mezinÁrodnÍ konference o internÍm auditu public …public finance management and control in italy...

PRAGUE, November 11th & 12th, 2010

Public Finance Management and Control in Italy

Marcello BESSONEFabrizio MOCAVINI

MEZINÁRODNÍ KONFERENCE O INTERNÍM AUDITU INTERNATIONAL CONFERENCE ON INTERNAL AUDIT

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Legislative Decree 30 July 1999, N. 286

Reorganization and strengthening of mechanisms and instruments for cost monitoring and evaluation,

performance and results of public administrations activity, according to art. 11 of Law 15 March 1997, n. 59

The normative framework


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Legislative Decree n. 286 of 1999

this decree fixes general principles, reorganization and strengthening ofmechanisms and instruments for cost monitoring and evaluation,performance and results of public administrations activity

main aspects:– control intended to perform an internal evaluation of effectiveness

and efficency of administrative activity– activation of a pool of supporting experts in the Presidency of the

Council of Ministers– defining and spreading, through ministerial directives, of public

service quality standards



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Legislative Decree 286 of 1999: control activities

ADMINISTRATIVE REGULARITY CONTROL To ensure legitimacy, regulartiyand correctness of administrative measures

MANAGEMENT CONTROL To verify effectiveness and efficiency ofadministrative measures

ASSESSMENT OF MANAGERS To assess managers performances

EVALUATION AND STRATEGIC CONTROL To evaluate congruence betweenachieved results and prearranged target

Each of these four controls has strong interconnection with the other three



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ADMINISTRATIVE AND ACCOUNTING

REGULARITY CONTROL

MANAGEMENT CONTROL

ASSESSMENT OF MANAGERS

EVALUATION AND STRATEGIC CONTROL

Each of these four controls has strong interconnection with the other three



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Administrative regularity Control

• Accounting Offices• Supervisory Offices• External auditors

Analyses and controls according to professionale audit general principles

Purposes

• To ensure legitimacy, regulartiy and correctness of administrative measures

• To verify observance of regulations and laws• To verify completeness, accuracy and

appropriateness of budget items

Subjects

Methodology


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verifying consistency between the single institution accountingsystem and a) EU and national legislation in force, b) regulationand statute provisions, c) national and international accountingprinciples for budget and final statement of accounts;

verifying regularity of accounting records and supportingdocuments;

verifying of correct execution of tax and welfare law provisions.

Administrative-accounting control aims at:


Administrative regularity Control

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• Structure working for strategic management

•Ex-ante and ex-post analysis of consistency and/orvariances among insitutional missions, prearrangedoperational targets, operational choices and assignedhuman, financial and material resources

•To verify the achievement of strategic objectives•To identify possible obstacles, responsibilities andremedies for unsuccessful or incomplete achievementof strategic objectives

• To verify the actual implementation of the choices set out in directives and guidelines intended to achieve strategic objectives, programmes and projects

Strategic Control

Purposes

Subjects

Methodology


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Strategic planning defines the strategic objectives set out in the actionplan and indicates how to achieve them.Strategic Planning presupposes:

Analysis of trends and environmental variables

Outline of operation area scenarios

Analysis of enterprise organizational and operative structure in orderto find out strenghts and weaknesses as well as unexpressedpotentialities

Verifying internal and external consistency of organizational structureand operating mechanisms, as well as indentifying all the aspects to bemodified in order to make the effective implementation of adoptedstrategies possible

Strategic Control


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Evaluation and Strategic control means to verify the actualimplementation of the choices set out in directives and guidelinesintended to achieve strategic objectives, programmes and projects.Strategic Planning presupposes:

Ex-ante and ex-post analysis of consistency and/or variances amonginsitutional missions, prearranged operational targets, operationalchoices and assigned human, financial and material resources

To verify the achievement of strategic objectives

To identify possible obstacles, responsibilities and remedies forunsuccessful or incomplete achievement of strategic objectives


Strategic Control

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• Ex-ante and ex-post analysis of consistency and/orvariances among insitutional missions, prearrangedoperational targets, operational choices and assignedhuman, financial and material resources

• To verify the achievement of managerial objectives• To identify possible obstacles, responsibilities and

remedies for unsuccessful or incomplete achievementof managerial objectives

• To verify efficiency and effectiveness of managerial measures in order to optimize the cost-result ratio (also through adjustment measures)

• General management• Responsibility centres• Planning and control office

Management control

Purposes

Subjects

Methodology

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MANAGEMENT CONTROL IS A PROCESS THOROUGH WHICH

IT IS POSSIBLE TO MAKE SURE OF THE EFFICIENT AND EFFECTIVE

PURCHASE AND USE OF RESOURCES IN ORDER TO

ACHIEVE THE PREARRANGED OBJECTIVES

Achieved/expected output ratioTo maximize output/input ratioTo minimize input/output ratio

Effectiveness Efficiency

Management control

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• General management• Appraisers and appraised• Management and human resources development

• Positions analysis• Performance evaluation• Organizational skill evaluation

• To affect results expected by single workers in order toimprove the whole organization results

• To assess the actual individual contributions comparingprearranged objectives and request behaviours withachieved results and actual behaviours

Assessment of managers

Purposes

Subjects

Methodology

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Performance evaluation is a

MANAGERIAL INSTRUMENT

intended to affect results expected by single workers in

order to improve the whole organization results


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Performance evaluation aims at measuring the actual individual

contributions comparing prearranged objectives and requested

behaviours with achieved results and actual behaviours

Aim and object of evaluation

Performance evaluation analyses the whole events and actions

performed by single workers and the results achieved within their

responsibilities and duties



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Assessment of managers aims at verifying the level of professionalism and the extent to

which assigned objectives have been achieved. It is an ORDINARY and ESSENTIAL feature of

managers employment

Assessment procedures should be marked by the following principles:

• transparency of criteria and results

• appropriate participation of the manager subject to assessment (also through

communication and cross-examination)

• the subject that put forward the proposal of assessment should have a direct

knowledge of the activity performed by the manager subject to assessment and the

verifier body has to declare his opinion about the proposal

Basic elements



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Audit Reforming Perspectives

Two importantREFORMS are taking placeswhich will affectAudit on the Public Sector


A) Law no. 196 of 31 December2009 on Public Finance and

Accpounting

B) Legislative Decree n. 39 of 27 January 2009 on Statutory Audit

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Art. 49 provides the Government to enactone or more legislative decrees to reinforceexpenditure analysisand evaluation and toreform the system ofaccounting audit


Art. 49 of Law no. 196 of 31 December 2009 on Public Finance and Accpounting

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Implementation ofDirective 2006/43/CE on Statutory Audit

Scope: Accounts and Consolidated Account with reference to the Fourth Directive(Companies, Corporations, ect.)


Legislative Decree no. 39 of 27 January 2010 on StatutoryAudit

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DOES STATUTORY AUDIT APPLY TO PUBLIC ENTITIES?


WOULD THAT REALLY BE CONVENIENT?

FROM A LEGAL POINT OF VIEW, WE COULD THINK SO

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No General Reference to Professional Standards in Public Entities Audit

No Professional Abilitation Required

Reference to Indipendence Standards (Code of Ethics of IFAC)

Single Public Entities may refer to Statutory Audit if Accrual Accounting is

adopted and if Revenues and Expenses Amount to large sums�

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THE CONTROL SYSTEM


Organization

mezinÁrodnÍ konference o internÍm auditu public …public finance management and control in italy...

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