Transcript PIFC Public Internal Financial Control - SIGMA

Union, principally financed by the EU
A joint initiative of the OECD and the European
2nd SIGMA NETWORKING
SEMINAR
OECD Conference Centre
Paris 27-28 November 2008
© OECD
Public Internal Financial
Control (PIFC)
Ritva Heikkinen
European Commission
DG BUDGET B.4
PIFC: the concept
• What is PIFC?
– A comprehensive concept developed by the EC for
re-engineering internal control systems in the public
sector in line with international standards
– EU accession requirement under Chapter 32
– PIFC = (IC = FMC + IA) + CHU
• Why PIFC?
– Integral part of good governance: increased
accountability and transparency in spending public
money (3Es)
PIFC development stages
1. Conceptualisation
PIFC Policy Paper plus Action Plan
2. Legislation
Primary (framework) and secondary laws
3. Administrative Reform
CHU(s); Finance Directorates, IA Units
4. Training
For managers, financial officers/controllers, auditors
PIFC development: challenges (1)
• Re-engineering internal control is a long-term project –
no short-term political gains
• Conceptualisation and legal drafting – too quickly, often
by external assistance projects without necessary
stakeholder consultations
• Often very detailed, prescriptive primary legislation
• Resistance to change (managers, inspectors)
• Managerial accountability not either well understood or
limited due to legal constraints and/or centralised
decision-making
PIFC development: challenges (2)
• Focus predominantly on IA; insufficient focus on FMC
• FMC (mis)understood to be a job only for specialists
rather than for everybody in the organisation
• IA perceived as additional control, i.e. “old inspection
with a new name” rather than consulting activity
• IA not sufficiently independent
• Dependency on technical assistance/ twinning: lack of
sustainability after projects end
PIFC: Key conditions
• Firm long-term political commitment from the outset and
appropriate steps (Policy Paper and Action Plan)
• General acceptance among public sector managers that
reform is necessary
• Adequately resourced and skilled Central Harmonisation
Unit to drive for the change
• IA development only in wider framework of Internal
Control (parallel development of FMC)
• Benchmarking procedures for measuring progress over
time (e.g. peer reviews)
PIFC as a leading concept has a track
record of success:
• An integrated and innovative approach for policy making
and central harmonisation
• Internal control has become a strategic issue in the
accession context
• Irreversible and efficient move to modernisation of public
administration: increased accountability and
transparency
• PIFC is the norm in public internal control area for
Candidate Countries, Western Balkan and selected ENP
countries
‘Outside’ areas that interact with
PIFC environment
• PIFC is not a ‘stand alone’ approach
• Interconnected with
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Accounting
National budget cycle: from input to output budget
Fight against fraud (inspection)
External audit
– Civil Service Reform
EU support on PIFC
• Chapter 32 requirements generally define PIFC
support in absence of a global PAR/PFM
framework
• Room for “cross-fertilisation”: Civil service
reform, DIS, Public Expenditure Management
• Appropriate mix of various instruments (SIGMA,
TAIEX, twinning/ technical assistance) required
Further information
• Welcome to the world of PIFC - Booklet by the European
Commission (2006)
– http://ec.europa.eu/budget/library/documents/overviews_others/brochu
re_pifc_en.pdf
• FccWebsite maintained by DG Budget
– [email protected] (for passwords)
• PIFC: a European Commission initiative to build new
structures of public internal control in applicant and thirdparty countries - Book by Robert de Koning (2007)
• DG Budget, Unit B.4
– [email protected]