Public Finance Management (PFM) System and Public Finance Control (PFC) in Belorussia PEMPAL, Moscow, October 2016 Natalia Pilets Deputy Head, Control and Auditing Department, Belarus

Public Finance Management and Control Authorities Government Control Committee and its Territorial Bodies (Highest government control authority) Ministry of Finance and its territorial bodies Budget holders (republican level authorities – Ministries and Committees ) Local executive and holding bodies (local financial authorities) Internal (agency-level) control bodies (control over subordinate organizations)

Formalization of Functions and Authorities of the Public Finance Management and Control Bodies Functions and authorities of the public finance management and control bodies are formalized in the Constitution of the Republic of Belarus, Budget Code, Presidential Decree #510 of October 16, 2009 On Improvement of Control (Oversight) Activities in the Republic of Belarus and other legislation

Functions of the Ministry of Finance Pursuing fiscal and tax policies, regulation and management in the financial sector, coordination in the sector Drafting of a budget law and a law on the approval of the budget execution report for the reporting year and submission of them to the Government Control of budget legislation compliance, assurances of the effective and appropriate budgetary expenditures Government regulation of accounting and financial reporting Government regulation and control of operations with precious metals and stones, of capital market, of the insurance and auditing activities, etc.

The PFM authorities of the Ministry of Finance include control over : Compliance with the budget legislation in development, review, approval and execution of the republican and local budgets; Implementation of the uniform methodology in accounting and financial reporting of budget execution; Consistency between payments and budget commitments and budget appropriations; Timely and complete receipt of revenues and efficient and appropriate expenditure of budget funds; Appropriate disbursement and timely repayment of budget funds, loans (credits), provided on a repayable basis.

offices of preliminary financial control at the level of the Ministry of Finance Main Budget Policy Department of the MoF– provides methodological guidance on budget legislation, develops main areas of fiscal and tax policies, drafts a republican budget, coordinates activities on development and execution of budgets. MoF Sector Departments– coordinate activities of budget holders in areas of their competence (e.g., construction, agroindustrial complex, social sector, etc.)

Main Treasury Office – carries our preliminary control of the republican budget execution, provides methodological guidance on issues related to the republican budget execution, reporting, coordinates activities of the territorial treasury offices, and compiles consolidated reports on budget execution. Territorial Treasury Offices– carry out preliminary control over execution of the republican and local budgets, check for consistency of payments with the budget commitments and budget appropriations. Local financial authorities– draft the local budgets, coordinate activities of the local budget holders, compile consolidated reports on execution of the local budgets

Holders of Budget Funds (internal control) Based on the action plan they estimate budget appropriations for a draft budget, and develop a draft consolidated budget cost estimate; Support management of budget appropriations, approve budget estimates for budget users; Carry out preliminary and ongoing control of the appropriate and efficient disbursement of the proceeds by the budget users; Prepare and submit consolidated financial reports and a consolidated budget cost estimate to the Ministry of Finance or a local financial authority, as appropriate.

Budget Users– legal provisions on the use of budget funds are strictly regulated They shall use budget funds in compliance with the legislation within the limits of budget appropriations for expenditure items Procurement of goods (works, services) follow the provisions of the Law of Republic of Belarus On Government Procurement They shall ensure effective and appropriate use of budget funds, and assume money commitments solely within the approved budget appropriations They shall submit accounting documents on the use of budget funds to the budget holders

Types of public financial follow-up control in the Republic of Belarus external: √ Government Control Committee (highest body of control) √ Control and auditing bodies of the Ministry of Finance, local financial authorities internal: √ internal (agency level) control in government authorities and entities

Последующий финансовый контроль: Follow-up Control at the Level of the Ministry of Finance : control and audit bodies of the Ministry of Finance, local financial authorities– check the compliance with the budget legislation, including efficient and appropriate spending of budget funds

Agency-level control (internal control) is implemented by the public bodies and institutions (ministries, concerns, local executive and administrative authorities, public associations), as a rule, through special subdivisions (internal control offices), established within the agencies

Ведомственный контроль Key Objectives of Internal Control Ведомственный контроль Check the activities of subordinate entities for compliance with the legislation Timely warn, uncover and prevent violations of law Undertake measures to ensure integrity, appropriate and efficient use of assets of subordinate entities Identify potential space for improving the efficiency of activities of subordinate entities

Government Control Committee – external control being the highest body of government control of the Republic of Belarus, subordinate to the President, it carries out government control of the republican budget execution, use of government property, implementation of the legislation approved by the President, Parliament, Government and other government authorities regulating the government property relations, economic, financial and tax relations The Committee is led by a Chairperson appointed to this position by the President

Authority of the Government Control Committee: Checks the execution of the revenue and expenditure parts of the republican and local budgets Controls the timeliness and completeness of revenue receipts, appropriate and efficient spending of budget funds Annual review of the Government report on the execution of the republican budget and drafting of the relevant opinion to be submitted to the President and Parliament for consideration, and to be sent to the Government. Ensures public access to the concluding opinion/report on the republican budget execution

Specific Features of the Follow-up Financial Control in the Republic of Belarus The primary focus of the control bodies is to check the compliance with the legal provisions and bring the offenders to responsibility They check the compliance with the legislation, take relevant measures to prevent and suppress violations of law, to bring to responsibility those persons whose actions (or negligence) resulted in the breach of law, to recover the value of uncovered violations to the budget.

Making conclusions: elements of the French-speaking model Detailed preliminary, ongoing and follow-up budget control All budget process procedures are strictly regulated The main focus in on the budget holders and budget users Financial control bodies check for compliance with the legal provisions, they may recover the value of uncovered violations to the budget, bring the guilty persons to administrative responsibility

Ведомственный контроль Public Finance Management Reform Strategy for 2016-20 Ведомственный контроль Public Finance Management Reform Upgrade Project in the Republic of Belarus Implementation of the mid-term budget planning Budget transparency and completeness: improvement of budget classification in accordance with the international principles and standards, implementation of the single chart of accounts integrated with the budget classification

Improvement of treasury control efficiency through consolidation of public funds, including extra-budgetary funds, on the single treasury account (STA), improvement of projections and management of free balance of the STA Improvement of public debt management arrangements Improvement of the accounting and reporting systems and convergence with the international standards for financial reporting in the public sector Creation of a new integrated information system for public finance management

and, finally: Implementation of performance-based budgeting, enhancement of independence of budget holders and users New approach to the organization of internal financial control in the public sector, implementation of performance audits aimed at the control of cost-effectiveness and efficiency of public governance !!!!! THIS IS AN IMPETUS FOR INTERNAL AUDIT AND INTERNAL CONTROL REFORMS

Thank you for your attention!