Audit/inspection in connection with investment projects - the - PowerPoint PPT Presentation

Audit/inspection in connection with investment projects - the Belgian case Tom De Bue – Finance Inspector Tuesday May 17th 2011

Different cycles in an organisation • Production cycle • Human resources cycle • Revenue cycle • Expenditure cycle

Scope of my presentation • Limited to the federal government, although main principles also apply to regional level (regions and communities) • Not included – Sector of social security institutions – Local government – European institutions

The federal government budget • A document, prepared by the ministries and the government (executive branch) • Approved in parliament (legislative branch) • Provides very detailed appropriations • Executed by the ministries and the government (executive branch)

Example: Department of Defense

Financial and budgetary rules in execution of the budget • Decision to invest • Decision to award the contract to a contractor • Decision to pay an invoice • In short: all decisions with budgetary impact

Delegation : who decides what • Council of Ministers and the Secretary for the budget (the King co-signs, but only formally) • Individual Minister and the secretary for the budget (the King co-signs, but only formally) • CEO of public entity • Other persons in a public entity

Delegation : who decides what Example: for a randomly chosen public entity (SPF Sécurité Sociale) for a construction project: exceptions are possible – Council of Ministers: above an amount of 11 à 17,8 mio euro (15,8 à 25,5 million USD) – Individual Minister: above an amount of 250.000 euro (358.000 USD) – CEO of the entity: up to 250.000 euro (358.000 USD)

Before the decision is made • Prior approval of the Finance inspection ( inspection des finances ) is mandatory – High level inspector – Local representative for the Secretary for the budget – Decentralised - located within the spending Ministry – Independent from the spending department. • Prior approval of the engagement officer ( controleur des engagements ) is mandatory – Mid-level inspector – Local representative of the Secretary for the budget. – Decentralised - located within the spending Ministry – Independent from the spending department.

Elements to be taken into account • Is the expenditure/decision legal? – Public procurement law – Contract law – Etc. • Is there an appropriation available? • Is the expense incurred in accordance with the appropriation?

Before the payment: Belgian Court of auditors • After the decision has been taken but before the payment • Belgian Court of auditors ( Cour des comptes ) auditor of the democratically elected Parliament • Approval of the payment – is there an invoice present – is the amount correct – is there an appropriation available, etc • The Court enjoys constitutional independence.

Considerations concerning the Belgian framework of financial control and audit • General remarks • Emphasis on prior approval of individual decisions (“ex-ante visa”) • Relatively little post-work • Prior approval is mostly focused on the existence of the engagement and legal issues • Considerations concerning efficiency and effectiveness are mostly left to the political level and are relatively underdeveloped • Lots of actors involved. No clear division of duties. The single audit principle is relatively little developed in the budgetary framework • Dominance of the political level in the decisions with budgetary impact, up to the smallest amounts

Evolution of the Belgian framework of Financial control • Under the influence of mostly Anglo-saxon countries (US, UK, New Zealand, etc.) the system is slowing adapting itself to ad different form of financial control – COSO-report (integrated framework for internal control) – INTOSAI, international organisation for supreme audit institutions

Features of the evolution of the system • Introduction of reinforced internal control – By structuring processes and goals – Conducting risk analyses and implementing measures to reduce the risks – Appointment of internal auditors and audit committees • Changing nature of inspections – From inspection in the form of prior approval of a individual decision (before or “ex-ante”) – emphasis on an individual decision and regularity of the decision – Towards inspection in the form of audits of functions, systems or entities (after or “ex-post”) – emphasis on considerations of efficacy and effectiveness

Thank you for your attention Questions?