General information

The Ministry of Finance is a successful grant applicant for the project “Strengthening public financial management and control” from the EEA and Norway grants 2014-2021 Programme Good Governance, Programme Areas 16 - Good Governance, Accountable Institutions. The main goal of this program is to improve the integrity and accountability of public administration.

The main objective of the project is to gain an independent assessment of the current state of public financial management and control, identify the main shortcomings and their causes and prepare a draft of the public financial management and control act, including thorough argumentation for enforcement of the change and regulatory impact assessment of the proposal.

Expected benefits of the project:

• creation of basic preconditions for successful legislative change (independent assessment of the current state, discussion of possible solutions and proposed changes in a wide range of stakeholders and experts, including the involvement of experts in the preparation of new public financal management and control system proposal.
• creation of a draft of the public financial management and control act, including the regulatory impact assessment;
• improving communication and cooperation in the field of public financial management and control between the Ministry of Finance and regulated entities, and the support for the existing methodological activities of the Ministry of Finance.

Within the project will be implemented the following key activities:

• independent expert assessment of the current system set-up, including recommendations to address the identified deficiencies;
• acquiring know-how and collecting best practices from other European countries in the field of financial management and control legislation;
• public consultations including establishment of an expert commission to assess outputs from public consultations and prepare inputs for regulation impact assessment in various scenarios of regulation solutions;
• targeted discussion with main stakeholders focused on key elements of newly proposed public finance management and control system,
• preparation of the draft of the public financial management and control act.

Independent expert assessment of the current set-up of public financial management and control system, including recommendations to address the identified deficiencies

The project is implemented in partnership with the Faculty of Law of Charles University, the Faculty of Law of Masaryk University and the Faculty of Economics and Administration of Masaryk University. The project partners will prepare analysis of the current state and propose recommendations to improve the public financial management and control system.

The Faculty of Economics and Administration of Masaryk University will prepare an analysis of the functioning of the internal control systems of public administration bodies. The aim of the analysis is to independently assess and evaluate the current set-up of the public financial management and control system in public administration bodies. The analysis will be based on the assesssment of the settings of the internal control system at selected 30 public administration bodies (15 types of organizations that are subject to the obligation to introduce an internal control system will be represented). Assessment of the settings will take place directly on the spot in public administration bodies with the help of guided interviews. The analysis should provide basic information for the future direction and changes of the public financial management and control system.

Another analysis that will be the output of this project partner is the Analysis of public financial management and control, prepared by a team of 5 foreign experts from prestigious foreign universities (University of Bologna, Albert-Ludwigs-University of Freiburg, University of Paris Dauphine, University of Studies Udine). This analysis aims to independently assess and evaluate the current set-up of the public financial management and control system in the Czech Republic in terms od international context, based on comparisons with selected countries (Italy, Germany, France).

The Faculty of Law of Masaryk University will participate in the project by preparing an analysis of the constitutional limits of the regulation of public financial management and control (in relation to territorial self-government), including an international comparison and Analysis of the conduct of proceedings of budgetary discipline breaches. In addition to the analysis, the Faculty of Law will also provide the proposal for solving the identified shortcomings. The analysis of the constitutional limits of the regulation of public financial management and control responds to discussions concerning the possibilities of the Ministry of Finance, resp. the legislature to regulate management and control issues at the level of territorial self-government. Territorial self-government is guaranteed by the Constitution the right to self-government and thus the right not to intervene by the state. Although this constitutional right is not conceived as unlimited, there is no consensus of representatives of public administration on when the state can intervene in the position of territorial self-government. This dimension is not only constitutional, but also has fundamental overlaps in the field of financial law and is limited mainly by the setting of financing of local self-government in the conditions of the Czech Republic. The issue of duplicate controls is closely linked to the regulation of public financial management and control. As part of previous legislative proposals, the Ministry of Finance proposed the transfer the competence to conduct of proceedings of budgetary discipline breaches from Tax offices to providers of public grants. Although the Ministry of Finance subsequently waived this change on the basis of regulatory impact assessments, there are constant voices from the professional public to exclude financial administration bodies from proceedings for breach of budgetary discipline. The analysis should provide an independent assessment and answer the question of which option will better fulfill the purpose of the institute of breach of budgetary discipline.

The Faculty of Law of Charles University will prepare an assessment of internal audit under the terms of the Czech legal order and de lege ferenda considerations. The regulation of internal audit is one of the most discussed areas within the management and control of public finances. The analysis should deal with the fundamental conceptual questions how to regulate the basic principles and rules of internal audit - where the internal audit should be established and under what conditions, whether qualification requirements for the internal auditors should be set, whether the internal audit process should be regulated or whether the internal audit should be regulated in a separate law. The answers to these questions should be prepared by the Faculty of Law of Charles University together with a proposal for a possible legislative solution.

Acquiring know-how and collecting best practices from other European countries in the field of financial management and control legislation

Acquiring know-how and collecting best practices from other European countries in the field of financial management and control legislation will be implemented through study tours and subsequent processing of identified experiences, best practices and formulations of applicable recommendations. The output will be an analysis of public financial management and control settings in selected countries, which will be prepared by the Ministry of Finance.

Public consultations including establishment of an expert commission to assess outputs from public consultations and prepare inputs for regulation impact assessment in various scenarios of regulation solutions

The Ministry of Finance will organize 8 public consultations. Participants will be employees of 15 types of public administration bodies, which are obliged to set up public financial management and control system (for example, administrators of state budget chapters, organizational units of the state, municipalities, regions, contributory organizations of local governments, public research institutions, health insurance companies). Ministry of Finance will proces the results of the public consultation into a Report from the evaluation of public consultations, which will be the input for the follow-up professional discussion, which will be carried out by the Ministry of Finance with key stakeholders.

Furthermore, the Ministry of Finance will set up an expert commission, which will have 10 members, to assess the outcomes of public consultations and prepare inputs for regulatory impact assessment in various scenarios of solutions. The members of this expert commission will be representatives of the academic community, experts in legislation and recognized experts in individual components of public financial management and control system (internal control system, control of subsidies, control of management, internal audit). Experts will participate in both public consultations and a two-day professional discussion and, based on the outputs of these activities, will prepare an evaluation report in which they will professionally assess the proposed solutions, including the expected benefits and impacts. The evaluation report will be used in the preparation of the draft of the public financial management and control act, in particular the part concerning the regulatory impact assessment (RIA).

Targeted discussion with main stakeholders focused on key elements of newly proposed public financial management and control systém

Targeted discussion is be intended for 40 participants from the employees of state administration and territorial self-government bodies. The discussion will be conducted on specific proposals for changes in the public financial management and control system, which emerged from the public consultation. From the evaluation of the expert discussion, the Ministry of Finance will create a Report from the evaluation of the targeted discussion, which will contain the conclusions of the consultation, identified shortcomings and proposed solutions. The report from the evaluation of the targeted discussion will also be the basis for the evaluation report prepared by the expert commission.

Preparation of the draft of the public financial management and control act

On the basis of documents obtained in the form of outputs from key project activities, the Ministry of Finance will create a draft of the public financial management and control act, including a regulatory impact assassment.

Target groups

The public financial management and control system applies to all public administration bodies. Public administration bodies will be subjected to a detailed analysis of their internal processes within the public financial management and control system and to an evaluation of the possibilities of their simplification. The outputs will include proposals for streamlining the public financial management and control system, which should increase the protection of public funds. This will benefit the general public, which is therefore the end user of the project. The public will participate in public consultations and thus be directly involved in the reform of public finances.

Publicity

The public will be informed about the project mainly through the thematically focused section of the website of the Ministry of Finance dedicated to the project and its activities. The section will be continuously supplemented with information from the project in Czech and English. Communication with the professional public will be further ensured through the official communication of Department 47 – Central Harmonization Unit of the Ministry of Finance, primarily via email. The Ministry of Finance will organize 2 information events in the form of seminars - an opening seminar, which will acquaint the public with the planned activities and an ongoing seminar, which will acquaint the participants with the results of the analyzes processed so far and the ongoing progress of the project. The project will end with a one-day international conference, which will present the results and outputs of the project, including the results of analysis, the results of public consultations and the draft of the public financial management and control act.

The project budget is CZK 15 243 492

The expected duration of the project is 30 months.

Contacts

Final beneficiary of the project - Ministry of Finance - Central Harmonization Unit Department 

• https://www.eeagrants.cz/
• https://www.fondyehp.cz/
• https://www.norskefondy.cz/
• https://www.eeagrants.org/