1. Performance Budgeting and its Impact on Audit of State Annual Accounts Neringa Cikanavičiūtė Principal Auditor National Audit Office of Lithuania 3-5 September 2008 Druskininkai

2. Survey Performance budgeting in Lithuania State Budget formation Annual audit of State accounts

3. 3 Development of performance budgeting Budget reform since 1998  Programme budget in 1999  Strategic planning methodology in 2000  Internal audit in public institutions and authority given to external audit in 2000  Public sector accounting reform in 2005

4. Current situation Legal framework  Fiscal policy in the Convergence programme  Public sector – balanced or surplus  Rules of fiscal discipline Programme budget  Assessment system of institution activity  Appropriation managers and budgetary programmes

5. 5 Assessment system of institution activity Product criteria Institution’s strategic goals Institution’s programme goals Institution’s programme means Efficiency criteria Result criteria Long term strategies of administrative area and the Government priorities Institution’s programme tasks

6. Appropriation managers and budgetary programmes

7. Recommendations for budget system NAOL performance audit Programme Budget System Development areas

8. Plan of budget formation Government priorities Macroeconomic & fiscal forecasts National Fiscal Plan Principal indicators for 3 years (approved by Government) Maximum appropriations Drafts of strategic operating plans & State Budget programmes Draft of the Law on Budget Consideration by Government Consideration by Seimas Approval of the Law on Budget

9. 9 NAOL opinions on account/report Opinion on: Account of the Execution of the State Budget Draft of the State Budget Report on Public Debt and Loans Given from Funds Borrowed on Behalf of the State and Given State Guarantees Report on the State-owned Property

10. Recent developments (1) Audit of State Budget execution: More attention to  Assessment of internal control  Measure of budget programmes Recommendations  To approve standards of internal control and audit  To link programme assessment criteria to the used appropriations  Information about execution of programmes and their assessment criteria

11. Execution of assessment criteria in 2006 InstitutionResult of assessment criteria (%)Used appropriations to achieve goals (%) EfficiencyResultProduct Ministries114.4132.3154.278.2 Counties104.9112.1143.999.2 Total109.7122.2149.188.7

12. Recent developments (2) Audit of the draft State Budget Attention to:  Number of appropriation managers and Budget programmes  Assessment criteria of programmes  Strategic plans of institutions Recommendation  To improve Strategic planning methodology

13. Weakness of strategic planning Examples in the opinion on the Draft State Budget 2008 InstitutionWeakness of strategic planning and creation of programmes Children’s Rights Ombudsman Institution No assessment criteria (efficiency, result, product) for the programme “Protection of Children rights and Their Legal Interests” Ministry of Education and Science Assessed result criteria do not show whether the goal will be achieved in the programme Management of Education Quality Lithuanian Geological Survey In the programme Geology and Harmonious Development efficiency criterion does not show benefit which must be derived, the result criteria do not allow to assess the result of the programme, in some cases the product criteria are identical with functions. Vilnius County Governor's Administration Efficiency and product criteria do not allow to assess goals of the programme Preschool and General Education in Eastern Lithuania, products which must be developed, in some cases the result and product criteria for the same goal are identical but achievable rate are different.

14. 14 Thank you !