Fiscal Transparency at Local Level Baki Kerimoğlu 7 June 2005, ISTANBUL

Contents: Transparency, Implementation of transparency, Legal infrastructure of transparency Factors obstructing transparency at local level, Effects of reform studies on transparency at local level, Transparency, accountability and audit, Conclusion,

What is transparency? It is a policy of providing information for public and shareholders concerning functions, organization, economic and fiscal policy goals, financial estimates and accounts of an administrative unit. It includes access to reliable, detailed, current, understandable and internationally comparable information about the activities of the administrative unit. Thus, voters, legislative body, financial markets and other shareholders are duly informed about the present and future financial position and activities of the administrative unit.

Implementation of transparency: General Conditions: That role and responsibilities are clear, That information is accessible to the public, That budget preparation, implementation and reporting processes are transparent, Guarantees concerning liabilities of issuing data, Institutional culture,

Implementation of Transparency: Special Conditions: Budgetary reports -Budget document, -Monthly reports, -Midyear reports, -Year end reports, -Pre-election report, Reports related to the extra budgetary transactions, -Reports related to management and utilization of assets, -Reports related to the activities intending to increase quality and security of life such as health, education, water, road, social security and social activities, Reliability, audit and accountability, -to clearly determine accounting policies, management system and financial and managerial responsibilities, process audit, internal audit and public audit, -Standards (quality) of data issuing, -Individual transparency culture.

Legal infrastructure of transparency: Public Financial Management and Control Law No 5018, Article 7- Fiscal transparency, Article 8- Accountability, I-Information is accessible to public Article 41- Accountability reports Article 49- Accounting system, Article 50- Recording time and Documents to be used, Fifth Part, Internal Control system -Actors of internal control system, 1-Authorizing officer, 2-Realization officers II-Role and responsibilities are defined clearly 3-Financial controller 4-Accounting officer, 5-Financial Services Unit, 6-Internal Auditor,

Legal infrastructure of transparency: PFMC Law No 5018, Article 12- Budget types and scope, III-Budget preparation, implementation and reporting processes are transparent Article Central Government Budget Law, Article General Principles for Implementation of Budgets, Article Spending authority, Article Collection of revenues, Article Accountability reports and final account Article Public accounts and financial statistics

Legal infrastructure of transparency: PFMC Law No 5018, Article Internal audit, IV-Reliability of data Article 68 External audit, Efficiency and functional independence of the ones preparing data, Institutional environment (culture),

Legal infrastructure of transparency: Municipality Law No 5272, Article 25 Auditing commission, Article 26 Municipal council’s ways of acquiring information and auditing, Article Purpose, scope and types of audit, Article 56- Accountability report, Article 59 Municipality revenues, Article 60 Municipality expenditures, Article Budget system and final account, Acquisition of Information Law No 4982,

Transparency at local level: Negative effects on transparency: No budgetary discipline, No accounting and reporting standards, No standards of data issuing, Not efficiently using instruments of data issuing, No creation of institutional culture, Poor understanding for being democratic and participation in the management, Poor internal audit, Poor external audit, Positive effects on transparency: Positive efforts based on willingness, Technological improvements: Internet and TV, New legal arrangements such as Law on Right to Acquire Information,

Effects of reform studies on transparency at local level: Effects of reform studies in public administration (localization), -More authority and responsibility (decentralization), -More allocation of resources (fiscal decentralization), -More transparency and accountability Effects of financial reform studies (financial localization), - Devolving more spending authority upon local governments, -Modern financial management system, -Accrual based accounting and reporting, -Effective internal and external audit,

Transparency, accountability and audit: Transparency, accountability and audit are complementary, Transparency not being supported by a sound accountability culture is insufficient, Transparency not being supported by a sound audit system lacks guarantee, Accountability and audit system not being supported by a sound transparency culture do not contribute to democratic development,

Conclusion: (-) Institutional and individual culture are not sufficient for an advanced transparency, (-) Accountability and audit systems to complete transparency are poor, (-) Arrangements contributing to transparency are new and their effects have not been evaluated yet, (+) EU adaptation process and increasing interaction with international organizations encourage public administration for much more transparency, (+) Participation of NGOs in public administration process will strengthen transparency, (+) Institutional organization contributing to transparency will grow stronger depending on improving reform studies,

Thank you for your attention Baki Kerimoğlu