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A jo
int
initi
ativ
e of
the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EU
Follow up on findings and recommendations together with
Parliament
Zita Zarina, State Audit Office, Latvia
Ankara, 8-9 November 2016
SAI Network ConferenceDeveloping Effective Working Relationships
between Supreme Audit Institutions and Parliaments
A jo
int
initi
ativ
e of
the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EUFollow up on findings and recommendations
together with Parliament
SAO of Latvia: scope and types of audits
Parliament structure (incl.functions of
Standing Committees)
Public Expenditure and Audit Committee
Cooperation b/w SAO and Parliament: • Legal framework• Practical cooperation Conclusions
2
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by
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EU
SAO of Latvia: scope of audits
Revenues, expenditure and property of state
institutions (except
Parliament)
Revenues, expenditure and
property of municipalities
European Union and other Funds
Revenues, expenditure and property of state
and municipality-
owned enterprises
3
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EU
SAO of Latvia – types of audits
• annual accounts of ministries and other central state institutions (by April 30)
• annual opinion on implementation of State and municipal budgets submitted by the Minister of Finance to the Parliament (by September 15)
Financial audits
• SAO is independent in defining theme and topic of audit and auditing period
Compliance audits
• SAO is independent in defining theme and topic of audit and auditing period
Performance audits
4
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by
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EU
Parliament structure
• 100 MPs• 6 Parliamentary Groups • Standing Committees - 16• Subcommittees - 14• Special Committees (Parliamentary
investigative committees)• Permanent delegations
12th Saeima (since Nov.2014)
5
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EU
Parliament structure Parliamentary groups No. of MPs
Concord (Saskaņa) 24
Unity (Vienotība) 23
Union of Greens and Farmers (ZZS) 21
National Alliance "All For Latvia!" – "For Fatherland and Freedom/LNNK" (VL – TB/LNNK)
17
Latvian Regional Alliance (LRA) 7
For Latvia from the Heart (NSL) 7
Unaffiliated members of parliament 1
6
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EU
Parliament structure
Coalition Vienotība, ZZS,
VL-TB/LNNK (23+21+17=61)
Opposition Saskaņa, LRA,
NSL (24+7+7=38)
7
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nced
by
the
EUParliament structure
Standing Committees
Regulated by the Saeima Rules of Procedure
Work in a specific field or carry out
specific tasks
Ensure parliamentary scrutiny
of topical issues of public interest and work of the government,
ministries, public institutions or local governments, providing
recommendations for improvements needed
Prepare matters to be considered at
Saeima plenary sittings, consider draft laws, proposals and
submissions
8
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nced
by
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EUParliament structure
Standing Committees
Meets on regular basis with ministers or
representatives of relevant institutions in
order to deal with issues that fall within
its competence
Has the right, without the Presidium's
mediation, to directly request information
and explanations from relevant ministers and
institutions, local governments
May use opinions of experts in the relevant field, social partners
and NGOs
Meetings are open to the public; however, may hold a closed
meeting
May convene joint meetings
9
A jo
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nced
by
the
EUParliament structure
Standing CommitteesComposition of committees is proportionate to Parliamentary
Groups represented in the Saeima (with the exception for MESC and NSC, both having 1 representative from each PG)
An MP may be a member of no more than 2 Standing
Committees and 2 Subcommittees at a time
An MP may be the chairperson of only one Standing Committee at a time
10
A jo
int
initi
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OEC
D a
nd th
e Eu
rope
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nion
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inci
pally
fina
nced
by
the
EUParliament structure
Standing CommitteesComposition of committees is proportionate to Parliamentary
Groups represented in the Saeima (with the exception for MESC and NSC, both having 1 representative from each PG)
An MP may be:•a member of no more than 2 Standing Committees and 2 Subcommittees at a time•the chairperson of only 1 Standing Committee at a time
11
A jo
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pally
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nced
by
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EU
Parliament structure Standing CommitteesSaeima currently has 16 Standing Committees
Foreign Affairs Committee Social and Employment Matters Committee
Budget and Finance (Taxation) Committee
Mandate, Ethics and Submissions Committee
Legal Affairs Committee Parliamentary Inquiry Committee
Human Rights and Public Affairs Committee
Public Expenditure and Audit Committee
Education, Culture and Science Committee National Security Committee
Defence, Internal Affairs and Corruption Prevention Committee
Citizenship, Migration and Social Cohesion Committee
Public Administration and Local Government Committee European Affairs Committee
Economic, Agricultural, Environmental and Regional Policy Committee Sustainable Development Committee
12
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OEC
D a
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e Eu
rope
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nion
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inci
pally
fina
nced
by
the
EUPublic Expenditure and
Audit Committee
Dedicated committee to
review SAO reports
First establised during 5th Saeima (1993 – 1995) as
The Audit Committee
Transformed into PEAC during 8th Saeima (2002 –
2006)
17 members (9 coalition
8 opposition)
Chaired by Mr. Andris Bērziņš during 9th,
10th (2006 -2011), 12th (since 2014) Saeima
The Chairman of the Committee represents the
coalition
13
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OEC
D a
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e Eu
rope
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nion
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inci
pally
fina
nced
by
the
EUPublic Expenditure and
Audit CommitteeDuring the lowest point of the economic recession in Latvia (2008–2011) as well as after the financial crisis, PEAC was in charge of parliamentary scrutiny of the financial and economic stabilization and recovery, including monitoring the implementation of the international loan programme.
14
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nced
by
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EU
Public Expenditure and Audit Committee
PEAC has two core functions
Parliamentary scrutiny of public expenditure Internal audit of Saeima
15
A jo
int
initi
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the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EUPublic Expenditure and
Audit Committee
Parliamentary scrutiny of public expenditure:• review of the SAO findings resulting from compliance and
performance audits • setting timeframe for briefing PEAC on the
implementation of the SAO recommendations • assessing the measures taken by the auditees to
implement SAO recommendations • identifying problems regarding public expenditure and
proposing measures for public authorities to eliminate them
A jo
int
initi
ativ
e of
the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EUPublic Expenditure and
Audit CommitteeInternal audit of the Saeima:• audit of bookkeeping records, review of
expenditure compliance and efficiency audits, reporting to the Presidium of the Saeima
• hiring an independent certified auditor for auditing the annual financial statements of the Saeima and submitting the relevant findings to the Presidium of the Saeima no later than 6 months after the end of each reporting period.
17
A jo
int
initi
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e of
the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EUPublic Expenditure and
Audit CommitteeIn 2015, PEAC met 68 times: • 47% of meetings focused on SAO findings, • 34% on parliamentary scrutiny of public
expenditure, • 10% on legislative proposals, • 9% on findings of parliamentary expenditure
audit.
18
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by
the
EU
Example: PEAC work planSeptember - December, 2016
19
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by
the
EU
PEAC work plan
Date Subject Participants
September 6 Accepting PEAC work schedule SAO
September 7 Cabinet of Ministers annual report - results of financial audit SAO, State Chancellery
September 14Performance audit "Does the protection policy of cultural monuments planned and implemented in Latvia ensure their preservation?" - presentation of audit findings
SAO, Ministry of Culture, State Inspection for Heritage Protection
September 21Performance audit “Information Systems in Health Care”- status of implementation of audit recommendations
SAO, Ministry of Health, National Health Service
September 27Performance audit "Municipal financial resources for culture, recreation and sport activities" - status of implementation of audit recommendations
SAO, municipalities of Cēsis, Bauska, Dr.oec.Inga Vilka
October 5Performance audit "Whether the Society Integration Foundation ensures traceability of the allocation of the State budget funds to associations and foundations, as well as control over the use thereof?" - audit results
SAO, Society Integration Foundation
October 12 International cooperation activities of SAO SAO, Ministry of Foreign Affairs
20
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nced
by
the
EU
PEAC work plan sept.-dec.2016Date Subject Participants
October 19
Performance audit "Has the process of selling the state-owned capital shares of Joint Stock Company “Citadele banka” seen such shat the state sould gain maximum possible amount of funds?" - audit results
SAO, Ministry of Economics, State Privatisation Agency
October 25SAO's role in the improvement of IT security, legitimate use of SW and IT management in municipalities
SAO, NGOs, Latvian Association of Local and Regional Governments
November 2Financial audit on 2015 Annual Report of the Republic of Latvia on State Budget Execution and Local Government Budgets - audit results
SAO, Ministry of Finance, Ministry of Justice, Ministry of Environmental Protection and Regional Development, Latvian Association of Local and Regional Governments, Lielvārde municipality, Latvian Association of Certified Auditors
November 8Implementation of SAO audit recommendations - summary and follow-up.
SAO, Ministry of Finance
November 16 Discussion paper by SAO on State owned enterprises
SAO, Ministry of Economics, Cross-Sectorial Coordination Center, Foreign Investors' Council of Latvia, Latvian Chamber of Commerce and Industry, Providus (Center for public policy), Delna (Transparency International), Baltic Institute of Corporate Governance
21
A jo
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D a
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nion
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pally
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nced
by
the
EU
PEAC work plan sept.-dec.2016Date Subject Participants
November 30The compliance of activities by municipal joint stock company "Daugavpils siltumtīkli" with the planning documentation and normative regulations
SAO, municipality of Daugavpils, "Daugavpils siltumtīkli"
December 7
Performance audit "Compliance of municipal waste management system with the intended objectives and regulatory enactments" - status of implementation of audit recommendations
SAO, Ministry of Environmental Protection and Regional Development
December 12Performance audit "Efficiency of limited liability company "Health care real estate" in managing state real estate used by the health care system"
SAO, State Joint Stock Company «State Real Estate», Ministry of Health
December 21Performance audit "Does state provide patients with the efficient ambulatory health care services?"
SAO, Ministry of Health
22
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int
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OEC
D a
nd th
e Eu
rope
an U
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inci
pally
fina
nced
by
the
EU
Cooperation b/w SAO and Parliament
Legal framework
Practical cooperation
23
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e Eu
rope
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nced
by
the
EU
Legal framework
State Audit Office Law
Appointing/ approving of SAO management
Reporting – SAO obligations
Rights to express opinion
24
A jo
int
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ativ
e of
the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EULegal framework
Appointing/ approving of SAO management
• Saeima appoints the Auditor General for the term of 4 years in accordance with the procedures of the Saeima Rules of order
• The Auditor General recommends to Saeima for approval the candidate members of the Council of the State Audit Office for the term of 4 years
25
A jo
int
initi
ativ
e of
the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EULegal framework
Reporting - SAO’s obligations
• to provide a qualified opinion to Saeima on the Annual Report by MoF concerning the implementation of the State budget and budgets of local governments
• to provide qualified opinions regarding the correctness of the preparation of Annual Reports by ministries and other central public institutions
26
A jo
int
initi
ativ
e of
the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EULegal framework
Reporting - SAO’s obligationsTo submit reports to the Saeima and the Cabinet of
Ministers:
of those financial audits where SAO issues opinion with
annotations, a negative opinion, or refusal to issue an opinion
of all performance audits by SAO
containing especially important and
significant findings
27
A jo
int
initi
ativ
e of
the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EULegal framework
Reporting - SAO’s obligations• The audit of the annual financial accounts of
SAO is performed by a sworn auditor selected by Saeima
• SAO submits the annual financial accounts together with the opinion of a sworn auditor to Saeima and State Treasury
28
A jo
int
initi
ativ
e of
the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EULegal framework
Reporting - SAO’s obligationsAfter the Council of SAO has approved the annual audit plan, the Auditor General shall send to Saeima an explicit report regarding the planned audit directions (without naming the audited entities)
29
A jo
int
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e of
the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EULegal framework
Reporting - SAO’s obligations
•There is no legal provision for Saeima to “order” specific audits•SAO is fully independent with respect to planning the audits •SAO does not consult Saeima on its annual work programme of audits•However, each year prior to preparation of its annual audit plan SAO invites Saeima to express their interest in general areas to be audited
Independence of SAO
30
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pally
fina
nced
by
the
EULegal framework
Rights to express opinionSAO has the right to receive draft regulatory enactments examined by the Saeima and the Cabinet of Ministers and to provide opinion if: • the regulatory enactments may affect the revenues and
expenditures of the State and local governments• enactments provide for actions with the property of the
State and local governments• enactments concern resources allocated by the EU and
other international organisations or institutions included in the State budget or local government budgets
31
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OEC
D a
nd th
e Eu
rope
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nion
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inci
pally
fina
nced
by
the
EU
Practical cooperation
Reporting to the Parliament
Practical examples
32
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OEC
D a
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e Eu
rope
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pally
fina
nced
by
the
EUPractical cooperation
Reporting to the Parliament
SAI audit reports after completion are sent to the
respective line ministry, PEAC + other relevant Parliamentary
committees if necessary
PEAC calls for a committee meeting
33
A jo
int
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the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EUPractical cooperation
Reporting to the Parliament
PEAC meetin
g
Auditee presents its opinion on the audit report,
conclusion, recommen
dations
SAO provides additional comment
s/ clarificatio
ns, if necessary
Other stakeholder
s (public bodies, NGO’s)
reflect on audit report
and auditee's reaction
MPs hold a discussion
PEAC sets a schedule for
auditee for the reporting on
implementation of
recommendations and for
SAO for providing their
opinion on progress
34
A jo
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the
OEC
D a
nd th
e Eu
rope
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nion
,pr
inci
pally
fina
nced
by
the
EUPractical cooperation
Reporting to the ParliamentSAO regularly prepares and presents to PEAC
overview on the status of all audit recommendations with implementation deadline during the past year (once a year)
overview on the implementation of all audit recommendations within each audit field for a period of last three years
35
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the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EUPractical cooperation
Reporting to the Parliament
There is no fixed formal Parliamentary procedure in place for reviewing SAO reports
It is a common practice for SAO to
meet with PEAC prior or between committee meetings to discuss
the latest audit findings, irregularities
detected, work in progress etc.
36
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D a
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e Eu
rope
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nion
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pally
fina
nced
by
the
EUPractical cooperation
Reporting to the Parliament
SAO communicates with the auditees on quarterly basis
regarding implementation status of recommendations
Cases of non-compliance or significant delays are put forward
to the Parliament – either within or outside the scope of regular
progress reporting
37
A jo
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initi
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the
OEC
D a
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pally
fina
nced
by
the
EUPractical cooperation
Reporting to the Parliament
38
•27 financial audit reports •18 performance audit reports (covering also compliance issues)•24 other reports and documents •SAO annual activity report
During 2015 SAO
submitted to
Saeima
A jo
int
initi
ativ
e of
the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EUPractical cooperation
Examples I. Audit on Prison Hospital and health care
provided to inmates (implementation of recommendations in progress, promising)
II. Audit (finding) regarding unified remuneration system in public sector (implementation of recommendations in progress, jeopardised)
III. Audit on IT management in municipalities (implementation of recommendations successfully completed)
IV. Survey of Members of Parliament
39
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int
initi
ativ
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the
OEC
D a
nd th
e Eu
rope
an U
nion
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inci
pally
fina
nced
by
the
EU
Example I – Prison Hospital
40
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int
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the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EUPractical cooperation
Examples (I)• Audit: Evaluation of operations of the Prison
Hospital of Latvia • Auditee: The Ministry of Justice and the Prison
Administration • Aim of the audit: to evaluate the operations of the
Prison Hospital in Olaine prison with the focus on efficient use of the Prison Hospital infrastructure to provide health care services to inmates
• Infrastructure investments - 9.3 MEUR of state budget funds
41
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int
initi
ativ
e of
the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EUPractical cooperation
Examples (I)Audit findings:• MoJ (responsible for penal policy) has not
ensured the assessment and promotion of the most appropriate health care model for the imprisoned and has not taken a decision regarding efficient use of Prison Hospital infrastructure and medical equipment
• PA has not created an efficient control system to monitoring operation of Prison Hospital
42
A jo
int
initi
ativ
e of
the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EUPractical cooperation
Examples (I)Audit recommendations to MoJ and PA: • to develop a model for health care in prisons• to identify the actual needs and develop a
formal list of medical services available to inmates, and organize the operations of Prison Hospital accordingly
• to review the actual use of Prison Hospital infrastructure and medical equipment and ensure the investment is used most efficiently
43
A jo
int
initi
ativ
e of
the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EUPractical cooperation
Examples (I)PEAC involvement: • 3 scheduled PEAC meetings with participation of SAO, MoJ, PA and
other stakeholders:1) 01/04/2014 - review of audit reports (“Provision and organization
of health care services for the imprisoned”; “Evaluation of operations of the Prison Hospital of Latvia”)
2) 03/03/2015 - discussion regarding Prison Hospital operations, result indicators and costs
3) 23/02/2016 - discussion on morbidity of inmates and review of MP suggestions for improving the operations of Prison Hospital
• several informal meetings b/w SAO and PEAC• several on-spot visits to prison and Prison Hospital by PEAC
members
44
A jo
int
initi
ativ
e of
the
OEC
D a
nd th
e Eu
rope
an U
nion
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inci
pally
fina
nced
by
the
EU
Example II - remuneration
45
A jo
int
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ativ
e of
the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EUPractical cooperation
Examples (II)• Audit: On 2013 Annual Report of the Republic
of Latvia Regarding Execution of State Budget and Budgets of the Local Governments Auditee: Ministry of Finance
• Specific audit finding (since 2009): the remuneration system of state and municipal institutions is not unified and based on equivalent conditions and financial resources
46
A jo
int
initi
ativ
e of
the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EUPractical cooperation
Examples (II)Audit recommendation to MoF and State Chancellery: to ensure equal conditions for implementation of unified and fair remuneration system till 15/01/2017. MoF initially accepted the recommendation and implementation deadline, however later asked for the recommendation to be closed.
47
A jo
int
initi
ativ
e of
the
OEC
D a
nd th
e Eu
rope
an U
nion
,pr
inci
pally
fina
nced
by
the
EUPractical cooperation
Examples (II)PEAC involvement
Scheduled meetings:- Oct.2014 – presentation and review of the audit report; PEAC instructs MoF to report on progress regularly- 29/03/2016 – review of the progress, discussion on necessary measures, PEAC instructs MoF to prepare official report with proposed solutions by Sept.2016.- 20/09/2016 – review of the progress, presentation of survey results (comparison of remuneration: civil service vs. private sector); postponing of submission or official report till end 2016. - 30/12/2016 – review of the progress and official report by MoF
48
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int
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OEC
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e Eu
rope
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inci
pally
fina
nced
by
the
EU
Example III - IT
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Examples (III)Audit: Software management assessment in local governments and local government educational institutionsAuditee: 14 local governments (incl.Riga)Aim of the audit: to verify the compliance and assess the effectiveness of software management in local governments and local government educational institutions
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Examples (III)Audit recommendations (169): - to comply with SW licensing terms, eliminate violations of intellectual property rights - to improve management of IT security and data protection, ensure compliance with the basic requirements of regulatory enactment, reduce the threat to the operation of IS of the institution, data protection and security- to improve organization of accounting and effectiveness of IT management with a long-term perspective
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Examples (III)PEAC involvement: - 3 scheduled PEAC meetings with participation of SAO and stakeholders:1) 9/10/2013 - presentation and review of audit report 2) 14/10/2014 follow-up on implementation of
recommendations3) 25/10/2016 discussion on impact of implemented
recommendations - written communication b/w SAO and PEAC on status of implementation of recommendations in between
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Example IV - questionnaire
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Examples (IV)General problem: short term approach to the state budget planning and execution
SAO repeatedly issued audit recommendations to the government to ensure that planning and implementation of the state budget is directly linked to the long term state policies and planning documents
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Examples (IV)Specific problem: SAO audit recommendations were repeatedly not taken into account Solution: to address Saeima for help - in the form of questionnaireMPs were asked to express their opinion - whether the state budget is prepared with the main priorities of the society in mind and is it based on the long term policy planning documents: Sustainable Development Strategy of Latvia 2030; National development plan 2020; Law on medium term budget framework 2015 – 2017
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Examples (IV)Q: What is overall satisfaction with the budget structure, planning process and the information availability for the achievement of goals?
A: 33% - satisfied with the process; 67% – not satisfied with the process
Q: Does the state budget offer sufficient and understandable information on the effective allocation and expenditure of the budget funds for the benefit of the society?
A: 83% - insufficient information; 17% - sufficient information
Q: Are political discussions regarding evaluation of the budget expenditure sufficient?
A: 69% - insufficient discussions; 31% - sufficient discussions
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Examples (IV)
Practical applicability of survey results: SAO could draw attention of the Ministry of Finance to the Parliaments’ low satisfaction level with the budget planning process
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ConclusionsMutual trust and respect
are essential
SAI should gain and retain the respect of MPs – by demonstrating high professional standards, independence and firm position
SAI should invest into making sure MPs understand SAI mission, functions, methods and reports («tailor-made»
presentations)
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Conclusions
Regularity of communication
(both formal and informal) does matter
Personalities (professional background,
previous experience of
MPs) do matter
Flexibility and adjusting to the
needs and interests of
different MPs is helpful
To work with both coalition
and opposition MPs is
important
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Thank you for your attention!
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