1. Budget of Municipalities - Planning and Execution the Role of the Supreme Audit Office of Poland (NIK) Warsaw, October 2015 Iwona Zyman Director of the NIK Regional Branch in Opole Piotr Miklis Director of the NIK Regional Branch in Katowice

2. LOCAL GOVERNMENT STRUCTURE Poland has a three-level local government structure: The basic local government unit - commune/gmina commune/gmina self-governmentpoviat self-governmentvoivodeship self-government.

3. DIVISION Currently Poland is divided into: 2478 communes/gminas: 304 urban, 608 urban-rural and 1566 rural 3 2478 communes/gminas 314 poviats 16 voivodeships

4. L OCAL GOVERNMENT UNITS QUALITIES legal personality ownership right independence protected by the law not organized in a hierarchical manner the activity scopes of different local government levels are separated 4

5. LOCAL GOVERNMENT TASKS OWN fulfilment of the citizens’ needs COMMISSIONED government administration tasks such as: -conducting the elections - issuing vital records - paying out permanent benefits 5

6. LOCAL GOVERNMENT REVENUES Local government units execute their tasks on the basis of the budget plan The main sources of revenues: own income (including local taxes and fees) general subsidies designated subsidies out of the state budget The share of local government units in the public revenues depends on their tasks 6

7. AUDIT AND SUPERVISION 7 LOCAL GOVERNMENT UNIT PRIME MINISTER VOIVODE REGIONAL ACCOUNTING OFFICES

8. AUDIT AND SUPERVISION the activity of local government units is supervised with regard to legality Regional Accounting Offices audit the financial management at least once in four years they carry out a complex audit of the financial management of local government units 8

9. when the local self-government reform was underway in Poland, there was a debate concerning the mandate of NIK’s audit, as well as the audit scope, in the area of municipal entities after long-lasting discussions it was finally agreed that NIK is to audit local self-government bodies SAO AUDIT MANDATE

10. The Supreme Audit Office audit the activity of: local government units communal legal persons other communal organisational units 10

11. AUDIT OF LOCAL SELF-GOVERNMENT ENTITIES The Supreme Audit Office as the chief state audit body is empowered to assess the activity of the whole administrative system and the management of any public funds govenrmental entities – 4 criteria local-government entities – 3 criteria

12. audit criteria legality economy - sound management – proper managment reliability – integrity The activity of the local government units is assessed by the Supreme Audit Office with regard to three criteria: omitting the fourth criterion of audit conducted in local self-government entities, namely efficacy, that is used as one of the four criteria of NIK’s audit in governmental entities, results from the autonomous character of such entities

13. In practice it means that NIK audits e.g. how the public money is spend on a specific investment of a local self-government entity with regards to legality and sound management but the audit does not assess the investment’s efficacy i.e. if the investment fulfils the citizens’ needs and expectations The NIK’s audit of local self-government entity cannot include the criteria of efficacy even if the entity implements tasks commissioned by the central governmental administration EFFICACY

14. PERMORMANCE/COMPLIANCE AUDIT PLANNED AD HOC SAO AUDIT MANDATE FINANCIAL/BUDGETARY AUDIT

15. Due to the fact that the Supreme Audit Office presents to the Sejm (lower chamber of the Polish Parliament): the analysis of the State Budget Execution and the Monetary Policy Guidelines opinion on the approval for the Council of Ministers it is obliged to conduct annual audits of the state budget and the utilisation of financial resources designated to the execution of tasks commissioned by the local self-government entities BUDGETARY AUDIT OF LOCAL SELF-GOVERNMENT ENTITIES

16. In the first part of each year all of the NIK organisational units, including regional branches, conduct budget audits, also in local self-government entities Regional branches of the NIK conduct audits of all three local government levels BUDGETARY AUDIT OF LOCAL SELF-GOVERNMENT ENTITIES

17. During such audits NIK checks i.a. the performance of tasks financed or co-financed out of the state budget and the way in which the resources obtained by the local government units to execute them are being planned and spent Furthermore, NIK verifies how the local governments plan, obtain and pass to the state budget the revenues being State Treasury revenues BUDGETARY AUDIT OF LOCAL SELF-GOVERNMENT ENTITIES

18. BUDGETARY AUDIT IN LOCAL SELF-GOVERMENT COVERS IN PARTICULAR: assessment of the internal control and management audit systemssettlement of (selected) subsidies designated for commissioned taskssettlement of subsidies for own tasksexamination of public procurementexamination of selected investments financed out of the EU budget regularity and promptness of charging and paying the income of the State Treasury Budget regularity, integrity and promptness of preparing financial statementsmanner of implementing public tasks financed or co-financed by the state budget 18

19. Detailed scope of audits of budgets of local self-government entities conducted within the audit of the State Budget is established annually It covers budgetary expenditure of local self-government entities important in a given year, or implementation of tasks important from the point of view of the state and its citizens financed or co-financed from the state budget BUDGETARY AUDIT OF LOCAL SELF-GOVERNMENT ENTITIES National Local Roads Reconstruction Programme 2012-2015

20. Apart from the audit of the Execution of the State Budget NIK also conducts planned or ad hoc audits among local self-government entities connected with financial issues

21. In the years 2011-2013 NIK audited more than 4000 local self-government entities and entities subordinate to them (e.g. municipality companies or community partnerships) or supervised by them (e.g. schools, hospitals) The audit covered almost all aspects of the activities of local self-government entities

22. NIK conducted, among others, the below listed audits concerning the local government units and their debt: 22 Functioning of the selected units providing economic and administrative service to schools and education establishments Influence of projects co-financed within the Operational Programme of the Opole Voivodeship 2007-2013 on the increase of economic attractiveness of the Opole voivodeship Use of technical assistance by the local governments of voivodeships within the Rural Development Programme 2007-2013 Regularity and effectiveness in the execution of local taxes and property income by the local government units Execution of tasks by the regional accounting chambers aimed at the prevention of threats resulting from an excessive debt of the local government units

23. Thank you 23