1. SMALL GROUP DISCUSSION SESSION 26.6.2012. GROUP 2

2. Participated: Bosnia and Herzegovina Bulgaria Montenegro Albania Serbia Macedonia Croatia OECD

3. 1. External conditions and limitations influencing treasury reforms. Relations between treasury reforms and overall public finances management and public sector reforms.

4. Issues we are faced with in the reform implementation processes: Political Legal Technical IT systems HR capacities

5. Treasury reforms are not inexpensive; Cost-benefit analysis should be preformed; Long term process; Security issues should be resolved; Transparency and efficiency should be ensured; There are no public finances reform without treasury reform, and vice versa; Users responsibility should be retained; Cooperation between staff, line ministries, overall system and policies should be secured in order to enable long-term sustainability.

6. 2. Possibilities for centralization of accounting and reporting deriving from introduction of modern IT systems for finance management. Advantages and challenges of centralized against decentralized accounting and reporting approach.

7. Macedonia: – Developed their own IT system; – All budgetary users are participating (local self government and state level). Croatia: – Treasury is using SAP system, while budgetary users have separate accounting (different IT systems). Linkage between them is currently ongoing process. Treasury holds data on budgetary users commitments and expenditures. – The biggest share of the revenues is collected on the single treasury account. The Treasury holds data on revenues, but for now not on receivables.

8. Bulgaria – They have centralized system, but they avoid limitations of centralization. The budgetary users are managing budget implementation aligned with their appropriations. In that way, an excessive number of treasury staff is being avoided, while at the same time budgetary users cannot avoid their responsibilities related to the accounting. – Daily, weekly, monthly, quarterly plans are produced. Zero balance accounts for revenue collection are used. – Accounting methodology – uniformed chart of accounts is stipulated, accrual, economic and functional classification. – Bulgaria does not include local self governments into IT system, but has plans for such action, taking into consideration their financial autonomy (decentralization). So far, they have included faculties (university), national TV broadcaster. – Reporting: they use Internet.

9. Serbia – They are planning to include social funds, agencies and local self government level into treasury system. – It is important how much is IT system flexible (network, server, staff). It is important to retain qualitative experts. – They are upgrading business reporting system. Data warehouse introduction is in the plans, system that can be expanded and upgraded independently from business operations functioning and development. – IT structure is time limited, while projects of this kind are time consuming (issue to be raised to Russia).

10. Bosnia and Herzegovina – They have created technical preconditions for centralized accounting. – Budgetary users do not have their own general ledgers. – Local self government level – reform related to introducing treasuries is ongoing, parts are already produced. – Consolidation of overall public spending can be made in a semiautomatic manner.

11. Albania – There exists an uniformed chart of accounts for overall budgetary sector involved into treasury system. – If there is a single treasury account, that should not have an influence on decentralization of their (BU) responsibilities and on their functionality. They decide on their commitments, and treasury manages their payment requests, as a bank. – Treasury is responsible for state related accounting and manages liquidity. Responsibility for budget execution remains on budgetary users. Advantages of centralized system: They have daily information on budgetary performances for all budgetary institutions (state level, local self government level). Before that, it took 1 month to produce report on fiscal activities for the government. Now, all data are presented two days after the period is closed. Single treasury account does not mean just a single account, the control of the account is very important.

12. Montenegro – There is no legislation regulating that local self government budgets should be managed via treasury. The Treasury offers software and all necessary support, but the decision is theirs. The service provided for them would reduce the costs of their operations. – It should be determined whether benefits are sufficient when compared to the costs.

13. Advantages of centralization – Efficient cash management; – Necessary data collection speed. Responsibility must remain on budgetary users.

14. Managerial responsibility cannot be taken away, that cannot be centralized. Data Warehouse (DW): in Ireland there is a department that provides services to the small budgetary users enabling them to plan on daily, weekly and monthly basis.