Financial Management and Control
Arrangements in Practice
Monika Kos, Ministry of Finance, the Republic of Poland
Scope of the presentation
What is FMC?
Main roles and responsibilities
The Polish example
Challenges and benefits
what is FMC?
Financial Management and Control (FMC)
– conceptual meaning
2 levels of Internal Control
Entire control system within
the public finance sector and
all institutions involved in
controlling public funds
(Treasury, SAI, etc)
Approach of Government to
ensure that managers of all
public entities establish,
maintain and monitor their
What is FMC?
Financial Management and Control is a
comprehensive system of decentralised internal
control put in place by and under the responsibility
of heads of public budget entities to provide
reasonable assurance that budget and other
resources will be used in a regular, ethical,
economical, effective and efficient manner towards
the achievement of objectives.
What is new about FMC?
FMC - spending
resources in efficient
and effective way to
systems compliance with
the budget, laws
What is FMC about?
requires a different style of
public administration with
emphasis upon ‘management’
the integration of finance with
management and achieving
affects legal and organisational
improving the way in which
public money is used - real
meaning of ‘efficiency and
Key actors in establishing FMC
The Ministry of Finance:
- The Central Harmonisation Unit;
- The Budget Policy Directorate;
- The Treasury.
The Ministry (or other institution) responsible for public
Public finance sector entities:
- Heads of entities
Elements of the FMC
• Managers of all levels public finance sector
entities must be accountable for the activities
they carry out in operational policies,
including financial management and control
• The manager is responsible for achieving
objectives within budget, on time, efficiently
Requirements for Managerial Accountability
Authority for head of public entity to make
Good quality information.
Managerial structure within the organisation and
delegation of authority to individual managers.
Objectives set for each manager, agreed resources,
timescales, accountability arrangements,
boundaries of the manager’s responsibilities.
Action taken when there is management failure.
Key actors in establishing and maintaining
FMC on the entity level
Public finance sector entity:
- Head of entity
- Operational managers
- Financial officer
- Assurance providers (eg. Internal audit)
The head of entity is responsible for
adequate rules for
FMC to carry out the
Managerial accountability covers:
The manner in
activities to be
put in place
system and its
The impact of FMC on role of finance officer
The role of the finance officer will be to
support the manager and to signal the manager
if resources are not being used efficiently and
The finance officer becomes a top level
financial adviser to management – at all levels.
The tasks of the finance officer
The finance officer becomes responsible for:
• Providing the manager (at whatever level) with the financial
information he/she requires to enable the manager to achieve
efficiency and effectiveness;
• Ensuring that the internal financial control standards are
properly met throughout the organisation;
• Developing strategic financial plans for the organisation;
• Liaising with the MoF over budget preparation/financial
• Ensuring that managers pay full attention to management risks
related with budget spending process.
Role of internal audit
• Independent and
of the adequacy of
existing systems and
• Independent consulting
head of entity in
FMC and COSO model
FMC is founded upon five interrelated components of
internal controls (COSO):
The Polish experience – key regulation
Key regulations included in
the Public Finance Act
were introduced in 2002.
The PFA was updated 3 times
(2005, 2006 and 2009)
- the last came into force
in January 2010
The Polish experience – the structure
The Polish CHU in the MoF
for FMC and IA
FMC in Poland
The FMC is called Management Control, which
comprises a general set of activities undertaken
in order to ensure the implementation of
objectives and tasks in an:
• and timely manner,
• compliant with the provisions of law.
The FMC objectives are to ensure in particular:
2 interrelated levels of FMC in Poland
• the minister in government administration
branches, a commune foreman, a mayor, a
chairman of the management board of the
secondary level of
local government unit
primary level of
• the head of the entity
Development and publishing on the website:
Annual activity plan - by the end of November each
Report on the plan execution and Statement on the
condition of management control - by the end of
April each year
The Minister in charge of the branch – mandatory;
Supervised entities – up to the minister’s decision;
Local government – up to decision of the head of
entity or supervisory body.
of the Prime
The Ministry of
Challenges on the strategic level:
FMC should be a part of public administration reform, including
public finance management reform;
Legal means that are needed to implement FMC should be
properly coordinated with all other relevant laws.
Development of FMC is not only a role of the CHU and the
Ministry of Finance; there should be close cooperation with
other institutions involved in public reform process.
The law is just a first not the final step in the reform, there
should be a strategy for its implementation and maintaining.
Challenges on the coordination level
Vision: Vision about the FMC and its good communication is
Control: Understanding that the FMC is not a new type of
control activities but a management system, involving all
levels of management and staff.
Monitoring by CHU: Not to focus on the existence of
bureaucratic processes but promote a new management
style based on planning, risk management and measuring
achievements of objectives.
Timetable: Assuring time and support to the head of entities
for building new approach within entity.
Challenges on the operational level:
Raising management awareness and professionalism by:
• providing seminars, conferences and training;
• introducing pilots programmes;
• sharing good practice examples.
Creating management tools:
• standards, guidelines, methodology;
• professional internal audit service;
• tools for self-assessment, etc.
The sound FMC should help public entities to:
improve quality of
and risks of
facilitate coordination and
guide operations to
the service and
increase trust and
improve image of
the public sector.
Developing FMC is thus an iterative process that involves
continually improving performance and governance,
rather than introducing a new, extra system.
The existing management system shall be structured,
formalised and improved in accordance with identified
needs and cost considerations.
Internationally-recognised or national standards and
frameworks offer common points of reference within
trends in modern management and provide a
comprehensive, structured approach to internal control.