Background

FMC is a key management tool that gives assurance that public money is used well and according to the budget. If undertaken properly, FMC makes it possible to improve efficiency and effectiveness of spending but only if a management exists with the authority to use the information and take decisions. The manager is also responsible for financial control to ensure that budgets are not overspent and that financial and other regulations are properly followed.

Management has to be accountable according to the principle of managerial accountability. This means that each manager is responsible for establishing a strong FMC system within his/her area of competence.  Drawing on experiences of countries introducing FMC, important questions arise which do not always seem to have been properly addressed. These include:

• who should be the manager and what should be the manager’s roles and responsibilities
•  does the budget system allow a manager to know what the budget is for all areas of expenditure, including payroll
• is the financial information sufficiently well analysed to enable the manager to make judgements about efficiency and effectiveness
• does the manager have objectives because the existence of objectives is fundamental to the development of risk management
•  what is the real purpose of the 5 components of internal control – are they to do with finance only or with management more widely
•  how does FMC reform fit with civil service reform

What was the webinar about

The objective of the webinar was to address crucial elements, characteristics of strong FMC, and current country practices.  

A short webinar was an introduction to the workshop. In addition, it provided a European Commission perspective on the FMC developments that have occurred and are occuring in SEE.

Faculty of the webinar

Noel Hepworth, CEF Associate Fellow

Mr. Hepworth’s initial contacts with the CEF were as the Chief Executive of the Chartered Institute of Public Finance and Accountancy (CIPFA) and then with a particular responsibility for its international development. Jointly we developed a professional training program for financial managers in western Balkans countries, which subsequently developed as an internal audit certification program and has extended its reach geographically. Noel is also a lecturer at the CEF financial management and accounting related workshops. Currently he works extensively with SIGMA on public financial management development in different countries.

Raymond Hill, DG Budget, European Commission

Raymond Hill has been working with the European Commission since 2001. Since 2006, he has specialized in the area of Public Internal Control and External Audit and has been involved in coaching Internal Control reforms in past and current EU Candidate Countries, as well as facilitating the PIC Network, operated in partnership between the Commission and the EU Member States. The PIC Network brings together public sector Internal Control specialists from all Member States with a view to peer-to-peer sharing of good Internal Control practices. He holds a Post-Graduate Diploma in Administration and Legal Studies as well as the CGAP qualification of the Institute of Internal Auditors. Before joining the Commission, he held various positions within the British civil service.

What was the workshop about

The main objective of this workshop was to assist representatives from SEE countries to have a better understanding of the requirements in regards to FMC, existing challenges, and a better overview of how to introduce the strong FMC system.

During the workshop we discussed the following topics:

• FMC – what is it?
• The manager and FMC
• Information that a manager should have to apply FMC
• Steps in introducing effective FMC
• The role of CHU in developing and implementing FMC and the skills the CHU requires

What were the benefits

The two-day learning event was facilitated by Noel Hepworth and Danijela Stepić. The workshop focused on developing participants’ capacities in developing FMC. Special attention was put to the sharing of experience and practical group work assignments.

The following were the learning objectives:

• An understanding of the key steps needed to introduce FMC as an effective tool of management;
• An understanding of who the managers ought to be including the relationships between the political and civil service management cadres;
• Raised awareness of the role of management and of finance officers within FMC concept;
• An appreciation of the significant changes that FMC requires of the finance officer in terms of role, learning and status;
• Developed a greater understanding of what culture changes need to be introduced to develop an effective FMC system.

Who was it for

The workshop was designed primarily for:

• officials working in Central Harmonization Units - CHUs
• finance officers
• other public sector officials from ministries with an  interest in FMC
• public sector managers who are responsible for managing activities
• officials who are responsible for preparation of strategic documents, e.g. public administration reform strategy, budget reform strategy, accounting strategy and other strategies and reform plans impacting upon public financial management
• officials with an interest in civil service reform
• officials working on the programming of EU funds

Faculty of the workshop

Noel Hepworth, CEF Associate Fellow

Noel Hepworth: Starting with pilot institutions and staging seems to be effective approach in developing #FMC

— CEF (@CEF_Ljubljana) June 22, 2016

Danijela Stepić, Director of CHU, Ministry of Finance, Croatia

Ms. Danijela Stepić holds a BSc and a MSc from the Faculty of Business and Economics at the University of Zagreb.

She started a career at the Ministry of Defence, in Finance and Budget Directorate, where she also assisted in the preparation of a introducing for an internal audit function. She joined the Ministry of Finance and became Director of the Central Harmonisation Unit in 2008. She was responsible for the introduction and implementation of PIFC reforms in Croatia in line with requirements under Chapter 32. Between 2013 and 2015 she took an unpaid leave and worked in international projects in the region. As an expert she worked in Kosovo, Serbia, and Bosnia and Hercegovina, providing technical assistance on various aspects of PIFC implementation, including financial management and control, internal audit and central harmonization unit. Since January 2016, she has returned to the Central Harmonization Unit as the Director. 

Danijela holds an International Certificate and Diploma in Public Sector Accounting and Auditing from CIPFA, and also worked as CIPFA/CEF tutor.

Recently she also co-authored the book »Fiscal Accountability and Financial Management – Guide for the Heads of Budget Organisations«.

Danijela Stepić: #networking with public sector institutions is crucial for CHU as the CHU is a driving force in developing FMC

— CEF (@CEF_Ljubljana) June 22, 2016

Partners

This learning initiative was supported by: