public internal control in the european union robert gielisse, cia, cgap european commission
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Public Internal Control in the European Union Robert Gielisse, CIA, CGAP European Commission Principal Advisor , DG BUDG In charge of PIC and PIFC. 2. Your presenter. Robert GIELISSE – Dutch National CIA, CGAP Principal Adviser, Head of EC PIC/PIFC Task Force - PowerPoint PPT PresentationTRANSCRIPT
Public Internal Control in the European Union
Robert Gielisse, CIA, CGAPEuropean CommissionPrincipal Advisor , DG BUDGIn charge of PIC and PIFC
2. Your presenter
Robert GIELISSE – Dutch National
CIA, CGAP Principal Adviser, Head of EC PIC/PIFC Task Force Chairperson of EU28 PIC Network and Working Group In EC since 1983, various managerial positions since 1993 Dutch Tax Administration 1978 – 1983 University degrees in Economy and Law
3. History of Internal Control in the EU
Pre 2004EU 15Diversity
EU 10 + 2 PIFC
2004EU 25
CC 2 + PCC:CCS -> PIFC
2007
EU 27
EU 15Diversity
CC 10 + 2:
Centralised Control System -> PIFC
2009
Kick start of PIC
(Potential) CC: CCS -> PIFC
EU 15Diversity
EU 10PIFC
4. History of Internal Control in the EU
Public internal control modernised in the past 10-15 years all over the EU
In some countries started in the 80s but more reforms since 2000 triggered by accessions to the Union of 2004, 2007 and 2013 need for administrative reforms (decentralising central
powers) recognition of need to manage risk reduce budget deficit following the financial crisis tax payers claiming value for money
5. Approaches to IC system in the EU
Decentralised internal control system (Denmark, Netherlands, Sweden, UK, 13 new Member States). The so-called Nordic model
Centralised internal control system (Luxembourg, Spain, Greece, Italy). The so-called Latin model
Hybrid model (Belgium, France, Portugal)
6. Approaches to IC system in the EU
Nordic modelNordic model Based on full decentralised managerial accountability and
functionally independent internal audit. Manager is accountable for meeting organisational objectives
(financial and non-financial) Responsible for setting up internal control to address risks and
provide reasonable assurance that objectives are achieved by means of
effective, efficient, economical operations; legal and regular transactions;
Internal auditor assesses adequacy of IC framework including governance, risk management and control; reports to the management and makes recommendations for improvement.
7. Approaches to IC system in the EU
Latin modelLatin model Centralised control function focusing on ex-ante controls, some
sub-functions may be delegated Internal control as a centralised collective responsibility in
relation to controlling public funds Specifically designated organisations /financial controllers to
control economic and financial compliance No internal audit; financial 'audit ' (transaction based
verification) is performed by ex-post financial controllers/inspectors
Ex-ante controls performed by centralised services (not within the entity) including SAI
8. Approaches to IC system in the EU
Hybrid modelHybrid model Various stages of development towards the Nordic model IC in France is a good example for incorporating 'Nordic'
principles in a given national administrative culture Mix of centralised approach with decentralised features
E.g. decentralisation of (ex-ante) controls
9. Similarities in the IC environments across the EU
25 out of 28 Member States base their systems onCOSO framework (including INTOSAI guidelines for internal control)IPPF oriented standards for Internal audit
Either IPPF directly applicable in national law Or national standards 'copy' IPPF
10. Differences in the IC environments across the EU Accountability arrangements vary
centralised departmental agencies (independent) bodies
Shift from input to output oriented management and budgeting
Split between political and executive responsibilities not in all countries
Internal audit systems do not cover all parts of the public sector or every part in the same way. Coverage of the central government part varies country by country.
11. Managerial accountability across the EU
Management and accountability arrangements vary Focus on the achievement of organisational objectives
and efficient, economic and effective use of public money (output oriented)
Focus on compliance with rules and legal and/or administrative provisions (input oriented)
12. The European Dimension
PIFC – Public Internal Financial ControlPIFC – Public Internal Financial Controlan Internal Control framework for the public sector that Candidate Countries must adopt to fulfil the conditions/ benchmarks of Chapter 32 'Financial control' of the EU Accession Negotiations
PIC – Public Internal ControlPIC – Public Internal Controlis a denominator for a panoply of Internal Control systems operated in the public sector of the EU-28
13. PIFC – European framework for Internal Control in the Public Sector
14. PIFC - 5 layers of defence for public money
Source: European Commission, DG Budget
Layer 1
Financial Management and Control systems
Layer 2
Internal Audit
Layer 5
National Parliament
Layer 4
State Audit Office
Layer 3
Centralised Budget Inspection
(Complaint- driven function to investigate cases of fraud and serious irregularity)
Entity - wide Gov’t - wide National
CHU and Audit Committee
PIFC Council
15. PIFC - 5 layers of defence for public money
These 5 layers are complementary:
FMC: decentralised ex-ante and ex-post under managerial responsibilityIA: to assess economy, efficiency and effectiveness; to provide reasonable assurance about adequacy of IC environment (FMC)Inspection: to pursue cases of fraud, but not proactive (!)EA: to oversee functioning of ICParliament: to hold the Executive accountable
16. PIC is a hot topic in the Member States
Internal Control is now widely used and integral to all governance systems
Stakeholders are demanding better quality results, accountability, and transparency
Recent reforms and increasing professionalism demonstrate dynamic character of PIC; IC in different Member States is still in transition
Reforms focus on streamlining and making existing set-up more efficient
17. Recent developments to IC in the EU
Increased attention to objectives and performance management; to risks and governance as a whole;
Clearer defined legal mandate for Internal Control Clearer mandates and descriptions of tasks for control
and internal audit (and financial inspection) Internal Audit professionalism (certification schemes) Type of engagements (from assurance audit to
performance audit and consulting)
18. Developments 2009-2012
2009 Conference on PIFC
Structured questionnaire
1st Compendium
PIC Conference 2012
outcome
Working Group to prepare ‘permanent’ EU 27 Network
19. What EU Commission does in partnership with Member States
Initiated Compendium Manages PIC Network Manages PIC working group Co-organises Conferences with Member States Contributes to Discussion Papers Distributes Newsletters
20. PIC network
Partnership between the European Commission and Member States to which EC provides coordination and logistical support.
Network composed of internal control and internal audit experts from the public sector of every Member State.
Platform for sharing experience and good practice when reengineering or otherwise improving public sector governance systems
Set up at February 2012 PIC Conference where the 1st ever Compendium on PIC systems in the EU Member States was presented
21. PIC Working Group
A PIC Working Group coordinated and chaired by DG BUDG lets Member States dictate the topics for the PIC Conference
DG BUDG coordinates and chairs WG meetings and ensures quality control of the outputs
Current members: Belgium, Czech Republic, Estonia, France, Hungary, the Netherlands, Portugal, and United Kingdom (Austria, Bulgaria, Poland's mandate ended in May 2014)
22. PIC Working Group
The Working Group meetings have already produced 4 discussion papers. The topics were endorsed by all participants at the Conference of the EU-28 PIC Network. They are extensively discussed at Conference workshop
Optimising Internal Control through Performance Management
Continual organisational improvement by integrating Internal Control into the management cycle
Quality assurance for Internal Audit Role of Audit Committees for Internal Audit in the Public
Sector
23. Keeping the Network informed
The PIC Newsletter
An edition after each Working Group meeting
http://ec.europa.eu/budget/pic/lib/newsletters/PICNewsNo5.pdf
Compendium (2nd edition 2014)• http://ec.europa.eu/budget/pic/compendium/
index_en.cfm • http://ec.europa.eu/budget/pic/lib/book/
compendium/HTML/index.html
2014 PIC conference• http://ec.europa.eu/budget/pic/conference/
index_en.cfm
Contact • [email protected]
24. Developments 2014
Robert Gielisse, CIA, CGAPPrincipal Advisor, DG BUDGIn charge of PIC and PIFC
Thank you!
Questions?