1. 1 The valorisation of human resources charged of the municipal finance management in Europe Grzegorz Orawiec Grzegorz Orawiec

2. 2 European Charter of Local Self-Government Art. 2 Constitutional and legal foundation for local self-government Art. 2 Constitutional and legal foundation for local self-government ”The principle of local self-government shall be recognised in domestic legislation, and where practicable in the constitution” Art. 4 (2) Art. 4 (2) ”Local authorities shall, within the limits of the law, have full discretion to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority”

3. 3 European Charter of Local Self-Government Art. 6 (2) Art. 6 (2)  The conditions of service of local government employees shall be such as to permit the recruitment of high-quality staff on the basis of merit and competence; to this end adequate training opportunities, remuneration and career prospects shall be provided  Legal network in practice: - National regulations - Internal Office Codes

4. 4 National regulations Local-self government administration Local Government Employees Act – 2008: Local Government Employees Act – 2008: - Organisation of human resouces - Recruitment and selection procedures - Qualification requirements - Internal and external staffing - The role of manager in HRM - Employee training - Employee development plans The outcome of polish research - two key conclusions: The outcome of polish research - two key conclusions: Size of the office Size of the office Commitment of persons responsible for HRM Commitment of persons responsible for HRM

5. 5 Local Government Employees Act : The idea of ”New Public Management” based on private sector: The idea of ”New Public Management” based on private sector: - flexibility / quality criteria / responsibility / new skills / openness - breaking: bureaucracy / only legal and social support / fixed system Recruitment procedures: Recruitment procedures: - open and competitive / basic + additional criteria / written + oral stage - manager: min. 3 years experience (public / private sector) - priority of internal verification (75%) - final list – min. 5 candidates - first contract – max 6 months - Preparation course: 3 months → exam - disabled persons (6% threshold ↔ preferences)

6. 6 Local Government Employees Act :  Management of human resouces - employee’s assessment (periods: 6 months ↔ 2 years, criteria, active ≠ passive method, conclusions → consequences) - employee training and development plans: annual training plan (new e.g. financial, public procurement rules) / individual track / talents - encouragements: mentoring / international experience / EU projects - position’s description and perspective of promotion - fluctuation of the staff (public ↔ private sector) - key role of office-manager in HRM (clear rules / motivation)

7. 7 The main independent institutions in the sector of public finance in Poland National fiscal entities are defined as : National fiscal entities are defined as : - independent public bodies, other than the central bank, government or parliament that prepare macroeconomic forecasts for the budget, monitor fiscal performance and/or advise the government on fiscal policy matters. The Supreme Chamber of Control (NIK) – state budget The Supreme Chamber of Control (NIK) – state budget The Regional Audit Chamber (RIO) – regional & local level The Regional Audit Chamber (RIO) – regional & local level The Treasury Control Office (UKS) The Treasury Control Office (UKS) The Supervisor of Public Finance Discipline The Supervisor of Public Finance Discipline * Internal Audit (Act on Public Finance -2009) * Internal Audit (Act on Public Finance -2009)

8. 8 RIO (The Regional Audit Chamber) RIO (The Regional Auditt Chamber) RIO (The Regional Auditt Chamber) – concentration on public finance management at self-government sector (three levels: regions / counties / local municipalities) – directly controlling the budgets: e.g. economic classification, charts of accounts, fiscal rules (e.g. debt limits, investemnts / current spendings) The scope of the control: The scope of the control: - the proposal of the budget - annual execution of the budget - quartely financial report (+ Ministry of Finance) - conformity with law (e.g. economic classification of budget expenses & chart of accounts)  Information & training tasks (advisory activity) e.g. PBB

9. 9 The Regional Account Chamber (RIO) The independent state institution with control powers to local self- governments (mainly financial aspect) The independent state institution with control powers to local self- governments (mainly financial aspect) The RIO is subordinate to the appropriate Minister for Public Administration & supervision of the Prime Minister The RIO is subordinate to the appropriate Minister for Public Administration & supervision of the Prime Minister The network – 16 RIO based on polish administrative division The network – 16 RIO based on polish administrative division RIO is divided into departments: RIO is divided into departments: - Control of finance management - Information, analysis and training

10. 10 The Regional Account Chamber (RIO) the main control areas: Control local self-government bodies (regions – counties – local municipalities & associations & other entities spending money from self-government budget) in area of: - public finance (all aspects of local budgets) - public procurement The proposal of the budget, obligatory financial forecasts and indicators Annual execution of the budget & quartely financial report (+ Ministry of Finance) Conformity with law (e.g. economic classification of budget expenses & chart of accounts) Supervision of local self-government‘s resolutions (Local Councils - opinions) Information & training activity (eventual income can be destined only to the same activity)

11. 11 Basic definitions Internal audit - an independent, objective assurance and consulting activity designed to add value and improve an organization's operations (the IIA's definition) Internal audit - an independent, objective assurance and consulting activity designed to add value and improve an organization's operations (the IIA's definition)IIA Objective source of independent advice + catalyst for improving an organization’s effectiveness and efficiency (by recommendations based on analyses and assessments of data and business processes) Objective source of independent advice + catalyst for improving an organization’s effectiveness and efficiency (by recommendations based on analyses and assessments of data and business processes) Internal auditing activity is primarily directed at improving internal control Internal auditing activity is primarily directed at improving internal controlinternal controlinternal control supercontrol ≠ professional external support supercontrol ≠ professional external support

12. 12 Basic definitions Management is responsible for internal control & audit system. Management is responsible for internal control & audit system. Managers establish policies and processes to help the organization achieve specific objectives in each of these categories. Managers establish policies and processes to help the organization achieve specific objectives in each of these categories. Internal auditors perform audits to evaluate whether the policies and processes are designed and operating effectively and provide recommendations for improvement. Internal auditors perform audits to evaluate whether the policies and processes are designed and operating effectively and provide recommendations for improvement. Internal control and audit system & the process of decision making and monitoring Internal control and audit system & the process of decision making and monitoring (public sector = private sector)

13. 13 Internal control & audit system in public sector The example of local government in Poland The Ministry of Finance is responsible for coordination of financial control and internal audit in public finances entities - Polish Act on Public Finance (27.08.2009) art.272 – 296 The Ministry of Finance is responsible for coordination of financial control and internal audit in public finances entities - Polish Act on Public Finance (27.08.2009) art.272 – 296 Local self-government: Local self-government: - obligation: if total value of expenditures and spendings in local budget > 10 mln € - the person responsible for internal audit → the manager of the administrative unit (mer, mayor, president, marshal) = legal entity External service (< 25 mln €) v internal auditor → obligation to create separate one-man/numerous unit External service (< 25 mln €) v internal auditor → obligation to create separate one-man/numerous unit The manager of internal audit unit is directly subordinate to the manager of this legal entity The manager of internal audit unit is directly subordinate to the manager of this legal entity

14. 14 Internal control & audit system in public sector The example of local government in Poland Internal audit in subordinate organizational/legal entity in the scope of Internal audit in subordinate organizational/legal entity in the scope of - tasks perform for local municipality (culture, cleaning) - operate the assets of this municipality (education) Main audited risk factors – local self-government: Main audited risk factors – local self-government: - external (EU ^ national law, social pressure, random incidents) - financial (cost limits, unplanned spending, cash flows, exchange rate) - quality of management control (staff’s qualifications, organizational scheme) - construction of planned tasks (lack of consequence, indicators, rules) Question: What is the first result of internal audit ? Question: What is the first result of internal audit ?

15. 15 Internal audit report The report at the end of each audit - summarize findings, recommendations, and any responses or action plans from management. The report at the end of each audit - summarize findings, recommendations, and any responses or action plans from management. Key parts: Key parts: - executive summary - body that includes the specific issues or findings identified and related recommendations or action plans - appendix information such as detailed graphs and charts or process information  The main value → the recommendations in an internal audit report !

16. 16 Auditors - crucial ethical issues The base: independent ^ objective work Competence ^ care ^ professional perfection ^ ethic - - Formal conflicts (family relations, former employer) → written note for superior (decision) - - Typical, usual conditions (e.g. snacks v dinners ?) - - Any small gifts, promotions materials from EU funds ? The basic rule: Always individual decision depending on the specific situation: - - no later unofficial commitments ! - - Normal objective work of auditors ≠ dubious distance

17. 17 Summing up Clear recruitment, selection and promotion procedures Clear recruitment, selection and promotion procedures Providing opportunities to lead (in-charge) tasks / cases with stronger individual engagement (departmental improvement tasks) - financial and other motivations Providing opportunities to lead (in-charge) tasks / cases with stronger individual engagement (departmental improvement tasks) - financial and other motivations Real participation in employee’s assessment with measurable concequences Real participation in employee’s assessment with measurable concequences Flexible employee training and development plans with accurate budget Flexible employee training and development plans with accurate budget Providing both outside training (e.g., seminars) and in-house training (e.g., company systems) Providing both outside training (e.g., seminars) and in-house training (e.g., company systems) Rotating through various internal teams / units Rotating through various internal teams / units Systemic support – external institutions (RIO) and funds (ESF) Systemic support – external institutions (RIO) and funds (ESF)  The key person – manager of Public Office