Audit/inspection in connection with investment projects - the - - PowerPoint PPT Presentation

Audit/inspection in connection with investment projects

• the Belgian case

Tom De Bue – Finance Inspector Tuesday May 17th 2011

Different cycles in an organisation

• Production cycle
• Human resources cycle
• Revenue cycle
• Expenditure cycle

Scope of my presentation

• Limited to the federal government,

although main principles also apply to regional level (regions and communities)

• Not included

– Sector of social security institutions – Local government – European institutions

The federal government budget

• A document, prepared by the ministries

and the government (executive branch)

• Approved in parliament (legislative branch)
• Provides very detailed appropriations
• Executed by the ministries and the

government (executive branch)

Example: Department of Defense

Financial and budgetary rules in execution of the budget

• Decision to invest
• Decision to award the contract to a

contractor

• Decision to pay an invoice
• In short: all decisions with budgetary

impact

Delegation : who decides what

• Council of Ministers and the Secretary for

the budget (the King co-signs, but only formally)

• Individual Minister and the secretary for

the budget (the King co-signs, but only formally)

• CEO of public entity
• Other persons in a public entity

Delegation : who decides what

Example: for a randomly chosen public entity (SPF Sécurité Sociale) for a construction project: exceptions are possible

– Council of Ministers: above an amount of 11 à 17,8 mio euro (15,8 à 25,5 million USD) – Individual Minister: above an amount of 250.000 euro (358.000 USD) – CEO of the entity: up to 250.000 euro (358.000 USD)

Before the decision is made

• Prior approval of the Finance inspection

(inspection des finances) is mandatory

– High level inspector – Local representative for the Secretary for the budget – Decentralised - located within the spending Ministry – Independent from the spending department.

• Prior approval of the engagement officer

(controleur des engagements) is mandatory

– Mid-level inspector – Local representative of the Secretary for the budget. – Decentralised - located within the spending Ministry – Independent from the spending department.

Elements to be taken into account

• Is the expenditure/decision legal?

– Public procurement law – Contract law – Etc.

• Is there an appropriation available?
• Is the expense incurred in accordance with

the appropriation?

Before the payment: Belgian Court of auditors

• After the decision has been taken but before the

payment

• Belgian Court of auditors (Cour des comptes)

auditor of the democratically elected Parliament

• Approval of the payment

– is there an invoice present – is the amount correct – is there an appropriation available, etc

• The Court enjoys constitutional independence.

Considerations concerning the Belgian framework of financial control and audit

• General remarks
• Emphasis on prior approval of individual decisions (“ex-ante visa”)
• Relatively little post-work
• Prior approval is mostly focused on the existence of the engagement

and legal issues

• Considerations concerning efficiency and effectiveness are mostly

left to the political level and are relatively underdeveloped

• Lots of actors involved. No clear division of duties. The single audit

principle is relatively little developed in the budgetary framework

• Dominance of the political level in the decisions with budgetary

impact, up to the smallest amounts

Evolution of the Belgian framework of Financial control

• Under the influence of mostly Anglo-saxon

countries (US, UK, New Zealand, etc.) the system is slowing adapting itself to ad different form of financial control

– COSO-report (integrated framework for internal control) – INTOSAI, international organisation for supreme audit institutions

Features of the evolution of the system

• Introduction of reinforced internal control

– By structuring processes and goals – Conducting risk analyses and implementing measures to reduce the risks – Appointment of internal auditors and audit committees

• Changing nature of inspections

– From inspection in the form of prior approval of a individual decision (before or “ex-ante”) – emphasis

• n an individual decision and regularity of the

decision – Towards inspection in the form of audits of functions, systems or entities (after or “ex-post”) – emphasis on considerations of efficacy and effectiveness

Thank you for your attention Questions?