Budget of Municipalities -Planning and Execution

the Role of the Supreme Audit Office of Poland (NIK)

Warsaw, October 2015

Iwona ZymanDirector of the NIK Regional Branch in Opole

Piotr Miklis Director of the NIK Regional Branch in Katowice

LOCAL GOVERNMENT STRUCTURE

Poland has a three-level local government structure:

The basic local government unit - commune/gmina

commune/gmina self-government

poviat self-government

voivodeship self-government.

DIVISION

Currently Poland is divided into:

2478 communes/gminas: 304 urban, 608 urban-rural and 1566 rural

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2478 communes/gminas

314 poviats

16 voivodeships

LOCAL GOVERNMENT UNITS QUALITIES

legal personality ownership right independence protected by the law not organized in a hierarchical manner the activity scopes of different local government levels are separated

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LOCAL GOVERNMENT TASKS

OWN

fulfilment of the citizens’ needs

COMMISSIONED

government administration tasks

such as:- conducting the

elections- issuing vital

records- paying out

permanent benefits

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LOCAL GOVERNMENT REVENUES

Local government units execute their tasks on the basis of the budget plan

The main sources of revenues: own income (including local taxes and fees) general subsidies designated subsidies out of the state budget

The share of local government units in the public revenues depends on their tasks

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AUDIT AND SUPERVISION

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PRIME MINISTER

VOIVODE

REGIONAL ACCOUNTING OFFICES

AUDIT AND SUPERVISIONthe activity of local government units is supervised with regard to legality Regional Accounting Offices audit the financial managementat least once in four years they carry out a complex audit of the financial management of local government units

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when the local self-government reform was underway in Poland, there was a debate concerning the mandate of NIK’s audit, as well as the audit scope, in the area of municipal entities

after long-lasting discussions it was finally agreed that NIK is to audit local self-government bodies

SAO AUDIT MANDATE

The Supreme Audit Office audit the activity of:

local government units communal legal persons

other communal organisational units

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AUDIT OF LOCAL SELF-GOVERNMENT ENTITIES

The Supreme Audit Officeas the chief state audit body is empowered to assess the activity of the whole administrative system and the management of any public fundsgovenrmental entities – 4 criterialocal-government entities – 3 criteria

aud

it

crit

eri

a legality

economy - sound management –proper managment

reliability – integrity

The activity of the local government units is assessed by the Supreme Audit Office with regard to three criteria:

omitting the fourth criterion of audit conducted in local self-government entities, namely efficacy, that is used as one of the four criteria of NIK’s audit in governmental entities, results from the autonomous character of such entities

In practice it means that NIK audits e.g. how the public money is spend on a specific investment of a local self-government entity with regards to legality and sound management but the audit does not assess the investment’s efficacy i.e. if the investment fulfils the citizens’ needs and expectations

The NIK’s audit of local self-government entity cannot include the criteria of efficacy even if the entity implements tasks commissioned by the central governmental administration

EFFICACY

PERMORMANCE/COMPLIANCE AUDIT

PLANNEDAD HOC

SAO AUDIT MANDATE

FINANCIAL/BUDGETARY AUDIT

Due to the fact that the Supreme Audit Office presents to the Sejm (lower chamber of the Polish Parliament):

the analysis of the State Budget Execution and the Monetary Policy Guidelinesopinion on the approval for the Council of Ministers

it is obliged to conduct annual audits of the state budget and the utilisation of financial resources designated to the execution of tasks commissioned by the local self-government entities

BUDGETARY AUDIT OF LOCAL SELF-GOVERNMENT ENTITIES

In the first part of each year all of the NIK organisational units, including regional branches, conduct budget audits, also in local self-government entities

Regional branches of the NIK conduct audits of all three local government levels

BUDGETARY AUDIT OF LOCAL SELF-GOVERNMENT ENTITIES

During such audits NIK checks i.a. the performance of tasks financed or co-financed out of the state budget and the way in which the resources obtained by the local government units to execute them are being planned and spent Furthermore, NIK verifies how the local governments plan, obtain and pass to the state budget the revenues being State Treasury revenues

BUDGETARY AUDIT OF LOCAL SELF-GOVERNMENT ENTITIES

BUDGETARY AUDIT IN LOCAL SELF-GOVERMENT

COVERS IN PARTICULAR:

•assessment of the internal control and management audit systems

•settlement of (selected) subsidies designated for commissioned tasks

•settlement of subsidies for own tasks

•examination of public procurement

•examination of selected investments financed out of the EU budget

•regularity and promptness of charging and paying the income of the State Treasury Budget

•regularity, integrity and promptness of preparing financial statements

•manner of implementing public tasks financed or co-financed by the state budget

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Detailed scope of audits of budgets of local self-government entities conducted within the audit of the State Budget is established annually

It covers budgetary expenditure of local self-government entities important in a given year, or implementation of tasks important from the point of view of the state and its citizens financed or co-financed from the state budget

BUDGETARY AUDIT OF LOCAL SELF-GOVERNMENT ENTITIES

National Local Roads Reconstruction Programme 2012-2015

Apart from the audit of the Execution of the State Budget

NIK also conducts planned

or ad hoc audits among local self-government entities connected

with financial issues

In the years 2011-2013 NIK audited more than 4000 local self-government entities and entities

subordinate to them (e.g. municipality companies or community partnerships) or supervised by them (e.g.

schools, hospitals)The audit covered almost all aspects of the activities of local self-government entities

NIK conducted, among others, the below listed audits concerning the local government units and their debt:

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Functioning of the selected units providing economic and administrative service to schools and education establishments

Influence of projects co-financed within the Operational Programme of the Opole Voivodeship 2007-2013 on the increase of economic attractiveness of the Opole voivodeship

Use of technical assistance by the local governments of voivodeships within the Rural Development Programme 2007-2013

Regularity and effectiveness in the execution of local taxes and property income by the local government units

Execution of tasks by the regional accounting chambers aimed at the prevention of threats resulting from an excessive debt of the local government units

Thank you

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