Tribunal de Contas Quality and comparability of Public Debt data: - - PowerPoint PPT Presentation

Tribunal de Contas

Quality and comparability of Public Debt data: the role of the Portuguese Court of Auditors

Annual Meeting of the INTOSAI Working Group on Public Debt Hyderabad, Telangana, India 11-13 July 2018

INSTITUTIONAL ARRANGEMENTS AT EUROPEAN LEVEL FOR THE PUBLIC DEBT SURVEILLANCE  LEGAL FRAMEWORK  PUBLIC DEBT IN THE EU FISCAL SURVEILLANCE (EDP PROCESS) INSTITUTIONAL ARRANGEMENTS AT NATIONAL LEVEL  COMPILATION AND VALIDATION OF PUBLIC ACCOUNTS  THE ROLE OF THE PORTUGUESE COURT OF AUDITORS

• OPINION ON THE GENERAL STATE ACCOUNT
• INSTITUTIONAL COOPERATION AGREEMENT IN THE FIELD OF

GENERAL GOVERNMENT STATISTICS

• FUTURE WORK
• ACCOUNTABILITY ARRANGEMENTS

Quality and comparability of the PD data: the role of the Portuguese Court of Auditors

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Quality and comparability of the PD data: the role of the Portuguese Court of Auditors

INSTITUTIONAL ARRANGEMENTS AT EUROPEAN LEVEL FOR THE PD SURVEILLANCE

• LEGAL FRAMEWORK

Maastricht Treaty (1992) creation of the Euro

Since the introduction

• f euro notes and

coins in 2002, 19 EU countries have joined the euro area

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Quality and comparability of the PD data: the role of the Portuguese Court of Auditors

INSTITUTIONAL ARRANGEMENTS AT EUROPEAN LEVEL FOR THE PD SURVEILLANCE

• LEGAL FRAMEWORK

Treaty on Stability, Coordination and Governance Stability and Growth Pact Protocol on the excessive deficit procedure (EDP)

• Management of EMU
• Coordination of economic and

fiscal policies in EU countries

Budgeta ry discipl ine EU Member States

• Government deficit must not exceed 3%
• f GDP
• Government debt must not exceed 60%
• f GDP

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Government debt: Relevant sustainability indicator to assess whether Member States' comply with the EU budgetary legislation

Government debt, also referred to as EDP debt or as Maastricht debt

INSTITUTIONAL ARRANGEMENTS AT EUROPEAN LEVEL FOR THE PD SURVEILLANCE

• PUBLIC DEBT IN THE EU FISCAL SURVEILLANCE (EDP PROCESS)

Quality and comparability of the PD data: the role of the Portuguese Court of Auditors

Maastricht debt and all fiscal data reported by MS based on international statistical standards – European System of Accounts (ESA 2010) – Manual on Government Deficit and Debt (EU) – System of National Accounts (2008 SNA), UN – IMF GFS Manuals and Guides

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Maastricht debt (definition)

• Comprised all units classified within the general government

sector (central government, regional and local government, social security funds)

• Categories:

a) Currency and deposits b) Debt securities c) Loans

• Valuation end-of-period position at face value
• Measured on gross basis
• Consolidated

INSTITUTIONAL ARRANGEMENTS AT EUROPEAN LEVEL FOR THE PD SURVEILLANCE

• PUBLIC DEBT IN THE EU FISCAL SURVEILLANCE (EDP PROCESS)

Quality and comparability of the PD data: the role of the Portuguese Court of Auditors

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Quality and comparability of the PD data: the role of the Portuguese Court of Auditors

INSTITUTIONAL ARRANGEMENTS AT NATIONAL LEVEL

• COMPILATION AND VALIDATION OF PUBLIC ACCOUNTS

Compilation of Government Finance Statistics (GFS) in Portugal

• Statistics Portugal compiles non-financial accounts
• Central Bank (Banco de Portugal) compiles financial accounts and

Maastricht debt Internal information compiled by Central Bank is complemented with information from external entities, namely, the Management Debt Office (IGCP), regarding the Sovereign debt

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Quality and comparability of the PD data: the role of the Portuguese Court of Auditors

INSTITUTIONAL ARRANGEMENTS AT NATIONAL LEVEL

• COMPILATION AND VALIDATION OF PUBLIC ACCOUNTS

Management of Sovereign debt Public Debt Law State financing has to be authorized by Parliament Annual Budget Law Establishes limits for the amounts Government is authorized to borrow during the year Minister of Finance Guidelines to be followed by the MDO in the execution of the financing policy approved by Government

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Quality and comparability of the PD data: the role of the Portuguese Court of Auditors

INSTITUTIONAL ARRANGEMENTS AT NATIONAL LEVEL

• COMPILATION AND VALIDATION OF PUBLIC ACCOUNTS

Management of Sovereign debt MDO (IGCP)

• Public entity;
• Depending from Ministry of Finance;
• Responsible for integrated management of cash,

funding and the direct debt management (issuance

• f debt instruments, repurchase of debt, repos and

derivatives)

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Quality and comparability of the PD data: the role of the Portuguese Court of Auditors

INSTITUTIONAL ARRANGEMENTS AT NATIONAL LEVEL

• THE ROLE OF THE PORTUGUESE COURT OF AUDITORS

Court of Auditors

• Sovereign body;
• Examines the legality of public expenditure and rules on

the accounts which the law has ordered to be submitted to the Court;

• Specialized financial court (more than just jurisdictional

functions), namely issuing an opinion on the General State Account (art. 214 of the Constitution of the Portuguese Republic)

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Quality and comparability of the PD data: the role of the Portuguese Court of Auditors

INSTITUTIONAL ARRANGEMENTS AT NATIONAL LEVEL

• THE ROLE OF THE PORTUGUESE COURT OF AUDITORS

Opinion on the General State Account (annual basis)

• Assessment of the level and composition of public debt

Direct financial debt (including contingent liabilities) Method: Audit of the data provided on the General State Account (Sovereign debt); Questionnaire to other entities (autonomous funds/public enterprises) Non financial debt Method: questionnaire sent to a sample of entities

• Compliance with the guidelines and limits established by the

Parliament and the Government

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Quality and comparability of the PD data: the role of the Portuguese Court of Auditors

INSTITUTIONAL ARRANGEMENTS AT NATIONAL LEVEL

• THE ROLE OF THE PORTUGUESE COURT OF AUDITORS

Institutional Cooperation Agreement in the field of GFS for general government accounts compilation Specific institutional framework signed in 2006 between Central Bank, Statistics Portugal, Budget Directorate Now extended to other entities: Public Finance Council, Court of Auditors, General Directorate of Treasury, Debt Management Office

• Contribute to the high quality of GFS
• Monitorisation of EDP notifications
• Methodological analyses

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Quality and comparability of the PD data: the role of the Portuguese Court of Auditors

INSTITUTIONAL ARRANGEMENTS AT NATIONAL LEVEL

• THE ROLE OF THE PORTUGUESE COURT OF AUDITORS

(a) Releases to the national statistical authorities information which has given rise to observations expressed in decisions, reports or

• pinions approved by the Court, where deemed relevant by the

latter to the compilation of statistics; (b) Clarifies issues arising from the information released Court of Auditors In the field of GFS

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Quality and comparability of the PD data: the role of the Portuguese Court of Auditors

INSTITUTIONAL ARRANGEMENTS AT NATIONAL LEVEL WHO DOES WHAT ? Parliament Authorizes State financing Public Debt Law Government Ministry of Finance Establishes limits and debt instruments to be used during the year Specific guidelines Annual Budget Law Management Debt Office Financial transactions related to the issuing of Sovereign debt Decree-Law that regulates the activity of MDO (IGCP) Court of Auditors Checks the activity of MDO (Assessment of the level and composition of public debt; compliance with the guidelines and limits) Institutional Cooperation Agreement (Relevant information for GFS) Specific audits; Opinion on the General State Account Central Bank Statistics Portugal Compilation of Maastricht debt EDP notification

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Budgetary central government Other budgetary units/entities Regional and local governments Social Security Funds Public non- financial corporations Public financial corporations

(+) Liabilities Currency and deposits Debt securities Loans Trade credits Other liabilities (-) Financial Assets Nominal value Valuation Face value Market value Net debt Sovereign debt Government debt Maastricht debt Non-financial public sector debt Gross debt

General Government Central government

Instruments

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Quality and comparability of the PD data: the role of the Portuguese Court of Auditors

Entity Ministry of Finance / Management Debt Ofice Court of Auditors Statistics Portugal and Central Bank European Commission (Eurostat) Type of debt Sovereign debt Government debt Publication Management Debt Ofice / General State Account Opinion on the General State Account Institutional units included Budgetary central government Budgetary central government and other budgetary units Consolidation Not consolidated Consolidated Value (2016) 236 282,8 M€ (127,6 % GDP) 234 573,2 M€ (126,7% GDP) Consolidated 240 883,0 M€ (129,9 % GDP) Central government Regional and local governments Social Security Funds Maastricht debt EDP notification

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Quality and comparability of the PD data: the role of the Portuguese Court of Auditors

FUTURE WORK

• ACCOUNTABILITY ARRANGEMENTS

The global financial crisis in 2008, imposed a better assess risks to public debt sustainability Looking at transparency and comparability of public sector reporting

• To achieve better accountability and transparency fundamental

to have an appropriate set of accounting standards

• European government accounting arrangements very

heterogeneous

• Governments pressed to be more transparent and produce

comparable information

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Quality and comparability of the PD data: the role of the Portuguese Court of Auditors

FUTURE WORK

• ACCOUNTABILITY ARRANGEMENTS

Mandatory statistical data on government would be considerably improved if all government entities used harmonized accounting standards European Commission towards the establishment and implementation of uniform and comparable accruals-based accounting practices (EPSAS/IPSAS) for all sectors of general government in European Union member states

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Quality and comparability of the PD data: the role of the Portuguese Court of Auditors

FUTURE WORK

• ACCOUNTABILITY ARRANGEMENTS

Public Financial Management Reform in PORTUGAL

• New Public Accounting Plan (SNC-AP), based in the International

Public Sector Accounting Standards (IPSAS)

• New Budget Framework Law

Objectives

• Reliability and scope of public finance

indicators

• Consolidated financial results
• Transparency of public finances
• Public management
• Accountability
• Accrual accounting as a basis of statistics
• Certification of accounts
• Certification of the General State Account

by the Portuguese Court of Auditors Main pillars

• Accounting System
• Reporting Systems
• Management and Financial

Control

• Internal Control and

Auditing

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Quality and comparability of the PD data: the role of the Portuguese Court of Auditors

FUTURE WORK

• ACCOUNTABILITY ARRANGEMENTS

Court of Auditors priorities: contribute to good governance, accountability and liability in public finances

• Follow-up audits on the Budget Framework Law implementation;
• Main focus on the transition for the new accounting standards

for public administrations (SNC-AP);

• Semi-annual reports (so far 4 audit reports);
• Several recommendations;
• Organize the certification process

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Quality and comparability of the PD data: the role of the Portuguese Court of Auditors

FUTURE WORK

• ACCOUNTABILITY ARRANGEMENTS

Main recommendations

• Constraints found require the strengthening of ongoing actions, in
• rder to comply in a timely manner with the obligations arising from

the law:

• development of the legal framework;
• design and development of IT systems;
• preparation and issuance of guidelines for addressing and

harmonizing accounting policies;

• start of SNC-AP implementation by some entities.
• Timely development of critical modules for SNC-AP development

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Thank you for your attention!

Teresa Ferreira (teresaferreira@tcontas.pt)

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