1. BASIC INFORMATON 2. OBJECTIVE

Transcription

1 1. BASIC INFORMATON 1.1 PROGRAMME ENP National Annual Action Program 2007 for Azerbaijan. 1.2 TWINNING NUMBER AZ10/ENP-PCA/FI/ TITLE Assisting the Public Financial Control Service (PFCS) in improving a system of public financial control in the Republic of Azerbaijan 1.4 SECTOR Public Finance 1.5 BENEFICIARY COUNTRY The Republic of Azerbaijan 1.6 INSTITUTION Public Financial Control Service (PFCS) under the Ministry of Finance 2. OBJECTIVE 2.1 OVERALL OBJECTIVE Support the Azerbaijani administration in its development of a public financial control system in line with internationally recognized standards and European best practice. 2.2 PROJECT PURPOSE Assist the new Service under the MOF, (the PFCS), to reach a professional level in its present duties by providing modern methodology, skills and tools and to achieve best control over efficiency, effectiveness and economy of public expenditure. Drafting the strategic framework of the new Public Financial Control Improve the Legal Framework of the Public Financial Control Improve the Governance of the Public Financial Control Organize trainings for improving administrative capacity among the members of the PFCS. Assist the new service (the PFCS) to reach a professional level in: 1) Modern Inspection, 2) Performance control of public expenditure, before commitment and on the results. 2.3 CONTRIBUTION TO THE EUROPEAN NEIGHBOURHOOD POLICY (ENP) ACTION PLAN SOUND FINANCIAL MANAGEMENT 1

2 As a response to the new geopolitical situation following its enlargement in May 2004 and January 2007, the European Union adopted a new framework for relations with its neighbours: the European Neighbourhood Policy (ENP). The European Neighbourhood Policy of the European Union sets ambitious objectives based on mutual commitments of the EU, its Member States and neighbouring countries to common values through reform process and for closer economic integration and common sustainable development. These common values include compliance with international standards in Public Financial Management. The central element of the ENP is a bilateral Action Plan which clearly sets out policy targets and benchmarks through which progress with and individual neighbouring country can be assessed over several years. The EU-Azerbaijan ENP action plan sets out, among others, the following priorities (Chapter 4.5.5, Other Key Areas Public International Financial Control and Related Issues, p 30): Promote the development of appropriate administrative capacity to prevent and fight against fraud and other irregularities affecting national and international funds, including the establishment of well-functioning co-operation structures involving all relevant national entities; Continue the process of public finance reform, to apply International Accounting Standards in Azerbaijan; Continue budget planning based on programs and performance objectives; Improve public finance management and transparency, through upgrading of the existing Treasury Accounts Systems, creating a mechanism for multi-stage application of accounting standards in the public sector and appropriate audit of budget revenue and expenditures. Set up and implement an integrated informational system for public finance management. Issue quarterly reports on financial and budget execution; Treasury Accounts Systems, creating a mechanism for multi-stage application of accounting standards in the public sector and appropriate audit of budget revenue and expenditures. Set up and implement an integrated informational system for public finance management. Issue quarterly reports on financial and budget execution; Develop a strategy and policy paper for the public internal financial control system (managerial accountability and internal audit); implementation of internal audit program by organizations dealing with budgetary issues; Establish legislative framework for public internal financial control; Pursue gradual harmonization with the internationally agreed standards; Strengthen the administrative capacity of the Chamber of Accounts; In the field of financial control this approximation to EU legislation, norms and standards should lead eventually to the implementation in Azerbaijan of a true PIFC 1 system based on internationally accepted standards and European best practice. To assist in this, Article 51 provides that the Community shall support Azerbaijan with appropriate technical assistance comprising: the exchange of experts; the provision of early information on relevant legislation; organization of seminars; training activities; support for translation of Community legislation in the relevant sectors; twinning programs. 1 Public Internal Financial Control. 2

3 3. DESCRIPTION OF THE TWINNING PROJECT 3.1 BACKGROUND AND JUSTIFICATION Management and control of public finances The ENP Action Plan emphasizes the need for sound management and control of public finances. This is an important pre-requisite for effective government. Sound management and control requires that: resources are allocated to programs according to pre-determined priorities and that program objectives and measurable outputs are clearly defined as part of the budgeting process; there is a strong culture of control, based on management responsibility and accountability, in all public sector bodies; all activities carried out by public sector bodies are subject to review by a competent and independent internal audit function; there is timely, reliable and transparent reporting of financial and management information within each public sector body and, as appropriate, to the Treasury and Ministry of Finance; There is a timely and competent external audit process, reporting direct to Parliament Organization Structure for Reform Developing and implementing an EU-style system of PIFC should be seen as a long-term process which requires the commitment of all stakeholders. Experience in implementing an EU-style system of PIFC in other countries has shown that a strong commitment from a central authority is the most important condition for managing the reform project. The logical choice for this central authority is the Ministry of Finance (MoF) because the issue of adequate internal control is at the heart of sound financial management of the national budget. The MoF is responsible for implementing the Government s reforms aimed at achieving sound financial management in the public sector. Within this overall reform process, responsibility for implementing the public financial control aspect is two-fold: the Ministry of Finance oversees and supervises the reform process and is responsible for legislative change; the Public Financial Control Service (PFCS) under the Ministry is responsible for the practical implementation of the reforms. Although the designated beneficiary of the twinning project will be the PFCS, the MoF and line ministries will benefit significantly from the project activities Analysis of current state of play 3

4 1) Evolution of the Service Four reforms are leading to the present state: 1999, 2001, 2006 and Until 1999 was prevailing the Soviet system: the powerful General Directorate of the State Financial Control has more to do with politics than with true financial control. There were financial control units within the MDAs (Ministries, Departments and Agencies). They were abolished by the Presidential Decree 69 in 1999, leaving the MoF as the sole body responsible for internal financial control The 2001 reform made the new structure, called State Financial Control Department, as an observer of the ministries and their territorial units. It conducted ex-post controls via inspections, analysis, monitoring and other examinations. The ex-ante and current controls were carried out by other appropriate divisions such as Budget or Treasury. The Financial Control Department reported to the MoF which communicated the findings to the MDAs, but it did not appear to have the power to impose improvements. In the frame of the reform of the Ministry of Finance in 2006, 60 persons were appointed in the central office in Baku and 64 in the territorial units. The present Public Financial Control Service (PFCS) was established under the Ministry of Finance of the Republic of Azerbaijan according to the Presidential Decree N 48, dated 9 th February On the same day was also published the Statute of the PFCS. The service has been formed on the basis of the existing State Financial Control Department of the Ministry with a staff of 124 (61 among the 11 units in Baku and 63 in the head office). The Public Financial Control Service is then an independent entity which reports directly to the Minister of Finance. The annual action plan is approved by the Head of the PFCS but presented to the minister. Except the top management which is nominated by the Minister, the rest of the personal is chosen by the Head of the Service. According to the Charter of the PFCS, 4 departments are working under the authority of the Head of the PFCS and his 2 deputies. 2) Role of the Treasury According to the same 2009 reform, the Treasury department (1994) became Treasury Agency. Thanks to the unification of the Public Finance accounts in a Single Treasury Account since 1997, the Treasury Agency is in a position to control all the operations concerning the State Budget as well as many other entities such as the SOE (State Owned Enterprises) and the Oil Fund (SOFAZ). The Agency is divided into 85 local Treasury units, including specific units in Baku for the financial operations of the ministries. The Social Security Fund is controlled by the Treasury units but not the Oil Fund. The local Treasury units do not control either the budgets of local Governments. The budgetary provision is set line by line for each Ministry, rayon or other organisation. Expenditures require prior budget allocation proof of appropriate procurement methods being deployed, and proof of well-done services. The Treasury is responsible for the supervision of the procedure. It fulfils this task mainly through the monthly budget execution reports. In the case of individual payments, the relevant authorization of the commitment (i.e. the availability of finance in the relevant budget line) is required and checked by the Treasury. Although the commitment control basically takes place through the budget allocation and execution, the Treasury is linking it directly to cash planning, which is communicated to the MDAs. 4

5 In short the Treasury is controlling the whole process of expenditure since the budgetary request, contract and invoice, public procurement and finally pays directly the beneficiaries. The Agency has an internal audit function and is implementing an integrated information system. Modern accounting standards are in the way of adoption in the frame of the CAPSAP 2 programme provided by the World Bank (see under). 3) Role of the Budget Department Budgetary Department provides preparation and prognosticating control for state and round-up budget projects in compliance with existing legislation. As pointed out above the role is assumed by the Treasury. Actually expenditure financial control is then performed by ministries or agencies themselves, by the Treasury, by the PFCS (inspections), especially in terms of performance. More then 90% of the budget is said to be in a programming form. The total amount of the budget is 15.4 billions $ and the consolidated budget including social security and the Oil fund is 18.4 billions $ 3 (12,7 billion 4 ) Expectations Expectations of the Government 1. Azerbaijan is currently enjoying growing influx of revenues and therefore is a self sufficient State regarding public funding. However the government is only too aware that oil resources are finite and that it has to use them with economy, efficiency and effectiveness to secure a long term economic development not only based on oil revenues. Obviously PIFC is a tool to answer this challenge. 2. In the frame of the European Neighbourhood Policy, the Public Financial Management, if not the PIFC, looks like a pre condition to receive budget support Expectations of the Beneficiary The level of abolishment of the old control structures and legislation and the absence of efficient replacement with new Modern ones is strongly felt by the Service. On the one hand, the suppression of the control units situated in public entities leaves the new Service alone for the job that is to say to cover the whole field of the entire public sector (Ministries, agencies, public enterprises, local governments, ) with a personal which has been only slightly increased. On the other hand, the definition and the implementation of the new system (Public Financial Control) are not yet determined by a new law. In this context of financial control and specific national environment, the main expectation of the PFC Service is to improve its current duties defined in February 2009 which are inspection and the so called Public Financial Control. This means: 1. Going from a traditional control of regularity to a more modern check of the performance (economy, efficiency, effectiveness), 2 Corporate And Public Sector Accountability Project (CAPSAP) 3 Budget for Average rate XE.com on the 12 th of January

6 2. Going from an ex post control (inspection) which appears to be often too late and so inefficient, to modern forms of preventive control (so called preliminary checks ), 3. But also improve the inspection function towards modern forms of forensic investigation Endemic difficulties Various studies and projects have identified several difficulties that will need to be overcome if Azerbaijan wishes to progress on the road of modern sound financial control and management and eventually to a European - like PIFC system. WB Project Public Internal Financial Control (PIFC) Gap Analysis and Strategy Paper 2007 The Paper starts with reminding the 3 components of a European PIFC system: 1. Financial Management and Control system (FMC) linked with decentralized managerial accountability and reporting, 2. Functionally independent (decentralized) Internal Audit capabilities (IA), 3. Central Harmonization of methodology for both FMC and IA under MoF supervision. The last is generally embodied in a Central Harmonization Unit (CHU) preferably situated in the Ministry of Finance 5. But the report from the World Bank, provides also information on the drawbacks of PIFC in Azerbaijan 6. PEFA (Public Expenditure and Financial Accountability) Assessment Report. Feb It is interesting to report here in relation with twinning purpose the strengths and weaknesses assessed by the PEFA study. Strengths (A or B) are as follows: Composition of expenditure compared to original approved budget, Predictability in the availability of funds for commitments of expenditure, Timeliness and regularity of accounts reconciliation, and even : Competition, value for money and controls in public procurement (in charge of the State Procurement Agency). Weaknesses (C+ or D) are concerning: Effectiveness of payroll controls (lack of a computerised system), Effectiveness of internal controls for non salary expenditure, Scope, nature and follow up of External Audit. 3.2 LINKED ACTIVITIES The CAPSAP programme of the World Bank Apart from the European Commission, the World Bank is the single donor in the field of Public Financial Control, through a programme called Corporate And Public Sector Accountability 5 In other type of organization, there are 2 CHU. One for the financial management and control systems (FMC) and is situated at the Treasury. The other one is for Internal Audit. This last scheme may be better applicable here (see below). 6 For more details, see the report from the WB on pages 20 and 21. 6

7 Project (CAPSAP) dedicated to promote private sector development and investment, improve public finance management and accountability, and establish a sustainable training capacity in accounting and auditing. The project comprises 3 components: (1) Corporate sector accountability, (2) Public sector accountability, (3) Strengthening accounting, auditing and financial management capacity. In the frame of the component 2 (allocated 3,65 Million $) the project aims at: - the establishment of appropriate legal and institutional frameworks; this may include establishing a single PIFC Central Harmonization Unit (CHU) or two separate CHUs one for Financial Management Control (FMC) and another for Internal Audit (IA), it may also include establishing harmonized Financial Directorates in income and spending centres as well as harmonized functionally independent decentralised internal audit units, - the establishment of responsibility for advising on and taking initiatives in regulating PIFC through the issuance of appropriate regulations, standards and guidelines, - the development of a modern internal audit function to cover all ministries and other major budgetary income and spending entities, - in conjunction with component 3, the establishment of sustainable training facilities for all those involved in the Azeri PIFC framework including managers, financial officers and internal auditors, - the implementation of appropriate linkages between audit and assurance functions, particularly internal audit and the external auditor, as well as the establishment of appropriate relations between PIFC bodies and other government bodies responsible for investigating and prosecuting financial fraud and related criminal activities. In addition, CAPSAP has financed the completion of the Government s PIFC Strategy Paper. But as we saw above this Paper was not approved, a too close financial control system similar the European PIFC being not wanted for the moment. On the contrary the part of CAPSAP aiming to improve the accounting system, private and public, seems going well. It involves 4 components for a total amount of 24 M $ in 5 or 6 years: - Adoption of modern accounting Standards: IFRS for the private sector, IPSAS for the public (in process with the Treasury Agency). - Internal control and internal audit in the field of accounting. - Integrated information system (TIMS: Treasury Information Management System) in experimentation in 6 regions. - Permanent Training Centre. In conclusion 1) The World Bank/ Sigma paper (Gap Analysis and Action Plan) has not been accepted because it demands that an internal audit system (including internal control) should be implemented immediately as a pre condition or a compulsory condition of PIFC. 2) The PEFA assessment, which also denounces the total lack of internal control and internal audit is to be followed by an action plan comprising these two targets. 3) The CAPSAP program, on the contrary sounds like good news, as far as it is implementing with big means, the accounting side of the PIFC. Actually one has to know that PIFC or similar has two sides: - one is dealing with the accounting system and establishes international standards, internal accounting control and internal accounting audit, 7

8 - the other side is aiming to sound financial management and is dealing with risk based methodology, decision making process, assessment of control and management systems, economy, effectiveness and efficiency of public expenditure, etc. It is clear enough that the first aspect is taken in hands by CAPSAP with for the public sector the Treasury Agency as beneficiary. It should be also clear that the second aspect is the twinning purpose and concerns the Public Financial Control Service, being understood that the two projects and the two beneficiaries should cooperate in a mid and long term perspective, under the Minister of finance responsible for implementing the PIFC. The difference is, as far as the PFC Service is concerned, that its part in the implementation (the sound management side or the non accounting part) will go step by step, from a Public Control System (expected result of the twinning) to a true PIFC system eventually established when internal auditing will be possible. 3.3 EXPECTED RESULTS 7 At the end of the twinning, and for the whole project, the beneficiary should have received and assimilated the necessary concepts, tools, techniques and processes to be capable of: 1. Performing its inspection function using the best modern methodologies based on risk analysis and other for detecting, preventing dissuading illegal use of public funds with appropriate skills and tools, 2. Performing its financial control function to prevent bad financial management, misuse and waste of public funds and to promote economy, effectiveness and efficiency in public expenditure. 3.4 ACTIVITIES Component 1 Papers It is obviously a must to clear the road which is supposed to go from the present situation to a good implementation of the so called Financial Control system (precisely with the help of the twinning) and from there to the future true PIFC system agreed by the Commission in the framework of the ENP. For that purpose two drafts are to be established committing the Government or at least the Minister of Finance: 1.1 Drafting a new Strategy Paper (long term) approved by the Minister of Finance, putting in line the objectives of the twinning with internationally accepted standards and European best practice and showing how it is a first step to a long term implementation of a PIFC system adapted to Azerbaijan peculiarities. 1.2 Drafting a detailed Policy Paper (mid term) also approved by the Government assorted with an Action plan taking into account the detailed twinning objectives, its expected results and the following actions of the Service and other entities to improve financial control management (PFM) all over BA. Work Scope Activity Here are only mentioned expected results for the whole twinning; expected results activity per activity will be described below. 8

9 Set up a working group between qualified members of the Service and the RTA with episodic collaboration of STEs to make 1. A clear description of the state of play in terms of control activities. 2. Defining the goals to be reached in the mid term, taking into account the main constraints (administrative capacity, human resources capacities).3. Anticipate the positive results and impact of the twinning 4. Defining the mid and long term targets to implement a true PIFC system. Activity 1.2 Draft a strategic paper clearly explaining what are the different steps on which the Government is committed to achieve finally into a true system of PIFC. Activity 1.3 Draft a Policy Paper describing the road map and the schedule between the current state of play and the final system, assorted with a mid term action plan (3 or 4 years) defining for each step and item : objectives, results to obtain, time table, and person or entity responsible. Outputs/Results Activities Outputs Mandatory results Activity 1.1 Activity 1.2 Activity 1.3 Establishment of the working group, presence and schedule respected Strategy Paper submitted Policy Paper submitted Two drafts produced and approved by all members Approbation and publication of the SP by the Government Approbation and publication of the PP by the Minister of Finance Component 2 Legal Framework As described above, the lack of a general framework Law to define and implement the new Public Finance Control system is badly felt by the Service regarding its action, although a Decree and the Statute were adopted in Further on, it might be necessary according to European best practice, that the PFC Service itself should draft recommendations to facilitate its action towards controlled public entities The twinning is expected to solve these problems by reviewing the existing legislation included the Statute of the Service, its Chart and the proposed draft law on Public Financial Control to put all in line with the two approved above Papers and a coherent system of Public Control. Propose secondary legislation necessary for developing the various missions of the Service in the frame of PFC notably upon other spending entities. Work scope Activity 2.1 Set up a working group responsible for reviewing the legal framework both enacted and in draft format necessary for implementing the PFC system. The Group will comprise representatives from the MOF and other interested public entities, be supported by the RTA and will benefit from short term experts working under his control. 9

10 Activity 2.2 Elaborate a report on key findings and proposed amendments to bring the legal framework into line with EU best practice (PFC and eventually PIFC). Also propose secondary legislation to be eventually proposed by the projects to make the system working. Activity 2.3 Adoption by the relevant authorities of the new legal frame work. Activity 2.4 Develop presentations for top management in line ministries, agencies, local government, etc on the principal aspects of the new control system. Activity 2.5 A study tour is to be organised for 10 civil servants, for a 5 days duration. The tour will take place in a new Member State. The members of the delegation will be designated by the BC project leader after proposals by the RTA. The RTA will support the members of the delegation in the preparation of the study tour (basic information, documents to be studied, and questions to prepare) and will organise meetings on that purpose with the experts of the twinning if so requested. The participants will be tasked to provide a report of the visit and the RTA will organise a meeting for allowing transfer of experience from the participants to the other concerned civil servants in the Ministry. This activity will concern also the Component 3 (Governance). The aim of the tour is to provide wide presentations of experiences about the process committed for implementation of the reform, including, reviewing the legal framework, elaborating proposed amendments and new legal framework, and the consequence on the Human resources management and procedures management. Best practices and on the other hand, worse practices to be avoided, will be presented to the member of the delegation. The experience will have to be recent. That is the reason why the tour should take place in a new Member State. Outputs/Results Activities Outputs Mandatory Results Activity 2.1 Working group is established and working. Calendar is adopted and followed. Activity 2.2 Key findings report produced highlighting gaps and proposing amendments and suggestions for secondary legislation. Activity 2.3 The new legal framework is adopted by the relevant authorities. Creation of working group and indication of its activity Changes and complements are presented to ensure alignment with PFC and EU best practice. A law on Public Finance Control is ready to be sent to the parliament. Decrees, Statute and existing relevant legislation are amended. Activity 2.4 Material and presentations to top managers are completed. Activity Study tour about the legal framework 2.5 and governance. Secondary legislation (recommendations) by the PFCS are issued. The principles of the new legal framework are communicated and accepted. Awareness and understanding of the process of preparation of the legal framework and the methods of governance. 10

11 Component 3 Governance Close but different from component 2 this component aims to put structures and organization of the all system in coherence with its targets. Propose modifications in the structure/organization of the PFCS and in its relations with public entities (ministries, agencies, public enterprises and funds, local governments ) * to ensure a sound financial control of these entities, * to promote amongst these entities the standards and good practice of a modern system of financial management (PFM). Work Scope Activity 3.1 Set up a working group between PFCS and representatives of the public entities under control (may be several sub working groups necessary) to meet agreement on modalities of the control activities both in the field of inspection and performance control. Activity 3.2 Draft contracts or procedures agreed by both parties. Diffusion of the information. Activity 3.3 Reconsider inside organisation of the Service presumably to separate clearly inspection activities from control of performance missions. Outputs/Results Activities Outputs Mandatory Results Activity Working group(s) constituted and Acceptation of the group(s) and actual 3.1 meeting according to the schedule. participation from most of important Activity 3.2 Activity 3.3 Procedures and/or contracts are signed with the different categories of controlled entities. New Charter (organisation) of the Service. public entities. Acceptation and diffusion of the documents necessary to make the new system of PFC working. Improving Service Regulations Component 4 Training Objectives of the training are two fold: 1) Bring concepts, best practice, tools and procedures following the international standards and assimilated by the personal of the PFCS in the use of its modern inspection role, e.g. : risk analysis, detection of clues of non proper use of funds, systemic recommendations and follow up, computer skills and sufficient knowledge of accounting, public procurement, 2) Bring concepts, best practice, tools and procedures following the international standards and assimilated by the personal of the PFCS, in the use of its mission concerning sound financial management (PFM Public Financial Management),e.g.: preventive control, preliminary checks and assessment, risk map, performance control, system based assessment, establishment of indicators, control and evaluation of outputs, outcomes and impacts, compliance between projects and government objectives, etc Training will concern not only personal of the service but also responsible managers and future internal control coordinators in line ministries and chosen entities. Personal of the PFCS should be associated in the training program delivered by CAPSAP to the Treasury Agency. 11

12 Focus is put on the change of mentality, behaviour and old habits necessary to assimilate the new concepts and further on to use the new tools properly. That is the reason why the training involves a Human Resources expert which should proceed to a preliminary evaluation of the trainees, to an ex post assessment but also deliver courses such as group dynamics sessions, techniques of human relationship (e.g. interviews), etc... That is also the reason why Seminars are necessary where high officials are to come absolutely, to give the tone at the top without what all will be a failure. Work Scope Activity 4.1: Compile a detailed programme and schedule for the preparation and delivery of all training activities defining their specific targets (beneficiaries), and assuring the sustainability, coherence and progression of the training action. Activity 4.2: Deliver high level seminars on European best practice and standards for top managers (Familiarisation). Activity 4.3: Deliver training on modern Inspection mainly oriented towards the illegal use of funds: forensic methodology, risks analysis, detection of clues, knowledge of process, means of prevention, public bids and procurement procedures, etc. Activity 4.4: Deliver training on modern finance control: measurement of efficiency, effectiveness and economy, use and limits of indicators, preventive checks on expenditure (sustainability, coherence, compliance with set objectives, etc). Activity 4.5 : Deliver a human relationship training : group dynamic, team working, behaviours, techniques of interviews, observation, conflicts management, etc. Activity 4.6 : Evaluation ex ante and skills assessment of the trainees; final evaluation after the training to detect future trainers, investigation skills, performance oriented and consulting capacities in order to select the best inspectors on one side, the future auditors on the other side. Activity 4.7: A study tour will be organised for 10 civil servants, and for a 5 days duration. The members of the delegation will be designated by the BC project leader after proposals by the RTA. The RTA will assume a preparation to the members of the delegation (basic information, documents to be studied, and questions to prepare) and will organise meetings on that purpose with the experts of the twinning if so requested. The participants will be tasked to provide a report of the visit and the RTA will organise a meeting for allowing transfer of experience from the participants to the other concerned civil servants in the Ministry. The aim of the tour is to provide wide presentations of experiences about the process committed for implementation of the reform, including, reviewing the legal framework, elaborating proposed amendments and new legal framework, and the consequence on the Human resources management and procedures management. Best practices and on the other hand, worse practices to be avoided, will be presented to the member of the delegation. The experience will have to be recent. That is the reason why the tour should take place in a new Member State. Outputs/results Activities Outputs Mandatory results Activity Complete programme for training Clear understanding and agreement on 4.1 courses and events to be delivered timing, duration, number and quality of 12

13 Activity 4.2 Activity 4.3 Activity 4.4 Activity 4.5 Activity 4.6 Activity 4.7 during the twinning project. At least 2 seminars of high level organised and delivered. All members of the PFCS trained to modern inspection techniques. All members of the PFCS trained to control the efficiency of expenditure ex ante and at the level of the results. Staff of PFCS selected for performance control receive a human relationship training. Evaluation of participants before and after the training (at least the main staff and leaders). Study tour about inspection and performance. trainees, and logistical equipments. High level audience and participation of key officials in sufficient quantity. Capability for a significant number of them to move from regularity checks to forensic investigation techniques. Capability for a significant number of them to move from inspection to assessment of performance in public expenditure. Due assessment of the changes made by the HR expert. Establishment of personal files showing capabilities and progress of the chosen trainees. Awareness and understanding of the methodology in the fields of inspection and performance. 3.5 MEANS/INPUT FROM THE MS PARTNER ADMINISTRATION In addition to the secondment of the RTA during the whole implementation period (18 months) and the tasks to be carried out by the MS Project Leader (see section 3.5.1), indicative time inputs by Short Term Experts of the MS Partner Administration are given below. Although the required amount of expertise on internal control and internal audit is specified separately, it is likely that experts in the field of financial management and control would have sufficient knowledge and experience of both internal control and internal audit. Category Description Days Project PFC Expert 25 leader as ST expert STE 1 PFC Legal Expert 50 STE 2 Inspection Investigation Expert 25 STE 3 Performance Audit Expert 25 STE 4 Human Resources Expert 25 Total for STEs 150 Additional mission days are forecasted for the two seminars ROLE AND PROFILE OF THE MS PROJECT LEADER Role and tasks: 8 Two seminars, including 3 days missions for 3 experts each. 13

14 The Project Leader will direct, co-ordinate, and control the overall thrust of the project. He/she will lead the activities of the project, ensure the achievement of the mandatory results, and be responsible for the implementation of the activities. The Project Leader is expected to devote a minimum of three days per month to the project in his home administration, not in Azerbaijan. In addition, he/she should co-ordinate, from the Member State side, the Project Steering Committee (PSC), which will meet in Azerbaijan at least every three months. The Project Leader should also be directly concerned, as an expert, within component 1, 2 and 3. Profile: Qualification and skills Good English language skills, both spoken and written. Command of the Russian/Azerbaijani language would be a strong asset; Good inter-personal skills, sense of Human relations, flexibility, diplomacy, and capacity to face non forecasted situations; Academic degree or equivalent professional experience. General professional experience Long term civil servant from the MS administration; Minimum 15 years of professional experience; Experienced project manager, demonstrating good record in organizational leadership, staff motivation, and communication. Specific professional experience Knowledge and experience of the EU concept of Public Internal Financial Control. Knowledge of International recognized standards and European best practices. Experience in drafting legal framework. Experience in drafting legal documents. Good knowledge of MS organization as regard PFC. (An experience in the CEOC, candidate countries and neighborhood policy countries would be an asset) ROLE AND PROFILE OF THE RTA Role and tasks: The RTA will be responsible for the day-to-day management and implementation of the project. He/she will be responsible for co-ordinating all the different activities and inputs and 14

15 for liaising with the RTA counterpart in Public Financial Control Service under the Ministry of Finance. The RTA will provide 18 months input on site (including leave) and will be based in an office in Public Financial Control Service under the Ministry of Finance. Profile: Qualification and skills University level education, or professional qualification in, Accounting; Excellent English language skills, both spoken and written. Command of the Russian/Azerbaijani language would be a strong asset; PC Computer literacy; Good inter-personal skills, sense of Human relations, flexibility, diplomacy, and capacity to face non forecasted situations. General professional experience Civil Servant from an EU MS Administration; Minimum 10 years of professional experience; Experienced project manager, demonstrating good record in organisational leadership, staff motivation and communication; Excellent team-working skills; Strong analytical skills; Two years experience of the transition economies of the CIS would be an asset. Specific professional experience At least 5 years experience in Public Internal Financial Control, preferably in a management role; Experience in developing, coordinating, and conducting training programs in the EU or CIS countries would be an asset PROFILE AND TASKS OF THE RTA ASSISTANT/ TRANSLATOR/ INTERPRETOR Role and tasks The Assistant should work full time on the project providing general daily logistical, administrative and organizational support, translation and interpretation services, participate in work sessions, take minutes and handle all logistical arrangements for seminars, training activities and field visits. 15

16 The Assistant will be remunerated through the Twinning budget Profile Qualification and skills University level education, Fluency in Azerbaijani, English and Russian, both written and spoken, Good PC literacy (Word, Excel, PowerPoint) and other office technique, Good inter-personal and organizational skills. General professional experience At least 3 years professional experience, Experience in working in an international environment\projects, Experience in working at projects related to finance control systems will be an asset. Specific professional experience Experience in translation and interpretation, Experience in working as project assistant or at similar position ROLES AND PROFILES OF THE SHORT TERM EXPERTS In order to provide the full range of expertise necessary, short term experts will be drawn from nine different skill sets (some overlapping) to assist the RTA on specific activities. These short term experts will be from the Ministry of Finance, or sub-ordinate line ministry, in the Member State or from another public sector institution. STE 1: PIFC Legal Expert Role The short term PIFC legal expert will be assisting the Project Leader on the three first components. More specifically, he will be responsible for attending meetings of the Legal Framework Working Group and for advising on any necessary amendments to the existing laws and decrees. Profile Qualification and skills University Degree in Law; Excellent English language skills, both spoken and written. Command of the Russian/Azerbaijani language would be a strong asset; PC literacy; Good inter-personal skills; 16

17 Knowledge and experience on legal framework and PIFC organization in new MS, Candidate countries and Neighborhood policy countries would be an asset. General professional experience An employee or former employee of a public administrative body in an EU MS; Minimum 10 years professional experience; Two years experience of the transition economies of the CIS would be an asset. Specific professional experience At least 5 years experience in providing legal advice/guidance on PFC. STE 2: Inspection/Investigation Expert Role The short term expert(s) will deliver trainings on the new methodologies to prevent, detect and investigate illegal use of funds. Profile Qualification and skills University level education, or professional qualification, in Accounting or Internal Auditing; Excellent English language skills, both spoken and written. Command of the Russian/Azerbaijani language would be a strong asset; PC literacy; Good inter-personal skills. General professional experience An employee or former employee of a public administrative body in an EU MS; Minimum 10 years professional experience; Two years experience of the transition economies of the CIS would be an asset. Specific professional experience Experience in a MS inspectorate; Knowledge in a forensic auditing; Knowledge in Public Procurement. STE 3: Performance Audit Expert Role The short term expert(s) will deliver trainings on performance and evaluation of public expenditure. He will be familiar with the measurement of efficiency, effectiveness and economy of 17

18 public spending. He will be familiar with the techniques of assessment of result and impact and evaluation of public programs. Profile Qualification and skills University level education, or professional qualification, in Accounting or Internal Auditing; Excellent English language skills, both spoken and written. Command of the Russian/Azerbaijani language would be a strong asset; PC literacy; Good inter-personal skills. General professional experience An employee or former employee of a public administrative body in an EU MS; Minimum 10 years professional experience; Two years experience of the transition economies of the CIS would be an asset. Specific professional experience At least 5 years experience of performance audit and evaluation, preferably within the EU Public Internal Financial Control concept. STE 4: Human Resources Expert Role The short term expert will assess and evaluate the performance of staff undergoing the training program, with particular focus on ex ante and ex post evaluation of the trainees. He will also deliver training courses on modern techniques of human relationships in conducting investigations and performance controls. He might also help to the elaboration of the training program. Profile Qualification and skills University level education; Professional qualification in Human Resource management; Excellent English language skills, both spoken and written. Command of the Russian/Azerbaijani language would be a strong asset; PC literacy; Good inter-personal skills. 18

19 General professional experience An employee or former employee of a public administrative body in an EU MS; Minimum 10 years professional experience. Specific professional experience Five years experience in training and/or facilitation. 4. INSTITUTIONAL FRAMEWORK Responsible Institution in the Beneficiary Country The Public Financial Control Service (PFCS), under the Ministry of Finance of Azerbaijan Mr Javanshir Yusifov Head of the Public Finance Control Service 83, S.Vurgun str., Baku AZ1022, Azerbaijan , (ext. 4-16) c.yusifov@mailyye.gov.az 5. BUDGET Euro IMPLEMENTING ARRANGEMENTS 6.1 Implementing Agency The Implementing Agency responsible for the tendering, contracting, and accounting of this twinning project will be the Delegation of the European Union to the Republic of Azerbaijan. The person in charge is: Mr. Jean-Louis Lavroff Counsellor Head of operations Landmark III, 11 th Floor, 96, Nizami Street 19

20 AZ 1010 Baku, Azerbaijan Tel.: Fax: Beneficiary Institution The beneficiary institution for the twinning project will be the Public Financial Control Service (PFCS) under the Ministry of Finance of the Azerbaijan Republic, which will also assume responsibility for the administration relating to the preparation, control, and implementation of the project. The Ministry of Finance of Azerbaijan Republic is the central executive authority organ carrying out state financial policy and organizing the management of the State financing. The structure of the Ministry of Finance of Azerbaijan Republic: 1. Administration of the Ministry of Finance of Azerbaijan Republic; 2. State Treasury Agency of the Ministry of Finance of Azerbaijan Republic; 3. Public Debt Management Agency of the Ministry of Finance of Azerbaijan Republic; 4. Public Financial Control Service of the Ministry of Finance of Azerbaijan Republic; 5. Public Insurance Control Service of the Ministry of Finance of Azerbaijan Republic; 6. Public Control Service on precious stones and precious metal of the Ministry of Finance of Azerbaijan Republic; 7. Local departments of the Ministry of Finance of Azerbaijan Republic. List of the organizations that are not included in subordinate body of the Ministry of Finance of the Azerbaijan Republic: 1. Finance science education centre under Ministry of Finance of the Republic of Azerbaijan; 2. Information-Calculation Center of the Ministry of Finance of Azerbaijan Republic; 3. Limited liability Company Editorial office of journal of finance and account. The contact person for PFCS will be: Mrs Aida Abdulrahmanova Chief specialist/chief inspector 83, S.Vurgun str., Baku, AZ1022, Azerbaidjan Telephone: , (ext. 4-16) a.abdulrahmanova@maliyye.gov.az The Programme Administration Office (PAO) at the Department of Foreign Investments and Coordination of Technical Assistance at the MoED of Azerbaijan is an administrative body 20

21 responsible for coordination of the preparation of Twinning projects, ensuring communication between national institutions and the EU Delegation and providing support in the course of the implementation of Twinning projects. The PAO is supported by an EU-funded project Implementation of Twinning, TAIEX and SIGMA Operations in Azerbaijan started in September Beneficiary Project Leader The Beneficiary Counterpart Project Leader is Mr Javanshir Yusifov, Head of the Public Finance Control Service. He will act as the counterpart of the Member State Project Leader and will ensure close co-operation of the overall steering and co-ordination of the project, ensuring operational dialogue and support at political level. His seniority will ensure his ability to mobilize the necessary staff in support of the efficient implementation of the project. His position allows him to have an excellent contact with all the administrative units concerned by the project, particularly in order to prepare the organization of the trainings. His hierarchical rank makes him capable to take all the main decisions in the organization of the project e.g. the selection of the members of the delegation who will benefit from the study tours. He has an excellent knowledge of the BA. His availability will let him to devote at least the time for a weekly meeting with the twinning team. He will also co-ordinate the Project Steering Committee (PSC) from the BC side. Mr Javanshir A. Yusifov Head of the Public Finance Control Service under the Ministry of Finance 83, S. Vurgun Street Baku, AZ 1022, Azerbaijan Phone/FAX: , (ext.4-16) c.yusifov@maliyye.gov.az RTA Counterpart: A RTA Counterpart will be assigned by the beneficiary institution. Ideally the personal profile should consist of: at least 3 years of employment in the Control Service in the Ministry of Finance; strong accounting background; good management and administrative capabilities. (E.G. capabilities to follow up the budget management of the program, the organization of seminars and of study tours); availability to work day to day with the RTA. The following person has been nominated as RTA counterpart: Mr Nazim Abbasov, Head of the Department of the Public Finance Control Service 21

22 83, S.Vurgun str., Baku, AZ 1022, Azerbaijan. Telephone: , (ext. 4-40) According to the good practices, it would be preferable to forecast also counterparts to the STEs. 6.3 Project Steering Committee A Project Steering Committee (PSC) will be established for the control and supervision of the project activities and the mandatory results. The PSC will be convened at least every three months. The PSC will be chaired jointly by the MS Project Leader and the BC Project Leader. The PSC composition will be set in the Contract according to requirement set in the Common Twinning Manual. Observers from the Programme Administration Office of Azerbaijan and EU Delegation in Azerbaijan will take part at the PSC meetings. The PSC will follow the achievement of the project results and timely implementation of project activities in order to identify and rectify any problems that may arise in the course of the implementation of the project. The secretarial support of the PSC will be provided by the RTA and RTA Assistant who will prepare the agenda of meetings, documents to be discussed as well as minutes of the meetings. 7. IMPLEMENTING SCHEDULE 7.1 Launching of the call for proposals September Start of project activities May Project implementation period The implementation period will be 18 months. An indicative implementation chart for all project activities is at Annex SUSTAINIBILITY The Beneficiary administration shall commit on designating a minimum number of project counterparts who will work part time together with the EU experts. The mission of these counterparts is defined in Point 6.2 of the Fiche. 22