El derecho de información: concepto, fundamento y finalidad

Apart from necessary training of accounting staff and government officials there is a need for education and support to politicians and parliamentarians to help them understand and be able to use accrual-based financial statements for decision making process. This can be achieved through activities of a budget parliamentary office which in some countries include such educational and advisory role (e.g. in Austria). In addition, there is a need for communication from the government on the use of financial statements in decision-making process in order to inform general public and citizens about the key vision for reforms, expected tangible outcomes and champions of the reform. In addition to full versions of national financial statements, the government can also prepare summaries that include highlights in narrative and graphic form for the general public which is used for communication with general public (France). The awareness raising and educational efforts should be also made available to students, academia, civil society, media and NGOs to make sure that there is demand for and understanding of information which will be produced by the government that enable constructive citizen engagement initiatives. These activities are linked to of the main “benefit” of accrual accounting – Accountability and Transparency.

96_{Total Number of Staff needs to be assessed, before actual capacity building activities starts. The huge number}

of staff, i.e. operational accountants (est. 12,000), which need to be trained impose a huge challenge for the overall capacity building approach.

117

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The Ministry of Finance is the overall coordinator of the PFM reform process and demonstrates strong ownership and commitment towards the implementation of the reform activities. The principal stakeholders of the Public Sector Accounting are inter alia: the Treasury Administration and Budget Department of the MoF, prioritized users of public funds, the State Audit Institution, Fiscal Council, SORS, Tax Administration. Reform implementation will require strengthening the Ministry’s staffing, internal procedures and coordination and infrastructure. It will also benefit from valuable international institution assistance through advice and funding. Lastly, it is essential that the political will and commitment to reform remain throughout the process.

Due to the large size of the public sector (11,000 budget beneficiaries), the reform in the first phase should focus on budget beneficiaries, which are the most significant in terms of size and budget, or in relative strategic importance. The capacity of various users of public funds varies significantly, but the overall assessment is that their current accounting and finance functions lack capacity and that substantial strengthening is needed in order to ensure accurate, complete and reliable financial information. In some cases this can be attributed to understaffing of those functions and a lack of necessary skills. However, it appears that these weaknesses are, to a larger extent, due to a lack of awareness by management of the significance of financial information. This has led to quality deterioration of the finance function and provision of unreliable financial information, accompanied by an underdeveloped system of financial management and control. Furthermore, it should be mentioned that there is no standardized software or interface and a range of different IT solutions are used for accounting and financial reporting purposes, some of which do not respond to the modern financial management requirements. The capacity across the targeted users of public funds will be the main challenge in achieving project objectives. This risk will be mitigated by training and educating accounting practitioners, as well as conducting workshops and seminars to raise decision makers’ awareness.

There are two main drivers of project risks: (a) the complexity of the reform which is multifaceted, cross cutting with PFM reform, phased, and long term to achieve tangible results requiring streamlined cooperation of several main stakeholders and multiple more budget entities to implement the changes, (b) the ambition to re-shape the culture and capacity of key stakeholders, from mainly cash basis accounting to modern accrual accounting concepts including not only preparation of financial statement but also effective use of accrual based information for monitoring, performance evaluation and decision making. The overall reform risks can be assessed as substantial.

118 The main risks are presented as follows:

Key Risks Mitigation Measures

Political and Governance The ownership of the project both at the level of the government, Treasury Administration and other stakeholders may be impacted by political changes and other reform priorities. The risk is, however, partially mitigated because the reform is: formalized in the government’s PFM Reform Program including roadmap, driven by the EU accession strive and interest from other development partners including the World Bank, IMF, SECO. The risk is also mitigated through (i) hands-on involvement of the World Bank in the follow up project due to implementation mode being recipient-executed; (ii) continued dialogue with Ministers and senior officials on the importance of the planned reforms. Mitigation measure will include activities to increase and sustain the visibility of the reform, as well as the disclosure of implementation strategy will be critical elements to sustain high political support to the reform and to limit the risks of slippage. Reform design The reform targets all users of public funds making the scope of

beneficiaries very broad and imposing capacity gaps and challenges. Due to this all beneficiaries of the project activities are relevant to the assessment of the capacity risk and are considered as such in determining the risk rating.

This risk will be mitigated in part through TA project in preparation: (i) engagement of World Bank and SECO specialists in the implementation support; (ii) engaging appropriate international peers, long-term advisors and consultants to support key institutions; and (iii) technical day-to-day project implementation assistance and enhanced supervision. The project will benefit from relevant World Bank and SECO experience in similar reforms in other countries, and their in-house expertise in supervising and carrying out proposed activities under the project. Mobilizing resources The reform need various resources including funding and staffing. Part of the reform will be supported by SECO funded TF Project, however the remainder actions which needs to be estimated including implementation of ICT system is to be provided by the government (which was part of its official commitment).

Key stakeholders will assign dedicated staff. External experts and consultants will also provide support to the reform.

Institutional capacity for implementation

Project management capacity needs to be strengthened in key stakeholders departments.

Technical assistances would be provided to all implementing entities, while implementation arrangements should ensure that a core number of expert staff are available.

The reform targets all users of public funds making the scope of beneficiaries very broad and imposing capacity gaps and challenges. This risk will be mitigated in part through TA project in preparation as described above.

119 Delivery Monitoring and

Sustainability

The risk is whether the implemented reforms may not be sustained because of lack of continuing funding, lack of outside support and assistance, or waning commitment on the part of relevant stakeholders.

This risk is mitigated in part by: (i) Serbia’s strong interest in EU accession, which imposes substantial requirements in the area of financial reporting; (ii) the Project’s focus on improving capacity within relevant stakeholders, a long-term investment that may yield benefits for years to come; and (iii) training and education of accounting practitioners and institutionalizing the education within Government structures, thus ensuring sustainability.

Environmental and Social The reform focus on technical aspects in its nature and is not expected to have any significant social and environmental impact. Stakeholders The main risk is linked to the multiplicity of stakeholders and to

the resistance to change possible in the budget entities.

Mitigation requires constant engagement by in line Ministry with underlying budget entities and their staff and continuous coordination and communication between stakeholders through the working groups and leadership.