State Debt Auditing Standards Република България Сметна палата.

State Debt Auditing Standards

Република България

Сметна палата

General Information on Debt Management

Legal framework

Constitution

Art. 84 – The Parliament gives mandate to assume new debt

Art. 85 – The Parliament ratifies the agreement concluded by the Council of Ministers

State Debt Act

Ministry of Finance manages the debt

Central Bank and other debt agencies

Annual State Budget Act Fiscal reserve volume

Debt volume limits



Structural Elements of State Debt Audited by the Bulgarian National Audit Office

External Debt

Internal Debt

State Guaranteed Debt

Municipal DebtConsolidated

State Debt



Structure of the Audit Process

Criteria

State Debt Audit

Micro Level

Audit of an Individual Loan

Macro Level

Monitoring Selection criteria



Macro-level Audit

Monitoring

External Debt

Internal Debt

MunicipalDebt

State Guaranteed Debt



Objectives of Monitoring



1. Verification of data derived from different sources – MoF, Bulgarian National Bank, line ministries, beneficiaries.2. To provide legislature and the executive with an independent and objective evaluation of the degree of fulfilment of the limits on the volume of debt as laid down in the legal basis. 3. Analysis of the level of obligations (principal and interest) and assessment of elements changes in respect of previous periods.4. Identifying those debt elements which are most vulnerable to impact by the inherent exchange and interest risks.5. Identifying government loans with ascertained problems in the use of borrowed funds and servicing, and state guaranteed loans with high risk of the guarantee being called.

Monitoring instruments (1)

1. Register of external debt obligations

2. Register of internal debt obligations .

3. Municipal debt register

4. Register of state guaranteed debt

5. Register of foreign loans (government and state guaranteed) credit files

(The registers maintained by the National Audit Office include all commitments agreed upon and assumed through acts of Parliament, while the Ministry of Finance keeps record only of the proceeds of borrowing actually received.)




In calculating the value of debt obligations (principal and interest), the NAO uses two different approaches:1. Nominal value of the obligations as of a set date (30 June or 31 December). The values of the principal and interest payments are calculated on the basis of the foreign exchange cross rates and interest rates used by the international financial institutions as of the respective date. This approach does not take into account the exchange risk and the interest risks throughout the repayment period - up to 35 years, and reduces the reliability of the dynamics of change in the values of obligations with respect to previous periods.




2. Determining the volume of obligations using a Linear Trend Model (LTM). This model uses average values of foreign exchange rates of participating currencies and the basic interest rates for past periods with a maximum remoteness, e.g from 1990. It is not particularly effective in the short and medium term, but in the case of long-term repayments (over 5 years) it allows for reducing the impact of foreign exchange and interest rate fluctuations down to acceptable limits. The data thus received, ensure greater degree of reliability of the dynamics of change in the volume of the external debt, internal debt and respectively the state debt.



Monitoring of Macroeconomic Indicators

Annual dynamics of the volume of debt with respect to other macroeconomic indicators.

Annual dynamics of the volume of quotas on significant budgetary revenue and expenditure indicators.

Examination of the fulfilment of the Maastricht criteria.



Using the Results of Monitoring Macro-level Management

State Debt Management

Strategy

Monitoring

State Debt Management

Reported Result

Material environment change

Yes

No



Criteria used in selecting specific government and state guaranteed loans for audit

Significant Investment

Loans

Loan spendingdelay

Reported problemsin loan servicing

Selection of entities for audit of government and state guaranteed

loans

MONITORINGInputinformation

Criteria

Type of audit Current Ex ante Ex post



Use of audit results in the management of borrowed funds under government and state guaranteed loans

Depending on the type of audit (current or ex post), the following scheme is applied:

Expectedresults

Reported result

Ex post audit

Management of fundsStrategy

Current audit

informationcorrective actionsРепублика България


Instruments and techniques used in the audit of funds under government and state guaranteed loans

Examination of the legality of signing

Regularity audit

Analysis of contractual relations

Performance audit

State Debt Auditing Standards Република България Сметна палата.

Documents

Transcript of State Debt Auditing Standards Република България Сметна палата.