectiveness andefficiency with which public money is spent.Addressing these shortcomings will enhancethe credibility of public officials in the realmof economic policy - not only in “the markets”, but also among the taxpayingvoters as well. It is therefore in the interestof the current government to take furthersteps to increase fiscal transparency. ■

Csaba László is former State Secretary of the HungarianMinistry of Finance. He now works as Chief Financial Officerfor the financial market services company Central ClearingHouse and Depository, Ltd. (KELER Rt.) He may be reachedin Budapest at tel.: (36.1)344.4468; fax: (36.1)344.4469; e-mail: [email protected].

structures to ensure that national and EUresources are managed in a sound way.

To date, the objective of strengthening inter-nal audit in Latvia has received supportfrom a number of sources, both bilateral(for example, from the British Council’sPADBAS project) and multilateral. The EU has provided significant assistance, mostnotably under the Phare NationalProgramme (Budget and Treasury Project,Public Administration Reform Project) andthrough SIGMA.

Work on the preparation of specific guide-lines and manuals for internal auditors, aswell as on the introduction of risk assess-ment in internal audit work, is currentlyunderway. Plans for the immediate futureinclude: the preparation of strategic auditplans for all ministries, the drafting of basicguidelines for an internal auditor trainingprogramme, the elaboration of a peer review methodology as well as the estab-lishment and strengthening of the InternalAudit Council foreseen under the new regulation.


Latvia Establishes a New Internal Audit System

MANAGING THE PUBLIC PURSE


Like in other areas of its work, SIGMA activities in thearea of internal financial control aim to prepare candidate countries in Central and Eastern Europe forthe institutional consequences of EU accession. In thedomain of internal financial control, SIGMA putsemphasis on the establishment of structures andthe implementation of standards and practices toenable countries to take on the responsibility for thedecentralised management of EU funds andresources provided through, e.g., Phare, Instrumentsfor Structural Policies for Pre-Accession, SpecialAccession Programme for Agriculture and RuralDevelopment (SAPARD), and “own resources.”

Recent SIGMA activities include:• Assessments of the status of financial control in

ten candidate countries, measured against theBaseline for Financial Control (see page 6);

• In-depth review of existing financial control solutions in Slovenia and analysis of eventual gaps vis-à-vis requirements for EU funds andresources management;

• Development of structures and standards for publicinternal audit and financial control in Lithuania;

• Co-operation with European Commission services, delegations, “twinning” experts and candidate countries in defining ways forward toestablish, accredite and certify SAPARD agenciesand providing counselling in that area (Bulgaria,Estonia, Romania, Slovakia, Slovenia);

• Assistance to European Commission services anddelegations in drafting terms of references, evalua-tion of tenders and defining and implementing different “bridging” activities to prepare for forth-coming donor-Phare projects (in Albania, Bulgaria,Estonia, Latvia, Romania); and

• Comparative analyses and dissemination of infor-mation on experiences and lessons learned inMember States when joining the EU. (See SIGMAPapers No. 19 and 20 -- Effects of European UnionAccession: Part I Budgeting and Financial Control,and Part II. External Audit. These publications areavailable on the SIGMA web site at:http://www.oecd.org/puma/sigmaweb.)

For the three non-candidate countries participating in SIGMA’s work -- Albania, Bosnia-Herzegovina, and the former Yugoslav Republic of Macedonia --support is aimed at how to establish the necessaryinstitutional foundations for financial control.

SIGMA and the ILO’s International Training Centre(Turin) have released the course material on“Training of Trainers in Public Procurement” to support dissemination of information on best practice procurement techniques across Central andEastern Europe. The package puts at the disposal of procurement officials a modular collection ofteaching materials based on the EC Directives andthe Public Procurement Manual for Central andEastern Europe, jointly published by SIGMA and ILO/ITC in 1996. The materials support the development of national procurement trainingcourses in EU candidate countries.

The “Training of Trainers Package” comprises eightmodules, including general principles of public procurement and institutional framework, manage-ment of the tendering process, contract administra-tion, accelerated procedures for small valuepurchases, and electronic tendering. Each moduleis divided into self-contained instruction units (sessions). Guides explaining the trainer’s role inthe management of the learning process will be prepared for the sessions. Most of the material inthe package appears in written form, allowing train-ers to operate as course facilitators rather than lec-turers.

Copies of the printed modules have been sent toprocurement directors in central and easternEuropean countries with which SIGMA works, aswell as to concerned directorates of the EuropeanCommission. Additional printed copies are beingmade available upon request from SIGMA at theaddress on page 2 or e-mail: [email protected].

SIGMA and ILO/ITC has prepared a CD-ROM versionof those parts of the modules relating to the EC services directives. Enquiries about obtaining copiesof the CD-ROM should be addressed to ILO/ITC at e-mail: [email protected].

and link current development projects toupcoming twinning projects. The box belowoffers a glimpse of the types of projects inwhich SIGMA and beneficiary countries areengaged, including support to twinning.■

Kjell Larsson heads SIGMA’s Audit and Financial Controlunit, in which Johannes Stenbæk Madsen serves as Adminis-trator. They can be reached in Paris at tel: (33.1) 45.24.83.68;fax: (33.1) 45.24.13.00; e-mail: [email protected] further information on the issues involved in preparingaudit and financial control systems for EU membership –and SIGMA support to such preparations – see SIGMA’sAudit and Financial Control Web at: http://www.oecd.org/puma/sigmaweb/acts/audit/index_ea.htm



fer of knowledge andexperiences of EUMember State practi-tioners to counterpartsin Central and EasternEurope or betweencounterparts of thecandidate countries.The idea of usingpractitioners from

Member States is also the conceptual backbone of the European Commission’stwinning initiative whereby practitioners ofMember State administrations are engaged

with sister organisa-tions in candidatecountries, to assist inthe development oflegislation, rules andprocedures for finan-cial control. SIGMA facilitates andsupplements twinningprojects where appro-priate, and, in several

cases, SIGMA has been asked by the coun-tries and European Commission delegationsto set up “bridging arrangements”to prepare

New Training Package for Procurement Officials

Kjell Larsson

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SIGMA Activities on Internal Financial Control

GOVERNANCE AND EU INTEGRATION

In preparing for European Unionmembership, Latvia hasdeveloped a number of structuresfor consultation with interestgroups outside the centralgovernment. A recent initiativeseeks to encourage wider publicparticipation in the definition ofnational interests with regard toEU accession.

In spring 1999, the Latvian Governmentapproved an initial outline of nationalinterests as part of EU accession prepa-

rations. Recognition that such an exercisegoes far beyond the remit of individualministries, and even of the Government asa whole, led to the decision to open up theprocess to consultation with outside interestgroups. The Government decided that clear,well-established consultative mechanismswith organisations outside central admin-istration would be essential for conductingeffective negotiations on EU membership.

Consultations on SectorsWith this objective in mind, the LatvianEuropean Integration Council launched inMay 1999 a series of meetings with organi-sations and groups outside government on

specific sectors of the acquis communau-taire and gave the task of co-ordination tothe European Integration Bureau (Bureau). These meetings have two objectives: first, togather the opinions of the those workingin a particular part of the private sector onkey national interests and on what issuesshould be negotiated; and second, to iden-tify potential members of working groupswho could eventually beinvolved in the EU nego-tiation process. Consultations are con-ducted with representativesof the relevant industrialor citizens’ associations, as well as the managers oflarge companies. The firstmeeting, focused onFisheries, took place inMay 1999, the second onCulture and Audiovisualsin September 1999. Themeetings are divided intotwo parts. During the firstpart, Bureau officials provide information onEU policies and on thecurrent state of affairs.Close attention is accordedto those pieces of EU legislation which should be in place after accession,but which are difficult andexpensive to implement.In the latter part of themeeting, the floor is openedto the representatives ofparticipating businessesand associations to give their perspectiveson the issues under review.Although the inaugural two meetingsattracted only a few participants, thoseinvolved agreed that they were useful. Inparticular, the meetings allowed govern-ment officials to look at issues from otherperspectives and to prepare the ground forconsultation with the private sector duringfuture accession negotiations. They alsobrought wider recognition that simple andefficient mechanisms of consultation can befound and that such meetings, if well pre-pared, bring positive benefits to all concerned.

Raising Awareness of EU MattersA key finding emerging from these meetingswas that business people had limitedknowledge about the priority issues facingLatvia in its preparations for EU member-ship. For many of them, EU accession isnot an urgent matter. A related challengeis the varying degrees of knowledge amongthe participants on issues discussed. A lack

of information obviouslyaffects participants’ abilityto speak about EU policiesand the impact of thosepolicies on Latvia. Only afew people can present theirviews clearly, while manysimply listen. But for thosewith limited previousknowledge, the consulta-tion exercise achieves a thirdobjective – encouragingparticipants to think moreabout the impact of EUpolicies on their businessesand lives.

Improving theConsultation ProcessThe Bureau intends toimprove its consultationexercise with the help ofthe European Movementin Latvia. In August 1999,that organisation receiveda grant from the SorosFoundation Programme ofthe Baltic-USA Partnershipto organise preparatorymeetings with business

representatives prior to each consultationmeeting. Experts from outside governmentwill be invited to these preparatory meetings.Questions emanating from these prepara-tory meetings will be submitted to the Bureauto help it better prepare the subsequentconsultation meetings. Acquis-related topicsto be addressed in further consultationsinclude Transport, Free Movement of Goods,Consumer Protection and Health. ■

Edvards Kušners directs Latvia’s European IntegrationBureau. He may be reached in Riga at tel: (371.1) 750.3100;fax: (371.1) 728.6672; e-mail: [email protected].

Latvia Consults with Interest Groups on European Accessionby Edvards Kušners


The meetings allowedgovernment officials to

look at issues fromother perspectives andto prepare the groundfor consultation with

the private sectorduring future accessionnegotiations. They also

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and efficientmechanisms of

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meetings, if wellprepared, bring

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An educational tool developed inAustralia seeks to address twomajor problems in public sectorintegrity management. The first isthat no “code of ethics” can help amanager who does not recognisean ethics or corruption problemwhen it occurs. The second is thatthere is a serious shortage ofexperienced trainers who canteach Public Sector Ethics topublic officials within aframework that reflects today’sprofessional values.

The Public Sector Ethics ResourceSeries is a multimedia educationand training resource on “hybrid

CD-ROM”, developed for the ten centraland state public services of Australia andNew Zealand. The series provides a flexible,cost-effective package of resources designedto assist adult learners in developing com-petence in “professional ethics for publicofficials.”

The CD-ROM technology allows the userinstant access to: • Comprehensive legislation, references, and

training materials.• Guidelines and codes of conduct.• A unique decision-support model for

“ethical reasoning.”• Extensive training materials and case

studies.• Links to useful Internet websites on

public sector ethics.Developing enhanced ethical reasoning skillsis the major objective of the Ethics ResourceSeries. The adult learning strategy adoptedby the series is supported by two animatedtutors, Parentheses (said to be a distantAustralian descendant of Socrates), and theVoice of Reason, a thought-provoking Owl.The characters prompt the users withSocratic questions, so they can adopt a self-paced learning approach to the video casestudy materials.

Key Professional SkillsThe five short case study movies in theEthics Resource Series are intended to provide skill development, professionalsocialisation and educationfor middle and seniorAustralian public sectormanagers. The case studiesemphasise integrity andethical reasoning ratherthan compliance. Each 10-minute movie raisesabout 20 ethics issues for discussion, in the contextof a realistic story set in atypical public sector work-place. The major themescovered by the videosinclude:• Power, delegation, and

public office• Government, the Minister,

and the rule of law• Respect for persons and

Human Resource Management• Ethics management and conflicts of

interest• Professional conduct and responsibility• “The public interest” and due process• Corruption prevention and whistleblower

protection• Integrity, accountability, and ethical

public management.

The Ethics Resource Series provides invaluableexposure to the language and concepts ofprofessional ethics that are relevant in thepublic sector workplaces of today. Amongother things, the Series aids users to identifyprofessional ethics issues in the workplaceaccurately and quickly, use a rational anddefensible decision-making framework fordealing with those issues, implement values-based leadership and management,and resolve ethics issues with reference torelevant legislation.

Flexible TechnologyThe Ethics Resource Series draws upon proven software and technology to providepractical tools, and comprises five CD-ROMs. This economical application hasalready been adopted successfully by the

Australian Department of Foreign Affairsand Trade. Ethics training or decision-making support can now be selected as needed by individuals at

their desks, or deliveredto a specific group ofemployees at one timeby a trainer, or called upover a period of time byparticipants contributingto, for example, a groupdiscussion of a case-study or a “real time”problem for on-the-jobtraining.

The training videos featured in the Serieshave already attractedvery positive responsesfrom international audiences, suggestingthat ethics problems inthe Australian public

services are familiar almost anywhere.

Because of the flexibility of the design andthe technology used, it is a relatively simpleprocess and inexpensive to change the voiceused in the videos into other languages, orto provide subtitles, thereby saving a greatdeal of time and movie production costs.

It is even simpler to replace the currentAustralian document and legislation database with equivalent reference materials relevant to any other jurisdic-tion in the world.

As a consequence of this flexibility, thePublic Sector Ethics Resource Series is cur-rently being considered for developmentfor public service applications in Canada,the United Kingdom and other coun-tries.■

Howard Whitton is Principal Project Officer in the AustralianOffice of the Public Service Commissioner. He may be contactedin Brisbane at e-mail: [email protected] information is available from the Series website athttp://www.ethicslearn.com.

ETHICS IN THE PUBLIC SECTOR


Ethics Training Programme for Public Service Managers

The case studiesemphasise integrity

and ethical reasoningrather thancompliance.

Each 10-minute movieraises about 20 ethicsissues for discussion,

in the context of arealistic story set in atypical public sector

workplace.

by Howard Whitton

S IGMA – Support for Improvement in Governance andManagement in Centra l and Eastern EuropeanCountries – is a joint initiative of the OECD and the

European Union. The initiative supports public administrationreform efforts in thirteen countries in transition, and is principally financed by the EU Phare Programme. TheOrganisation for Economic Co-operation and Developmentis an intergovernmental organisation of 29 democracies withadvanced market economies. Phare provides grant financingto support its partner countries in Central and Eastern Europeto the stage where they are ready to assume the obligations ofmembership of the European Union.

Phare and SIGMA serve the same countries: Albania, Bosnia-Herzegovina, Bulgaria, the Czech Republic, Estonia, the formerYugoslav Republic of Macedonia, Hungary, Latvia, Lithuania,Poland, Romania, Slovakia and Slovenia.

Established in 1992, SIGMA works within the OECD’sPublic Management Service, which provides information andexpert analysis on public management to policy-makers andfacilitates contact and exchange of experience amongst public sector managers. SIGMA offers beneficiary countriesaccess to a network of experienced public administrators,comparative information, and technical knowledge connectedwith the Public Management Service.

SIGMA aims to:■ assist beneficiary countries in their search for good

governance to improve administrative efficiency and promote adherence of public sector staff to democraticvalues, ethics and respect of the rule of law;

■ help build up indigenous capacities at the central governmenta l l eve l to face the chal lenges of internationalisation and of European Union integrationplans; and

■ support initiatives of the European Union and other donorsto assist beneficiary countries in public administrationreform and contribute to co-ordination of donor activities.

Throughout its work, the initiative places a high priority on facilitating co-operation among governments. This practiceincludes providing logistical support to the formation of networks of public administration practitioners in Centraland Eastern Europe, and between these practitioners andtheir counterparts in other democracies.

SIGMA works in five technical areas: Public AdministrationDevelopment Strategies; Policy-Making, Co-ordination andRegulation; Budgeting and Resource Allocation; Public ServiceManagement; Financial Control and Audit. In addition, anInformation Services Unit disseminates published and on-line materials on public management topics.

SIGMA

6-7 April 2000, Paris, France. 21st Session of the OECD’s PublicManagement Committee (PUMA). Contact: Edwin Lau, PUMA, OECD, Paris, France. Fax: (33.1) 45.24.87.96; e-mail: [email protected]. In English and French.

10-17 April 2000. Vienna, Austria. Tenth United Nations Congress onthe Prevention of Crime and the Treatment of Offenders. “Crimeand Justice: Meeting the Challenges of the Twenty-first Century”. Contact: Jonathan Lucas, Congress Secretary, Vienna Tel: (43.1) 26060.4280; fax: (43.1) 26060-5917; e-mail: [email protected]; website: http://www.uncjin.org. In English.

13-14 April 2000, Paris, France. “Justice and Home Affairs - How toImplement the Amsterdam Treaty?” International Seminar for Experts in the series Great Debates.Contact: Cicero Foundation, Paris, France. Tel: (33.1) 43.80.18.21; fax: (33.1) 42.67.92.04; e-mail: [email protected]; website: http://ourworld.compuserve.com/homepages/cifo. In English.

13-15 April 2000, Budapest, Hungary. Eighth NISPACee Conference.“Ten Years of Transition: Prospects and Challenges of the Futurefor Public Administration”. Contact: NISPAcee, Bratislava, Slovakia. Tel/fax: (42.7) 64.28.55.57;e-mail: [email protected]; website: http://www.nispa.sk/news/events.html. In English.

4-6 May 2000, Wigry, Poland. “Ethics in the Public Administration.Prospects and Challenges for the Future for Local Governments”. Contact: Patrycja Suwaj, Project Manager, School of PublicAdministration in Bialystok (WSAP), Bialystok, Poland. Tel: (48.604) 96.67.48; fax: (48.85) 732.34.02; e-mail: [email protected] or [email protected]. In English and Polish.

19-23 June, 2-6 October, 20-24 November 2000, Maastricht, The Netherlands. Seminar on European Negotiations. Contact: Ms. NoëlleDebie, Programme Organization Division, European Instituteof Public Administration (EIPA). Tel. (31.43) 3296.226; fax: (31.43) 3296.296; e-mail: [email protected]. Or submit the online registration form on the EIPA website: http://www.eipa.nl. In English and French.

ON THE AGENDAUpcoming Programmes

Please note that not all of the programmes included in this calendar are open to every public administration practitioner or the general public. Details are provideddirectly by the organiser, who may be contacted for further information. If your organisation is planning an event, please send details to SIGMA (address on page 2).A more complete calendar of events may be found at: http://www.oecd.org/puma/sigmaweb.

Public Management Forum No. 6, Volume V,...

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