State Audit Office of Georgia Public Finance Management Report 2016 Action Plan (January - December)
1. Enhance the impact of financial, compliance and performance audits in accordance with international audit standards Responsible Institution: State Audit Office (SAO) 1. At Least 80 financial and compliance audits are conducted in accordance with international standards; 2. The final version of compliance audit manual is developed. Progress: 1. As of December, 74 Financial and compliance audits were conducted and 9 audits are being conducted; 2. The final version of the compliance audit manual is being developed. 2. Enhance the impact of SAO s performance audit Responsible Institution: State Audit office (SAO) 1. Conduction of at least 9 performance audits in accordance with international standards; 2. Performance audit manual is updated. Progress: 1. 12 performance audits are conducted; 2. Methodological updates are reflected in the performance audit manual. 3. IT Audit Development Responsible Institution: State Audit Office (SAO) 1. At least 2 IT audits are conducted; 2. At least 5 auditors are trained in IT audit; 3. A draft IT audit manual is developed. Progress: 1. 2 combined audits were conducted with the engagement of the IT audit team; 2. 8 Auditors were trained in IT audit; 3. A draft IT audit methodology is being developed. 2
4. Introduction of Donor-Funded Projects Audit Responsible Institution: State audit Office (SAO) 1. At least 1 pilot post-review is conducted. 2. At least 5 employees are trained in auditing of donor-funded projects. Progress: 1. 3 Post-review was conducted on the donor-funded projects; 2. 9 employees were trained in this regard. 5. Introduction of Recommendation Follow-up System Responsible Institution: State Audit Office(SAO) 1. Electronic system for recommendation implementation follow-up is implemented; 2. A manual on the elaboration and follow-up of recommendations is approved. Progress: 1. Recommendation Follow-up system is implemented in the Audit Management System (AMS); 2. A manual on the elaboration and follow-up of recommendations was updated approved in July. 3
6. Increase SAO s Role in Public Finance Management (PFM) Responsible Institution: State Audit Office (SAO) 1. Within the framework of supporting the Government to enhance its capacity, questionnaires are updated for SAO s rating system (which aims to evaluate strategic planning and the budget cycle of spending agencies); 2. Preparation of at least one publication on the relevant topics of PFM; 3. At least 20 public sector auditors are certified. Progress: 1. Within the framework of the preparation of the report on the state budget execution, special questionnaires for rating system of ministries were updated. At first, questionnaires were sent to 16 ministries with the aim to assess 7 main components which are essential for their proper and efficient functioning. A report on the 2015 state budget execution reviews the ministries activities in the aspects of human resource management, external communications & internal Audit. 2. Two best practice manuals are being prepared: State Property Management Wages in the Public Sector 3. LEPL Public Audit Institute certified 81 public sector auditors. In addition, LEPL Public Audit Institute Conducted: Training on public procurement - 126 participants were trained; Training in Internal Audit - 21 participants were trained; Training in local government implementation process and its legal framework - 21 participants were trained; Training on financial statements of budgetary organizations - 21 participants were trained; Training on the improvement of productivity in the public sector - 15 participants were trained; Training in performance audit - 17 participants were trained; Training on the use of recommendation elaboration and follow-up manual - 98 participants were trained; Training on the reporting and accounting software used in the budgetary organizations, autonomous republics and local self-government entities - 27 participants were trained. 4
7. Enhancing communication with the Parliament, media, society and non-governmental organizations Responsible Institution: State Audit Office (SAO) 1. Parliamentary hearings of SAO s audit reports; 2. 100% of the audit reports are submitted to the Parliament; 3. Updated communication strategy and approved/implemented communication action plan for 2016; 4. Meetings/seminars on the web platforms - Plan with Us and Fight Corruption ; 5. Parliament and citizen engagement web-platform is developed; 6. At least 2 meetings are held with citizens, non-governmental organizations, academic society and media representatives; 7. Implementation of the Project - Advancing Public Participation in the Audit Process : - At least 5 meetings with non-governmental organizations. Progress: 1. Within the Parliamentary Finance and Budget Committee, a working group on the hearing of audit reports was created. As of December, the following audit reports were discussed: "Performance audit on the Rural Doctor Program Compliance audit of Ivane Javakhishvili Tbilisi State University for 2012-2013"; Financial audit of the Ministry of Corrections for 2013-2014 "Performance audit on public debt management 2014 "Performance audit of public debt management information systems - 2014"; "Performance audit of the Government s on-lending activities - 2016"; "Performance audit on Government measures for ensuring food safety - 2015 ; Performance audit of forest commercial resource management - 2016 Compliance audit of financial and economic activities of Poti Municipality ; Compliance audit of financial and economic activities of Ozurgeti Municipality ; Compliance audit of financial and economic activities of Tsalka Municipality ; Parliamentary committee and plenary discussions were held on the following reports: SAO's report on the government report "on the execution of the state budget for 2015" SAO s 2015 annual performance report; Opinion on the Draft Budget Law On the State Budget of Georgia for 2017 ; SAO's report on the government report "on the execution process of the state budget for 2016" 2. In order to enhance communication with key stakeholders, the following activities were carried out within 5
the framework of the project - Advancing Public Participation in the Audit Process in Georgia : Round Table meeting with representatives of the Parliament, Government and Non-governmental organizations. The NGO Working Group on citizen engagement, held two meetings with representatives of nongovernmental organizations A two-day meeting / seminar was held with non-governmental organizations in Kakheti; 9 public hearings on audit findings were held in municipalities. (Telavi, Gori, Kutaisi, Rustavi, Ozurgeti, Ambrolauri, Batumi and Zugdidi) Media seminar was held for the representatives of the media. 2-day communication seminar was with the support of USAID. Seminar aimed to increase internal capacities in order to improve external communications; 3. A web platform was prepared for the parliament and citizen engagement Budget Monitor 4. Communication Strategy was updated. Communication action plan for 2016 was approved and successfully implemented been approved and implemented. Communications lessons learnt report was also prepared. Implementation Timeframe: January, 2016 - December, 2016 8. Improving Financial Monitoring System of Political Parties Responsible Institution: State Audits Office (SAO) 1. Increasing transparency of financing of political parties and ensuring public access to SAO s reports: - Organizing information/consultation meetings; - Publishing all information in editable formats; 2. Enhancement of the monitoring service and broadening the function of financial monitoring of political parties: - Preparing draft legislative amendments; - Holding a regional conference; - Preparation of the documents on work procedures, instructions, and quality assurance; - Hiring temporary employees for the election period; 6
- Capacity building for the employees. 3. Cooperation with other institutions and development of monitoring methodology in order to avoid mismanagement of all kinds of administrative resources: - Organizing a consultation meeting; - Preparation of draft of monitoring methodology; - Stakeholder agreement on the methodology and the official approval of the document; Progress: 1. In order to increase transparency and public access to the reports: - A regional meeting - Money in Politics was held on February 18-19, 2016. Representatives of political parties monitoring services from 18 countries were invited, as well as experts and politicians from different countries. The conference was attended by more than 120 participants, including special guests - 70 participants. The conference discussed the various examples of the European countries, and challenges in terms of monitoring the political parties and their common solutions. The representatives agreed on further cooperation in different formats, like working groups and conferences. - Working procedures and quality control documents were prepared with the help and support from an expert of IFES. - During the 2016 Parliamentary election campaign, a number of advisory/ awareness raising meeting was held with the stakeholders. The purpose of the meetings was to strengthen (1) NGO s work in this regard and (2) SAO s transperency. 2. In order to increase the transparency of political finances, electronic declaration web portal was created: - New website and donation declaring program was lunched. - In Addition to the donation declaring program, a consulting group worked on the fully functional declaration portal, started software testing phase of and by December, political parties submit declarations in electronic format. - British and Dutch expert provided consultation services by the support of International Organization IDEA. Experts held meetings and consultancies for two days to support the implementation of programs and preparation of the instructions. Experts provided international practices and examples while taking into account Georgian context. - With the support of the international Organization IDEA, SAO s employees visited Estonia to share experience in the use of electronic programs. In addition, Estonian experts shared their insights on the further improvement of monitoring system. 7
3. Political Parties Monitoring Service held several meetings and consultancies with stakeholders in order to further improve the election law. Prepared legislative changes were reflected in SAO s performance report for 2015 and recommendations were sent to the Parliament in May 2016. 9. Enhancing Human Resource Management Responsible institution: State Audit Office (SAO) 1. Adoption of final version of professional development plan; 2. At least 15 employees are trained in financial, compliance and performance audits; 3. Final version of the Human Resource Appraisal System is developed; 4. Conduction of staff survey at the end of the year. Progress: 1. Professional development plan was prepared. 2. 41 employees were trained in financial, compliance and performance audits. 3. Human Resource Appraisal System was developed under the TWINNING Project with German and Polish SAIs. A pilot appraisal was conducted. 4. Staff survey was conducted. Implementation Timeframe: January, 2016 - December, 2016 10. Improvement of management systems and processes Responsible institution: State Audit Office (SAO) 1. Improved electronic system of audit registration, classification and reporting; - The system includes audit information for least two years. 2. Implementation of Audit Management System (AMS) - Procurement and configuration of AMS; 3. Improvement of SAO s strategic planning and performance evaluation processes: - Final version of guideline for strategic planning and performance evaluation. Progress: 1. 3 years of audit and relevant information was reflected in the system for audit systematic recording, reporting and classification. 2. SAO signed a contract with a supplier for purchasing the AMS. As of December: - 12 trainers and system administrators were retrained. Pilot audit teams were created and retrained: -120 system users of financial audit; 8
-15 system users of performance audit; -20 system trainers of financial audit; 3. Final version of guideline for strategic planning and performance evaluation was developed. 11. Knowledge sharing on international audit experiences and better practices. Responsible institution: State Audit office (SAO) Indicators: 1. Carrying out all activities/projects within the framework of MoUs between SAO and its strategic partners Swedish National Audit Office (SNAO) and GIZ; 2. Carrying out all activities within the framework of the TWINNING project; 3. Participation in at least 5 international events (conferences, seminars, trainings). Progress: 1. In September, TWINNING project with German and Polish counterparts was finished. The project carried out a number of activities, notably: 1.1. Component 1: Strengthening SAO s corporate and resource management; - Analysis document on the review SAO s legal framework and organizational structure is prepared; - Relevant and transparent organizational structure is implemented; - Planning is improved and manual on strategic planning is developed. - Audit Management Software is configuration and piloted. 1.2. Component 2: Strengthening financial and compliance auditing and reporting - The annual audit planning methodology is improved; - Financial and compliance audits are carried out in accordance with international standards with the support from experts. - Structure of audit report is improved; - IT audit capacities are developed; - Trainings on AMS and data analysis are conducted. 1.3. Component 3: Audit staff professional development and performance appraisal - Professional development strategy is reviewed; - Detailed staff job descriptions are developed; - Two surveys are conducted with the aim of identifying the training needs; - E-learning course is developed; - Developing and implementing staff appraisal system. 9
2. A Memorandum of Understanding was signed with Board of Auditors and Inspection of Korea. Cooperation between the sides will entail sharing experience in citizen engagement and IT auditing. 3. Cooperation with Swedish National Audit Office was extended to 2018. Cooperation areas are: (1) quality assurance for performance audits; (2) strengthening leadership and management skills of SAO s top and middle level management. 4. Cooperation with the German International Cooperation (GIZ) was extended to 2018. 5. SAO and the Center for Audit Excellence under US Government Accountability Office (GAO) signed an agreement on the development of skills and capacities of IT auditors. The cooperation between the sides is carried out within the framework of the project funded by the World Bank. 6. SAO hosted a final meeting on the audit of public debt management. Apart from SAO, 10 different supreme audit institutions and an international expert in public debt management took part in the meeting. 7. SAO took part in the Congress of supreme audit institutions of INTOSAI INCOSAI XXII, which offers all INTOSAI members an opportunity to share experiences, discuss issues, and pass resolutions and recommendations to improve government accountability worldwide. 8. SAO participated in a workshop organized by Swedish National Audit Office. Workshop aimed to share experience in the field of financial and compliance auditing. 10