1

ADVISORY

Principles of the Reduction of Administrative Burden using the Standard Cost Model

Petra ExnerNicosia, 16th March 2010

2

Agenda

1. SCM Basics (9:00 - 09:55 am)

2. Examples of mapping of Information Obligations and Data Requirements (9:55 - 10:10 am)

3

Standard Cost Model

simplified, consistent model for estimating the administrative costsdoes not focus on the policy objectives of each regulation high degree of detail in the measurement provides transparency and a leverage for reduction approaches

The Standard Cost Model (SCM) is designed to measure the effect of government regulation on businesses

4

Information Obligations

Information Obligations (IO) are the obligations resulting from regulation to provide information and data to the public sector or third parties

Furthermore:Transfer of the data to the public authority or private persons is not a mandatory criterionincludes the duty to have the information available for inspection or supply it on request

5

Administrative Costs

Direct financial costs e.g. tax payment

Costs of compulsory obligations

Information Obligations: Support of governmental regulation and legal control

Costs of regulation - Administrative costs e.g. trade registration

Material costse.g. filters forharmful emissions

Content requirements: Support of the government policiese.g. resources distribution, tax collection, behavioral regulation

6

Administrative Costs

The following costs are not administrative costs:

Financial costs, such as premiums, duties, penalties and repayments

Substantive compliance costs, such as (technical) facilities in connection with hygiene

Acquisition of professional qualifications

Statutory information requirement for which the entrepreneur receives a payment from the commodity board or industrial board

Turnover lost by the entrepreneur as a result of compliance with information requirements

Irritation burdens, or the quantitative expression of annoyance

Costs induced by exercising a right to complain

7

Data Requirements

Definition: The specific information that must be provided in order to comply with an Information Obligation

Legislation

Information obligation 1

Information obligation 2

Information obligation 3

Data requirement 1

Data requirement 2

Data requirement 3

Mapping of different frequencies

Facilitate reporting and the assessment

Function

8

Identification of Information Obligations

Identify target groups

If related to several target

groups: probably several IO

Regulation

Reference to a not specified information transmission?

Does the paragraph contain an Information Obligation for a

business?

Connected to other Information Obligations?Link to some other regulation?

Continue with the next paragraphno

Supply of specific business data?

probably an IO:identify relevant DR

yes

probably DR:identify relevant IO

yes

probably IO: deduce DR from subordinated

regulation

no

Decision if IO/DR when linked regulation is identified

9

Calculation Model

Legislation

Information Obligations and Data Requirements

Time(H)

Frequency (F)

Price(T)

Additional costs(A)

Population(N)

Costs per administrative activity (P)Annual quantity of administrative

activities (Q)

Administrative costs = P x Q

Laws, decrees, administration instructions

Reports, permits, certifications, registrations

Administrative activity

Standardized process for complying the legal requirements

x + x

10

Types of Required Actions

Supporting process modeling and standardization

Facilitate reporting and the assessment

Central idea of SCM : every Information Obligation is a process that consists of collecting and/or transferring data. This process can be mapped through a given set of action types

Familiarization with the

Information Obligation

Filing the information

Submitting the

informationCopyingFilling forms

Retrieving relevant

information from

existing data

1 3 7 10 11 12

Example: Acquiring a permit

Reasons for using standardized types of required actions:

11

Types of Required Actions

1. Familiarizing with the information obligation2. Training members and employees about the Information Obligations3. Retrieving relevant information from existing data4. Adjusting existing data5. Producing new data6. Designing information material7. Filling forms and tables, including recordkeeping8. Holding meetings9. Inspecting and checking10. Copying11. Submitting the information12. Filing the information13. Buying (IT) equipment & supplies14. Other

12

Standardization

Administrative activity A:

30 min.Company 5

10 min.Company 4

10 min.Company 3

10 min.Company 2

10 min.Company 1

30 min.Company 5

10 min.Company 4

10 min.Company 3

10 min.Company 2

10 min.Company 1

10 min.

Administrative activity B:

15 min.Company 5

20 min.Company 4

10 min.Company 3

20 min.Company 2

10 min.Company 1

15 min.Company 5

20 min.Company 4

10 min.Company 3

20 min.Company 2

10 min.Company 1

15 min.

Administrative activity C:

5 min.Company 5

2 min.Company 4

50 min.Company 3

20 min.Company 2

10 min.Company 1

5 min.Company 5

2 min.Company 4

50 min.Company 3

20 min.Company 2

10 min.Company 1

More

interviews

Administrative activity D:

15 min.Expert 2

20 min.Expert 1

25 min.Company 3

20 min.Company 2

10 min.Company 1

15 min.Expert 2

20 min.Expert 1

25 min.Company 3

20 min.Company 2

10 min.Company 1

20 min.

13

Phases of SCM Projects

Phase 3 Calculation and reporting

Phase 0 Project Set up

Phase 2 Data capture and standardization

Phase 1Preparatory analysis

14

What’s next?1. Further activities

What is to be done with the SCM results?

Reduction analysis and implementationSCM is concerned with the:

Time of the administrative activities (duration)

Wage of the employee involved (cost)

Quantity (number of affected businesses or cases)

Frequency (How often is the obligation required)

EU reduction goal: 25%

Cyprus reduction goal: 20%

Influence of SCM on further legislative procedure

Ex ante measurement of new legislation

Further development: impact assessment, better regulation

15

What’s next?2. Institutionalization of SCM

Reason for an Institutionalization: independent organization forMonitoring reduction process

Checking further legislation drafts for IO’s

Updating baseline measurement

Forms of organizationIndependent unit (independent from other institution (NL, GER, EU)

Interdepartmental steering group: core in MoF, satellite units in other ministerial departments (NL, GB, DK, GER)

External support for updating, incl. involvement for business organizations (DK)

16

What’s next?3. Future tasks of government units

Tasks and duties

Monitoring reduction process

Achieving consent about reduction goals for the different departments and the reduction measures to be taken

Addressing results to responsible unit (e.g. parliament)

Auditing further legislation drafts for IO’s during the legislative procedure

Reporting progress

Updating baseline measurement

Concerned organizations

Ministry of Finance

Other Government departments

Private Sector

17

Agenda

1. SCM Basics (9:00 - 09:55 am)

2. Examples of mapping of Information Obligations and Data Requirements (9:55 - 10:10 am)

18

Example

19

Example