2005年-世界发展银行全球_Croatia___Country_Financial_Accountability_Assessment_117页_8mb

Croatia Country Financial Accountability Assessment Summary

Overview

This report, prepared by the World Bank in May 2005, evaluates Croatia's Public Financial Management (PFM) and financial accountability arrangements. As a candidate country for EU membership, Croatia is focused on aligning its systems with the acquis communautaire, particularly Chapter 28 on financial control and the European Commission's concept of Public Internal Financial Control (PIFC). The assessment is based on interviews with key officials, analysis of financial data, and benchmarking against international standards and codes.

Core Content

The report covers the following key areas:

• Budgeting
• Treasury and Cash Management
• Accounting and Financial Reporting
• Internal Control and Internal Audit
• External Audit and Legislative Oversight
• Sub-national Government Units
• Capacity Development

Each section includes:

• A background and assessment framework
• Findings related to the current state of PFM
• A summary of findings and fiduciary risk assessment
• Recommendations for improvement

Main Findings and Fiduciary Risk Assessment

Budgeting

• The budgeting process promotes realism but lacks strategic planning and effective monitoring.
• Budget classifications are present, but the information provided to Parliament is insufficient for policy and strategy guidance.
• Budget revisions during the year may undermine policy consistency.
• Variations between budget figures and actual outturns are generally small.
• Fiduciary Risk: Moderate.

Treasury and Cash Management

• The Treasury relies on the SAP system for financial management, but it is not fully utilized.
• There are over 3,200 private bank accounts held by budget users, increasing fiduciary risk.
• The SAP system lacks a multi-period commitment control module and is not well integrated with other financial systems.
• Cash management inefficiencies and potential estimation errors contribute to expenditure arrears.
• Fiduciary Risk: Significant.

Accounting and Financial Reporting

• Consolidated financial statements for 2002 were delayed and based on incomplete data.
• The transition to modified accrual-based accounting was only partially successful.
• The SAP system cannot generate a complete audit trail, and there are multiple outdated accounting systems in use.
• Fiduciary Risk: Significant.

Internal Control and Internal Audit

• The internal control framework is weak, especially in the Public Debt Management Section of the Ministry of Finance (MOF).
• There is a lack of proper segregation of duties, understaffing, and poor management practices.
• The MOF has not fully implemented the internal audit requirements of the Organic Budget Act.
• Fiduciary Risk: Significant.

External Audit and Legislative Oversight

• The State Audit Office (SAO) provides basic external assurance but lacks independence and effectiveness due to shortcomings in its legal framework and practices.
• Parliament (Sabor) has accepted a limited oversight role, which could compromise transparency and accountability.
• Fiduciary Risk: Moderate.

Sub-national Government Units

• PFM issues identified at the national level also exist at the local and regional levels.
• There is a lack of capacity in key PFM functions such as financial control, accounting, and auditing.
• Fiduciary Risk: Moderate.

Key Recommendations

For the Ministry of Finance (MOF)

1. Assign an Assistant Minister to develop and implement a strategic vision for the evolution and rationalization of the Government's financial systems.
2. Commission an independent systems audit of the SAP system by an external auditor or consultancy with financial and IT expertise.
3. Establish an inter-ministerial steering committee to oversee the development of the SAP system.
4. Implement the Treasury Single Account (TSA) by closing all private bank accounts and consolidating them into the TSA.
5. Immediately implement the SAP module for multi-period commitments.

For Budget Users (BUs) and EBFs

1. Integrate all Extra-budgetary Funds and Agencies (EBFs) into the State budget or subject them to similar budgeting, control, and audit arrangements.
2. Appoint financial controllers as required by the Organic Budget Act (BA).
3. Strengthen the forecasting function in the Ministry of Finance to ensure transparency and timely forecasts.

For the State Audit Office (SAO)

1. Initiate legislative changes to the Act on State Audit to enhance its independence and effectiveness.
2. Improve the technical support and mandate of the Parliamentary Budget Committee.

For Capacity Development

1. Offer training and guidelines to all accountants and staff in Budget and Finance Units.
2. Extend the statutory deadlines for annual financial statements and amend the Budget Act and Ordinance on Financial Reporting and Budgetary Accounting (OFB).
3. Prioritize the recruitment of accounting staff.
4. Develop a modernization strategy for the state administration's accounting system.

Conclusion

The overall fiduciary risk of Croatia's PFM system is rated as significant, primarily due to weaknesses in financial accounting and management systems, poor internal control, and inadequate capacity in key PFM functions. The report emphasizes the need for urgent reforms, including the modernization of financial systems, improved internal audit practices, and enhanced legislative and oversight mechanisms to ensure transparency, accountability, and efficient use of public funds.

Annexes and Supporting Information

• Annex I: Key persons interviewed.
• Annex II: Fiduciary risk indicators and their interpretation.
• Annex III: Overall assessment of fiduciary risk.

The report also includes several boxes that provide insights into specific issues such as the principles of sound financial management, the Treasury Ledger System, and the International Standards for Internal Audit. These support the detailed analysis and recommendations provided in the report.

Summary of Fiduciary Risk Ratings

Final Notes

The CFAA is not an audit but a diagnostic tool to enhance the World Bank's understanding of PFM and accountability arrangements in Croatia. It aims to support the design and implementation of capacity-building programs to improve transparency and accountability in the use of public funds.