1. Financial Management and Control system implementation in Georgia March 2016 Nino Eliashvili, Giuli Chkuaseli Public Internal Control Department of Ministry of Finance o Georgia

2. Public Internal Control What is Public Internal Control in Georgia? 2 Internal Control system control environment risk manage ment control activities information and communication monitoring and assessment IA

3. Public Internal Control What is Public Internal Control in Georgia? 3 Internal Control system of one OrganisationS control environment risk manage ment control activities information and communication monitoring and assessment IA Program Budgeting Central Harmonization Unit

4. Public Internal Control Legal Basis: Law on Public Internal Financial Control –Chapter II – Financial management and Control 4

5. Conditions Conditions agreed between EU and Georgia 2014: –Criteria: The Central Harmonisation Unit in the MoF develops the Rules and Procedures for Financial Management and Control in accordance with international best practice 2015: –Criteria: FMC system is established and functioning according to "FMC rules and procedures" in at least 1/4 out of 16 line ministries. 2016: –Criteria: FMC system is established and functioning according to „FMC rules and procedures" in at least 1/2 out of 16 line ministries. Financial Management and Control System establishment: 2014 develop the instruction 2015 – establish in 4 Ministries; 2016 – establish in 8 Ministries

6. everything or step-by-step I.II.: Stage 1: Financial Control Stage 2: Managerial Control Stage 3: Financial Management a) control environment; b) risk management; c) control activities; d) information and communication; e) monitoring and assessment. + managerial accountability Dilemma- Implementing Financial Management and Control

7. Implementing Financial Management and Control Financial Control Improvement of the existing financial controls Establishment of the elements of Managerial Accountability Managerial Control clear defined (SMART) objectives compatible with the programme budgets A clear linkage between the budget and the objectives. Process Analysis Risk Management Financial Management the most complex stage. Effective financial management ultimately leads to better value for money in public expenditure. 7

8. Operational manager Budget Holder Program Manager Head of Institution Minister program #1 Sun/program #1/01 #1#2 Sun/program #1/02 #3#3 Sun/program #1/03 (budgetary organization) program #2 Sun/program #2 #4…#4… SLA – service level agreement- defines the scale, standards, dates and other measurable Features of the product or service which should be provided by the budgetary organization SLASLA Implementing First Stage: Financial Control

9. Results: 4 Pilot Ministries ( Ministry of Finance, Education, Economy, Refugees) Approved duties and responsibilities of Manamement structure according FMC instruction Developed SLA Established FMC working group is established, by the ministerial decree; The Working group defines the annual plan: Prepared monthly and quarter report of financial control matters 9

10. QUESTIONS? 10 n_eliashvili@yahoo.com g.chkuaseli@mof.ge