THE DTHE DEBT OF THE LOCAL EBT OF THE LOCAL GOVERNMENT UNITS IN GOVERNMENT UNITS IN

POLAND POLAND

Iwona Zyman, Director of the Regional Branch in OpoleSUPREME AUDIT OFFICE OF POLANDwww.nik.gov.pl

Vilnius, 9-11.09.2014

GOVERNMENT GOVERNMENT STRUCTURESTRUCTURE

Poland has a three-tier local government structure:

The basic local government unit - commune (gmina)

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DIVISIONDIVISIONCurrently Poland is divided into:

2479 communes: 305 urban, 608 urban-rural and 1566 rural

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LOCAL GOVERNMENT LOCAL GOVERNMENT UNITS UNITS QUALITIESQUALITIES

legal personality ownership right independence protected by the law

not organized in a hierarchical manner

the activity scopes of different local government levels are separated

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LOCAL GOVERNMENT LOCAL GOVERNMENT TASKS TASKS

OWN

fulfilment of the citizens’ needs

COMMISSIONED

government administration tasks

such as:

- conducting the elections- issuing vital records- paying out permanent benefits

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LOCAL GOVERNMENT LOCAL GOVERNMENT REVENUESREVENUES

Local government units execute their tasks on the basis of the budget plan

The main sources of revenues: own income, including local taxes and fees general subsidies designated subsidies out of the state budget

The share of local government units in the public revenues depends on their tasks

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AUDIT AND SUPERVISIONAUDIT AND SUPERVISION

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AUDIT AND SUPERVISIONAUDIT AND SUPERVISIONREGIONALREGIONAL ACCOUNTING ACCOUNTING

CHAMBERSCHAMBERSThe activity of local government units is supervised with regard to legalityThe audit of financial management of the local government units in the scope of government administration tasks is also conducted with regard to purposefulness, reliability and sound managementAt least once in four years carry out a complex audit of the financial management of local government units

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The Supreme Audit Office (NIK) may audit, beside other entities, also the

activity of local government units, communal legal persons and other communal

organisational units with regard to legality, sound management

and reliability

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Due to the fact that the Supreme Audit Office presents to Parliament :

1) the analysis of the state budget execution and the monetary policy objectives, 2) opinion on the approval for the Council of Ministers, it is obliged to conduct annual audits of the state budget and the utilisation of financial resources designated to the execution of tasks commissioned by the local government units

In the first quarter of each year all of the NIK organisational units, including regional branches, conduct budget audits, among others in local government units

The regional branches conduct audits of all three local government levels

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A budget audit in a local government unit encompasses among others:

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SAO AUDIT

Apart from typical financial audit of state budget execution and local government units

NIK conducts audits of mixed character:during the typical compliance or performance audit the reliability of funds used to execute tasks is also audit

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NIK conducted, among others, the below listed NIK conducted, among others, the below listed audits concerning the local government units audits concerning the local government units

and their debt: and their debt:

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INCREASE OF THE POLISH DEBTINCREASE OF THE POLISH DEBT

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INCREASE OF THE POLISH DEBTINCREASE OF THE POLISH DEBT

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INCREASE OF THE POLISH DEBTINCREASE OF THE POLISH DEBT

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EU budgetEU budgetUnsatisfied needs in the

scope of social and technical infrastructure

forced the local government units to seek external financial sources, in particular those out of the EU budget, whereby the obligation of national input

determined the decision on the incurring of debt liabilities.

During two, three years local government units conducted investments that, considering their economic and financial

potential, should have been executed in a time

perspective twice or thrice longer.

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Undertook activities:Undertook activities:

The local government units undertook activities aimed at the increase of the operational

surplus (in particular by a more efficient use of the

resources ascribed to them and expenses optimisation),

however such activities were not adequate in relation to a rapid increase of the debt,

as well as the costs connected with its service (discount, interest rates)

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The audits connected with the debt of local government units revealed the following

irregularities:

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Such situation in the local government units requires greater

accuracy in the scope of local government activities connected

with the incurring and repayment of debt.

Financing expenses with debt liabilities should be connected with:

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Thank you

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