KICK OFF MEETING 30 MARCH 2005 Mr' NORBERT GUILLOT

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KICK OFF MEETING 30 MARCH 2005Mr. NORBERT
GUILLOT

• Public Internal Financial Controlcharacteristics
  and convergences in France

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A primary legislation covering the principles of
PIFC PIFCFMCIACHU
Audit
Audit Scope
Internal Control
French Organic Law of 1 August 2001
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A widely shared concept from now on, regardless
of the national characteristics
In France, for example

• Public expenditure management and control systems
  have proven to be insufficient to cover the
  growth of public spending (which has increased
  faster than the inflation)

• The growing responsibility of the directors of
  the programs appeared to be an essential
  condition of control of expenses

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A widely shared concept from now on, regardless
of the national characteristics

• The role of the Parliament on the field of
  controlling the public expenditures needed to be
  strengthened.

• The public wants to know the costs, the results
  and the efficiency of public policies in
  comparison with the level of tax revenues

not only about the new Members of the EU but
also about the several Member States of the OECD
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The principles of the Organic Law of 1st August
2001, are close to those of PIFC
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Notions of transparency, responsibility, and
efficiency

• Transparency allows the Parliament to carry out
  its mission of controlling public funds (before
  the budgetary discussions were only focused on
  annual complementary means)

• In France, the budget of 2006 will be thus
  adopted for the first time in terms of missions
  and programs by precising
• The targeted objectives
• The expected results
• The measurement indicators related to each
  objective
• The general necessary ways of achieving these
  objectives.

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Notions of transparency, responsibility, and
efficiency

• Responsibility The directors will be responsible
  for and be assessed according to their results.

• The methods will be generalized
• The results will be measured according to valid
  indicators

• Analytical follow-up of the costs of the actions,
• Auditing of the results by an inter-ministries
  audit committee.

• Salaries of the directors will be related to the
  results

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Notions of transparency, responsibility, and
efficiency

• Efficiency

• Necessity of a strict internal control in the
  fulfillment of the responsibilities and through
  efficiency management
• A more asserted role of the internal audit for
  the benefit of internal control

NB With the Organic Law, the services will be
obliged to organize themselves efficiently in
order to enhance their performances
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The European Funds, strong factors of
harmonization
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The European funds, strong factors of
harmonization

• France has integrated the European standards to
  ensure the management and control of the
  community funds.
• This integration in all of the Member States
  resulted in a convergence of the management and
  control systems
• This convergence is discernible through
  institutional similarities (winding-up body,
  functional separation between the paying and
  managing Authorities)

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The implementation of the Law substantially
modifies the role of the partners
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The organic law necessitates the repositioning of
the partners
1- The Authorizing officer

• More responsability out from the flexibility
  of budget means.

• Arranges accounting guidelines, example the
  criteria of depreciation

• In charge of preparing an internal manual of the
  procedures including

• the organization of the tasks
• the financial flows
• the internal control

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The organic law necessitates the repositioning of
the partners
1- The Authorizing officer

• Here, internal audit is designed as the
  privileged way of ensuring the respect of the
  guidelines and the manual and also to enhance
  them.
• It should not be confused with the other forms of
  control(ex-ante, budgetary, management and all
  types of inspectorate)

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The organic law necessitates the repositioning of
the partners
1- The Authorizing officer

• who already deals with accounting and finance

• has now new competencies

• Certification of the accruals and liabilities as
  soon as they are officially declared
• Inventory operations (evaluation of the supplies,
  depreciation of the assets, provisions, charging
  to the corresponding fiscal year)
• Operations outside the balance sheet granted
  guarantees, etc.

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The organic law necessitates the repositioning of
the partners
2- The Accountant

• ...whose guidelines includes from now on
  international standards IAS

• Account schemes, reimbursement
• Recording of the accruals and obligations
• evaluations, inventory, underlying charges
• Strong controls on the procedural guidelines

• guarantees the respect of the following
  principles

• Regularity compliance to the rules and
  procedures
• Sincerity obligation of bona fides,
  interpreting the importance of recorded events
• Transparency the accountant has to ask himself
  whether the adopted solution reflects the most
  exact possible view.

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The organic law necessitates the repositioning of
the partners
2- The accountant

• Keeps his previous obligations

• Which ensure the accounting quality

• Certification of the delivery of goods and the
  provision of services real and current debts
• validity of the spending expenditures related to
  the right entity
• liquidation for the good amount
• Exact budgetary and accountancy charging

• or take place within the margins of strictly
  accountable aims such as the availability of the
  credits, budgetary follow-up, etc.

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The organic law necessitates the repositioning of
the partners
?The accountants are always organized in a
network to

• Obtain synthetic statements in real time

• Guarantee an homogenous and high level expertise
  quality

• Facilitate the implementation of the standard
  procedures

• Contribute to the work of Court of Accounts on
  certification

• Manage the cash flow of different entities

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The organic law necessitates the repositioning of
the partners
?...but the border between the authorizing
officer and the accountant , which is more
permeable than in the past, is evolving with the
risks

• Interaction of the tasks the case of invoice
  services
• Variable range of accountantsaction

• Risk based checkùng according to the analysis of
  risks by regulating
• The field (comprehensive or sample-based)
• The period (on going or ex-post)
• The intensity (fully or partially).
• Partnership control after the risk analysis on
  the WHOLE of the spending process.

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The French Mechanism from Seperation to
Partnership
Expression of the needs
Commands
Reception
Account registry
Payment
Files are shared within the whole chain
Participation to call of tenders
Examination of budgetary conditions
Certification of the realized services
Partnership Audit
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Internal Audit is at the core of the mechanism
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Inter-ministries audit committee of the budgetary
programs

• Receiver of the  draft  of the program

• mobilizes the audit teams and delivers them
  mission letters

• examines the audit reports and transmits them to
  the ministry related to the financial commissions
  of the National Assembly, the Senate and to the
  Court of Accounts

• 35 programs audited before the presentation of
  the Financial Law of 2006

• examines the reliability of the declared results
  and the production of the indicators

• ensures the objectivity and the totality of the
  comments

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Presentation of the Audit competencies of the
GDPA and its network (Public Treasury) a large
intervention area
Which bodies? - at first, the network itself -
but also The public accounts The bodies of
social security The European Funds (5
Control) at least all public funds beneficiaries
Which types of Audit ? - regularity audits, -
procedures audits, - performance audits etc.
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General Director
National Level
National Audit Committee
MAEC
Orientation/Supervision
Orientation
Orientation/Supervision
Regional Level
Regional Audit Committee
MRFC
Orientation/Supervision
Departmental Level
Piloting/Coordination/ Supervision
General paymaster
Internal Control
Audit Pool
300 auditors
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KICK OFF MEETING 30 MARCH 2005

• Ministry of Economy, Finance and Industry
• of the Republic of France
• Public Accounting General Directorate
• International co-operation division