1. SUPREME AUDIT OFFICE CZECH REPUBLIC REPORT FROM DISCUSSION GROUP 3 AUDIT ISSUES FOR PUBLIC PRIVATE PARTNERSHIP VI EUROSAI Training Event Better Auditing of Public Aids and Subsidies Prague, 6-8 November

2. VI EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6-8 November 2006 2 Leadership of Discussion Group: National Audit Office (Richard Wade) Presentations and case studies: Netherlands Court of Audit (Harry Kramer) State Audit Office of Hungary (Gusztáv Báger) Alsace Accounting Chamber (Jean François Forestier)

3. VI EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6-8 November 2006 3 Netherlands Court of Audit (Harry Kramer) Introduction into PPP in Netherlands High Speed Train project from Rotterdam to Belgium – why this project? Public Sector Comparator and Public Private comparator issues Audit findings Very hard to stop the PPP process

4. VI EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6-8 November 2006 4 Netherlands Court of Audit (Harry Kramer) Conclusions: If decision is meant to have a financial basis – the calculation should be checked If decision is made on policy grounds – the implementation should be checked A look at risk allocation recommended

5. VI EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6-8 November 2006 5 State Audit Office of Hungary (Gusztáv Báger) Informed on general situation of PPP in H. 4 major groups of projects (road infrastructure, large sport facility projects, educational/cultural investments, prisons Problems identified – risk allocation, contracting, financing

6. VI EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6-8 November 2006 6 State Audit Office of Hungary (Gusztáv Báger) Some of recommendations: Need to balance short term savings in publicly funded investment with long term efficiency Need for capacity building (applies to more countries) Guidelines for planning ahead The impact of PPP (cap at 2% annual budget expenditure)

7. VI EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6-8 November 2006 7 Alsace Accounting Chamber (Jean François Forestier) Presentation on Water Provision Management Audits General information: almost 37 thousand communes (often very small on population) Various types of management – private or run by communes Communes are audited every 4 to 6 years and water provision contracts are always included Presentation gave overview on audit procedures, control of contract‘s provisions, execution and final recommendation Some of key findings: Unbalanced contract negotiations with big contractors from the start Unadjusted revision provisions Private sector looking for demand risk „upside“ only with protection from any fall in water consumption Special fees paid by companies

8. VI EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6-8 November 2006 8 Alsace Accounting Chamber (Jean François Forestier) Some of key findings (continued): Undue direct costs - scope of work not always relevant to the paying water consumer Unallocated costs Replacement costs – inadequate maintenance and renewal – leading to unjustified profits Recommendations: Amend contracts (audit every 4-6 years in average 12 year contract) Start right (inventory of water service first, performance indicators)

9. VI EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6-8 November 2006 9 Shortly on key note presentations from morning sessions: National Audit Office (Richard Wade) PPP Centrum Czech Republic (Libor Cupal)

10. VI EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6-8 November 2006 10 National Audit Office (Richard Wade) UK experience to date Major audit issues – financial and performance The dangers of off balance sheet accounting A comprehensive audit approach

11. VI EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6-8 November 2006 11 PPP Centrum Czech Republic (Libor Cupal) Market development summary Standard Project Agreement Pilot projects Framework / institutional capacity Control process Conclusions : be realistic, be pragmatic, look for best practice, diversified focus important, systematic approach

12. VI EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6-8 November 2006 12 Conclusions PPP audit can have real impact!!! Netherlands – reexamination of model France- recommendations to protect local communities from unbalanced contracts Hungary – budget planning for the extent of PPP UK – influence on government guidance Czech Rep. – a central body to provide expertise before audit starts

13. VI EUROSAI Training Event: Better Auditing of Public Aids and Subsidies 6-8 November 2006 13 www.nku.cz Thank you for your attention Radek Majer radek.majer@nku.cz