POLAND - Najwyższa Izba Kontroli

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POLAND - Najwyższa Izba Kontroli

Supreme Audit Office The year 2010, when thisreport is published, is the InternationalYear of Chopin, celebrated on theoccasion of the 200th anniversary ofthe composer’s birth. To commemoratethis anniversary, the cover of the NIK’sAnnual Report has been illustrated withphotographs from Żelazowa Wola – theplace where Fryderyk Chopin was born,presenting the composer’s family houseand garden.Annual Report 2009WARSAW 2010 POLAND3


The year 2010, when thisreport is published, is the InternationalYear of Chopin, celebrated on theoccasion of the 200th anniversary ofthe composer’s birth. To commemoratethis anniversary, the cover of the NIK’sphotographs from Żelazowa Wola – thewithillustrated been has Report Annualplace where Fryderyk Chopin was born,presenting the composer’s family houseSupreme Audit Officeand garden.Annual Report 2009WARS AW 20 1 0 PO LAND4


Manor House in Żelazowa Wolawhere Fryderyk Chopin wasborn in 18101


The mission of theSupreme Audit Office (NIK) is topromote economic efficiencyand effectiveness in the publicservice to the benefit of theRepublic of Poland.The vision of the NIKis a Supreme Audit Institutionwith a widely recognisedstanding, whose reports willbe an expected and sought forsource of information for bodiesof the state and the generalpublic.The organisation and the functioning of the Polish SupremeAudit Office (the NIK) are set out in the Constitution ofthe Republic of Poland and in the Act on the NIK of 23December 1994. The NIK is subordinate to the Sejm (thelower chamber of the Polish Parliament) and it is headedby the President, who is appointed by the Sejm for a sixyearterm of office. The NIK’s basic task is to conduct auditsrelated to the execution of the state budget. It also auditspublic finance spending and the management of publicassets by state and local governmental bodies and economicentities (businesses). Every year, the NIK submits three keydocuments to the Sejm: its analysis of the execution of thestate budget and monetary policy guidelines, its opinionon the vote of approval for the government and its annualactivity report.3


AnnualReportNIKDearColleagues,It gives me great pleasure topresent you with the summaryreport on the NIK’s activity for theyear 2009. In this report, you willfind the general information onthe responsibilities of our institution,its staff and budget, as wellas the list of the audits carried outin 2009. Those audits were conductedwithin three audit priorities,set to cover the years 2009-2011,namely Efficient and Citizen-friendlyState, Cost-efficient Governanceof Public Assets and Poland in theEuropean Union. The majority ofthe audits the NIK performs areconnected with the state budgetexecution audit, which is our mainresponsibility, aimed at informingthe authorities and, in the firstplace, the citizens, on how thestate functions and how the publicadministration performs its tasks.As for the international activity,which is also of high importance tothe NIK, we continued with fulfillingour role of the EUROSAI Presidencywhich was handed over to theNIK at the 7th EUROSAI Congressheld in Kraków in June 2008 forthe following three years. The flagshipinitiative of our Presidency isthe development of the EUROSAIstrategic plan, to cover the years2011-2017, which is a novelty inthe history of the Organisation.The document is aimed at makingEUROSAI activities yet more efficient,so I do hope that this challengewill one day be regarded asour joint great success.The year 2009 was also specialbecause in February we celebratedthe 90th anniversary of the establishmentof the NIK. So the NIKhas been the guardian of publicmoney spending for almost a centuryalready, which makes us oneof the oldest institutions in ourcountry. The celebrations organisedin connection with the anniversarygave us an opportunitynot only to reflect on the past, butalso to consider future challengesthat the NIK and all Supreme AuditInstitutions have to face.4Jacek JezierskiPresident of the NIK


Management of the Supreme Audit Office. From the left: NIK Vice-Presidents Jacek Kościelniak and Józef Górny,NIK President Jacek Jezierski, NIK Vice-Presidents Marek Zająkała and Stanisław Jarosz, and NIK DirectorGeneral Marek ChodkiewiczAudits in 2009– some statistics 175 planned audits 2,603 entities audited 160 ad hoc audits 2,663 post-audit statements 177 pronouncements on audit results submitted to the lowerchamber of the Parliament (Sejm) PLN 15.8 billion – amount of financial or reporting impactof irregularities disclosed in audits PLN 740.6 million – financial benefits received from audits PLN 1.8 million – financial impact of irregularities to thedetriment of the European Communities budget NIK representatives participated in 932 sessions of parliamentarycommittees and sub-committees 65 de lege ferenda proposals 6 parallel audits conducted with Supreme Audit Institutionsof other countries5


AnnualReportNIKCollege of the NIKJacek JezierskiPresident of the NIKJózef GórnyVice-President of the NIKStanisław JaroszVice-President of the NIKJacek KościelniakVice-President of the NIKMarek ZająkałaVice-President of the NIKMarek ChodkiewiczDirector General of the NIKProf Zbigniew DworzeckiWarsaw School of EconomicsProf Czesław MartyszSilesian University in KatowiceProf Artur Nowak-FarWarsaw School of EconomicsProf Mirosław StecJagiellonian Universityin KrakówDr Marcin TrzebiatowskiCatholic University of LublinWaldemar DługołęckiDirector of the Department ofBudget & Finance of the NIKRoman FurtakDirector of the NIK RegionalBranch in Zielona GóraMieczysław KosmalskiDirector of the NIK RegionalBranch in WarszawaDr Wojciech MisiągAdvisor to the Presidentof the NIKDr Józef PłoskonkaAdvisor to the Presidentof the NIKDr Czesława Rudzka-LorentzDirector of the Department ofPublic Administration of the NIKDr Bogdan SkwarkaDirector of the Departmentof Legal Affairs of the NIK6


College of the NIKThe NIK operates on the basis of the principle of collegiality,which means that there is a special body, called the Collegeof the NIK (Polish: Kolegium NIK), involved in the process ofapproval and adoption of the most important documents thatare submitted to the lower chamber of the Polish Parliament, i.e.the Sejm. The College is composed of the NIK President (Chair ofthe College), Vice-Presidents, Director General, directors of theNIK’s organisational units, Advisors to the President of the NIKand representatives of Polish top academic institutions.7


AnnualReportWhat the NIKdoesEach citizen who pays taxes to the state wants to besure that this money is spent appropriately. The NIK,as the guardian of public funds, takes care of legal,sound and efficient spending and reliable accountabilityof these funds. Not only does the NIK discloseirregularities, but it also proposes possible solutionsaimed at better spending in the future as well. NIK auditsshow in which areas the state operates well andwhich need to be improved. If the irregularities foundstem from loopholes in the regulations or unclear legalprovisions, the NIK postulates changes in the law (socalled de lege ferenda proposals). When NIK auditorsfind criminal offences or negligence, they inform thelaw enforcement bodies.Bodies audited by the NIK and the criteria appliedBodies audited by the NIKAudit criteriaappliedGovernment administration authorities,the National Bank of Poland (NBP), state legalentities and other state organisational unitsLegality, soundmanagement, efficacyand integrityLocal government authorities, local governmentlegal entities and other local governmentorganisational unitsLegality, soundmanagementand integrityOther organisations and businesses that usestate funds or assetsLegality and soundmanagementPublic money spending under the microscopeThe NIK investigates all the areas of the statewhere public money or state assets are involved. Italso checks whether public institutions do their jobeffectively, efficiently and economically. Every year, theNIK audits a few thousand entities, and on this basis itdevelops a report presenting the overall picture of thestate functioning. Pronouncements on audit resultsare submitted to the Sejm (the lower chamber of thePolish Parliament) and to the institutions responsiblefor the proper functioning of the audited entities.8


Structure of the NIKThe NIK is composed of 14 departments, located in its central office inWarsaw, and 16 regional branches, one in each administrative region ofPoland. Out of the 14 departments in the central office, there are eightdepartments directly involved in audits (audit departments), each dealingwith a different area of state activity, two audit support departments andfour administrative departments which provide internal services for the office.All 16 regional branches are directly involved in auditing.Audit departmentsAudit support departmentsDepartmentof Public AdministrationRegional Branchin BiałystokRegional Branchin OlsztynDepartmentof LegalAffairsDepartmentof AuditStrategyDepartmentof Budget & FinanceRegional Branchin BydgoszczRegional Branchin OpoleDepartment of Economy,Public Assets & PrivatisationRegional Branchin GdańskRegional Branchin PoznańDepartment of Communication& Transport NetworksRegional Branchin KatowiceRegional Branchin RzeszówDepartment of Science,Education & National HeritageRegional Branchin KielceRegional Branchin SzczecinAdministrative departmentsDepartment of NationalDefence & Internal SecurityDepartment of Labour, SocialAffairs & HealthDepartment of Environment,Agriculture & ConstructionInfrastructureRegional Branchin KrakówRegional Branchin LublinRegional Branchin ŁódźRegional Branchin WarszawaRegional Branchin WrocławRegional Branchin Zielona GóraCorporateServicesDepartmentAccountsDepartmentDepartmentof HumanResourcesDepartmentof Facilitiesand Logistics9


AnnualReportAuditplanningThe NIK’s annual work plans aredeveloped on the basis of priorityaudit directions defined by theNIK College every three years.In the years 2009-2011, the NIKis to assess whether the stateoperates smoothly and is friendlyto its citizens, whether publicresources are managed effectivelyand how the Polish state functionswithin the European Union. Theaudits planned for 2009 were alsoconcerned, as in the previous years,with examination of corruptionthreats. Within each audit, alreadyat the stage of developing itsschedule, potential corruptionthreats were taken into account.This allowed for identifying10potential corruption areas andcorruption-prone mechanisms.During each audit, the NIK alsoassessed the functioning of theauditee’s internal control system.The most important audit in eachNIK’s annual plan and the NIK’spriority task is the audit of theexecution of the state budget andmonetary policy guidelines. Everyyear, the NIK carries out audits insome 400 entities within the statebudget execution audit, whoseresults are presented by the Presidentof the NIK at a plenary sessionof the Sejm. They are described inthe document entitled Analysis ofthe Execution of the State Budgetand Monetary Policy Guidelines(in Polish: Analiza wykonaniabudżetu państwa i założeń politykipieniężnej).To support audit planning,NIK experts have developeda specialist software, tailored tomeet the specific needs of theplanning process, called SterNIK.It has proved to be a useful toolas it allows for making lists ofpotential audit topics, for drawingup audit schedules, as well as foranalysing the number of tasksassigned to auditors and thefrequency of audits carried out inindividual entities.


Audit prioritiesof the NIKThe NIK work plan for 2009 wasadopted by the College of theNIK at the end of 2008. At thesame time, audit priorities wereset for the years 2009-2011. Ithas been decided that NIK auditsshould focus on checkingwhether the state is efficientand friendly to its citizens,whether it effectively managespublic assets and how Polandfunctions within the structuresof the European Union.An Efficient and Citizen-friendlyState should ensure safety andother needs of its citizens, and itshould also be able to look to thefuture and see potential threatsand opportunities it may bring.Such a state should perform itstasks efficiently and effectivelyand it should provide professionalservices for its citizens.The second priority, namely theCost-efficient Governance ofPublic Assets, requires the stateto be economical and well-managed,to take care of its assetsproperly and to implement objectivesof high importance to thesociety through well-thought-outactivities and taking account ofpotential risks.Poland in the European Unionis a new priority related to thecountry’s involvement in theCommunity’s matters. It combinesvarious issues in the field of economy,ecology, law etc. This priorityis related to both the rightsstemming from Poland’s membershipin the European Union aswell as tasks and responsibilitiesaccepted in this respect.Audit prioritiesAudit areasEfficientand Citizen-friendlyStateInternal and external state security; functioning of investigation and judiciary bodies;performance of controlling and supervisory functions by government bodies; qualityof services for citizens offered by public administration offices; promotionof e-administration; living in a clean environment; rational use of natural resources;cultural heritage protection; access to education and its quality; labour management;unemployment fighting; social assistance and social security, supportfor families and the disabled; access to and quality of medical services in the publichealthcare system; promotion of Poland in Europe and worldwide.Cost-efficientGovernanceof Public AssetsState of public finances, including the budget deficit development; collectionof revenues of the state budget and local government units; public funds managementin public finance sector units and public utilities; implementation of investmentsfinanced from public funds; public aid for entrepreneurs and subsidies for non-publicfinance sector units; functioning of earmarked funds; restructuring, commercialisationand privatisation of economic sectors, State Treasury entities and municipal entities;management and administration of State Treasury assets, local government and stateownedenterprises’ assets; development and maintenance of the infrastructure; providingconditions for economic growth, including implementation of undertakings related to2012 European Football Championship.Polandin theEuropean UnionAdjusting the law to EU requirements and meeting commitments taken towards the EU;obtaining and managing EU funds; simplification of procedures and eliminationof institutional barriers as regards the use of 2007-2013 funds; implementationof the Common Agricultural Policy.11


AnnualReportNIKauditsAudits carried out by the NIK comprisea whole variety of issues. Not only doesthe NIK conduct financial audits andexamine the state budget execution,but it also checks whether the publicadministration performs its tasks in aneffective, efficient and economical manner.The following are the audits conductedby the NIK in 2009, divided according tothe three audit priorities which are theEfficient and Citizen-friendly State, theCost-efficient Governance of Public Assetsand Poland in the European Union.12


Efficient and Citizen--friendly StateAnnualReportInternal and external state security:a broad spectrum of audits covering issuesrelated to defence, activities of internal policingservices, traffic safety and preparedness fornatural disasters and emergencies. In this field,the following audits were conducted in 2009: Implementation of the Programme for modernisationof the Police, the Border Guards, the StateFire Service and the Government Protection Bureau(BOR). Supervision of vehicle testing stations by localauthorities. Assignments of army employees for posts inmilitary institutions and army units in case ofa war.Fire protection in the army.Tasks of the Government Protection Bureau (BOR)with regard to securing Polish diplomatic posts,including protection of their employees (secret). Use of state budget subsidies allocated to theVoluntary Fire Service (OSP).Acquisition planning, distribution and register ofcomputer equipment in national defence units.Maintenance of road and rail checkpoints on thenorth-eastern and eastern section of the stateborder.Functioning of water rescue services.Flood protection.Functioning of border services at road checkpointson the Polish-Russian and Polish-Belorussianstate border.Providing appropriate conditions for transportingstudents to primary and middle schools.Access to education and its quality,cultural heritage protection:audits in this field present the functioning ofmilitary higher education institutions, awardingof academic degrees by state universities and thefunctioning of the Polish Academy of Sciences(PAN) and its subordinate units. Special attentionwas paid to the audit aimed at checking whetherthe state provides good conditions for talentedstudents and to the audit of the organisation ofsports for the disabled.Protection of and access to museum collectionsin Poland.Organisation and financing of special education.Education for adults in the light of labour marketneeds.Functioning of training schools for non-commissionedofficers in the years 2005-2008 (first half).Functioning of young offenders institutions.Performance of public broadcaster tasks andassets management by the Polish Television (TVPSA).Functioning of regional public radio broadcastingcompanies.Functioning of the healthcaresystem, including access to andquality of medical services:audits in this field checked how the NationalHealth Fund (NFZ), local self-government bodiesand providers of medical services meet theirobligations. The NIK paid special attention toissues concerning access to medical serviceswithin the health insurance.NIK audits13


NIK auditsAnnualReportImplementation of the National Health Fund’s(NFZ) financial plan.Use of specialist medical equipment for medicalservices financed from public funds.Implementation of selected tasks of the NationalProgramme for Cancer Fighting. Functioning of self-governmental hospital treatment.Preventive healthcare for children and teenagers.Performance of supervisoryand controlling functions bygovernment bodies; functioning ofinspection and supervision bodies:Functioning of government administration bodiesin the field of providing trainings for drivers ofroad vehicles transporting passengers and goods,and supervision of their activity.Supervision of regional governors (voivodes) withregard to how local self-government units fulfilgovernment administration tasks. Legalisation of buildings constructed lawlesslyand regularity of execution proceedings. Functioning of the system for filing andinvestigating complaints in several supremepublic administration bodies. Activity of several administrative districts withregard to consumer rights protection.Living in a clean environment andecological security:NIKMonitoring of the environment of the Baltic Seaarea. Implementation of the National Programme forCouncil Sewage Treatment.Functioning of the State Monitoring of theEnvironment.Collecting environmental payments from farms bygovernors of the regions (marshals).Technical equipment recycling.Implementation of selected tasks set out in theUnited Nations Framework Convention on ClimateChange.Organic farming in Poland.Dealing with genetically modified organisms(GMOs).Public assistance, welfare andsupport for families:Performance of tasks related to public assistanceby the self-government administration.Aid granted to those harmed by tornado and therepair of tornado damage.The quality of services for citizensprovided by public administrationoffices:Poland’s accession to the European Union,which opened the labour markets of severalstates to Polish employees, saddled Polishconsular services with new responsibilities, suchas providing emigrants with contacts with thecountry and its culture. This was also one of theissues audited by the NIK.Judging cases related to land registers by courtsand the implementation of the New Land Registerproject.Realisation of projects related to the electronic Platformfor Public Administration Services (e-PUAP)and the Public Administration IT Network (STAP).Activity of the Polish Post Office, including financialflows and quality of the services provided.Implementation of the provisions of the repatriationact by government and local-government administrationbodies in the Małopolskie region.14


Real estate management and landregister: Updating the actual and legal state of real estateby bodies that manage state property andassets.Labour management and unemploymentfighting: Recruitment for posts of civil servants in localgovernment units in the Lubuskie region.Assistance to the disabled: Rules for performance and financing of professionalactivation centres.Cost-efficient Governanceof Public AssetsThe state of public finance,especially the question of publicrevenue raising,is of special importance to the NIK. It dependssignificantly on the good and coherent tax law,and especially on its effective execution. Althoughthere are no state borders in the SchengenArea, the collection of duties, for example onPoland’s external borders that are simultaneouslythe European Union’s borders, is still of highimportance to the state budget. Collection of tax and non-tax arrears by headsof tax offices. Collection of Corporate Income Tax. Management of the public debt and the statebudget liquidity. Effectiveness of administrative collection oftaxes and payments set and collected by competentexecutive bodies at the level of selfgovernments.The management of public fundsin public finance sector units andpublic utilitieswas another area of the NIK’s audits aimed atchecking whether the audited entities used theirresources in accordance with their allocation, in areasonable and economical manner, and whetherthe heads of the auditees did not breach the ruleof public finance discipline. The NIK was alsointerested in checking whether the costs of theaudited entities’ functioning were adjusted to thescope of their activity. Use of public funds by state entities dealing withagricultural consultancy. Remission of liabilities of the Agency for Restructuringand Modernisation of Agriculture (ARiMR). Food and standards of cleanliness in public hospitals. Collection and use of payments for alcohol saleslicences by self-governments. Functioning of the Polish Tourist Organisation(POT). Technical condition of buildings used by publichealthcare centres. Regularity of returns of excise duties included inthe price of diesel oil used for farm production. Concessions applied in repayment of liabilities atthe level of self-governments.Costs of public administrationfunctioning: Employment and remunerations in regionaloffices.Public aid and subsidies:Audits related to this issue were aimed at checkingwhether employers who receive public aid fulfilledtheir obligations and what were the results of theaid granted. The NIK paid special attention to themechanisms established in order to monitor theuse of public aid funds. Implementation of the Civic Initiatives Fundgovernment programme. Management and use, for construction purposes,of funds established by the BGK bank. Functioning of the housing bonuses system.NIK audits15


NIK auditsAnnualReportNIKWhile auditing the realisation ofinvestments financed from publicfunds, including multi-annual investments,the NIK focused on the regularity of investors’activities at all levels of the investment process:planning, implementation and settlement. The NIKchecked, in the first place, whether agreementsconcluded with contractors guaranteedperformance of the planned works and securedfinancial interests of investors. Audits in this fieldalso examined whether public funds were spentefficiently, economically and effectively. Theyalso covered utilisation of EU funds allocated forimplementation of certain investments. Regularity of procedures for selection of entitiesto construct gas networks and those to providemeans of transport, and realisation of theagreements concluded. Preparations for construction of the S8 dualcarriagewayroad. Functioning of special economic zones and theirextension. Regularity of decisions taken with regard to constructionplanning conditions and planning permissions. Realisation of sports investments by selected localself-government units in the Wielkopolskie region.Functioning of earmarked funds: Collection and division of funds from environmentfines and payments, and management of resourcesof environmental protection and water managementfunds at the level of self-governments. Management of public resources by selected environmentalprotection and water managementfunds at the level of regions (voivodeships).Providing conditions for economicgrowth, including realisation ofprojects related to the organisationof the EURO 2012 FootballChampion ship,calls for, according to the NIK, involvementof Polish diplomatic services, embassies andconsulates in the promotion of Poland as areliable economic partner. That is why the NIKchecked the regulations and organisation of basictasks of economic and commercial posts abroad,and cooperation of state authorities in makingjoint arrangements concerning the work of Polishmissions. Preparations of Poland for the organisation of theEURO 2012 Football Championship. Performance of tasks set out in the act on touristservices in the regions where the cities to organiseEURO 2012 Football Championship matchesare situated.While carrying out audits of themanagement of state assets(also by state agencies) and themanagement of assets of selfgovernmentsand state enterprises,the NIK focused on checking whether competentinstitutions appropriately and effectively lookedafter state assets and whether the interests ofthe state did not suffer from mismanagementor corruption. These audits also dealt withdistribution and utilisation of funds allocatedto Poland by foreign financial institutionsfor realisation of projects subject to loanagreements. Capital investments of banks operating with theState Treasury capital. Implementation of improvement schemes by selectedentrepreneurs from the mining and energysectors.16


Privatisation with a view to leasing enterprises forchargeable use. Governance of enterprises with a State Treasurymajority stake. Management of the resources of the forest fund. Repairs of machines and equipment by entitiesfrom the mining sector. Functioning of the Służewiec Horse RacecourseGroup in Warsaw. Management of selected assets of the PolishAcademy of Sciences (PAN). Sales of wood from state-owned forests managedby the Regional State Forests Office (RDLP) in Olsztyn. Protection of seashores.Processes related to restructuring,commercialisation and privatisationof the economy sectors, StateTreasury and council entitieswere audited with regard to proceedings taken inindividual sectors. This allowed for assessing thestrategies and privatisation programmes adoptedand their implementation. The audits carried out inthis field comprised, for instance, the efficiency ofrestructuring and privatisation processes and theeffectiveness of pubic aid allocated to enterprisesthreatened with bankruptcy. Realisation of the offset agreement provisions relatedto the acquisition of F-16 planes.Restructuring of the electrical power engineeringsector and the grid security.Sale of minority shares and stakes by the Ministryof Treasury.Implementation of the privatisation strategy instate health resorts.Restructuring and privatisation of the shipbuildingsector.The development and maintenanceof the infrastructure depends,for instance, on the acquisition of land necessaryto construct new roads by state and selfgovernmentbodies, as well as on the use offunds designated for this purpose. The NIKaudited this issue as it is particularly important inthe perspective of the organisation of the EURO2012 Football Championship by Poland, whichrequires immediate investments in roads andsports facilities. Activity of the public administration with regardto providing the required quality of public roadsrepairs. Issuing planning permissions with regard to connectionsof public roads with commercial andbusiness investments and their realisation. Functioning of the monitoring system for rail investmentsin Polish Railways Infrastructure (PKPPLK SA). Activity of Polish Railways Cargo (PKP Cargo SA)on the domestic and international markets. Coordination of works related to redevelopment,modernisation and repairs of roads and their infrastructurein selected agglomerations. Financial management of selected companies ofthe Polish Railways Group (Grupa PKP).Poland in theEuropean Union Capability of the public administration to use theStructural Funds within the Human Capital OperationalProgramme 2007-2013.Overall report on the results of NIK audits concerningthe use of funds from the European Communitiesbudget within the cohesion policy in Poland.Functioning of the animal identification and registersystem.Issuing integrated permissions for using the environmentand compliance with their provisions.Activities of public services with regard to technicalequipment recycling. Realisation of supplementary payments fortobacco producers.NIK audits17


State budgetexecution auditAnnualReportThe audit of the state budget executionis one of the most important tasks ofour institution, in accordance withthe Act on the NIK.In 2009, 96 out of 175 completedplanned audits were related to thestate budget execution. NIK auditorsspent almost a quarter of their workinghours on this huge audit. Pronouncementson the results of statebudget audits made over a half of allthe pronouncements that the NIK developedin 2009.State budget audits are coordinatedby the Department of Budget andFinance of the NIK, and all NIK auditdepartments participate in them.The outcome of state budget auditsis Analysis of the Execution of theState Budget and Monetary PolicyGuidelines, which is a document thatthe President of the NIK presents atplenary sessions of the lower chamberof the Parliament (Sejm) everyyear, as set out in the Constitution ofPoland. These audits also determinethe opinion on the vote of approvalfor the government that the NIK annuallysubmits to the Parliament.18


Planned audits carried out in 2009Percentage of working time dedicatedto individual types of audits in 200919


AnnualReportAddresseesof ourreportsReports on the NIK’s audits are presented to the Parliament,the President of Poland and the Prime Minister.In this way, these bodies are provided with knowledgeon how the most important areas of the state function.The NIK also sends its reports to other governmentand local government authorities.After audit reports are presented to the Parliament, thePresident of the NIK can make them public, except forconfidential and sensitive data.obliged to make results of its audits public. Therefore,the President of the NIK meets the media and makesstatements, press conferences are organised andinformation on audit results is available in the Internetat www.bip.nik.gov.pl.In 2009, the NIK presented the Sejm with a total of177 reports (including 94 concerning state budgetexecution audits).As the citizens have the right to be informed on theperformance of public bodies, institutions and officials,which is guaranteed in the Constitution, the NIK is20


President of the Supreme Audit Office in the Polish Sejm, Warsaw, 15 July 2009.Structure of 83 pronouncements on audit results (excluding state budget audits)submitted in 2009, by government administration sections21


AnnualReportResultsof NIK auditsAudits conducted by the NIK provide information onthe most important areas of the state’s functioning.The NIK elaborates recommendations, both with regardto individual entities and with regard to the overallfunctioning of the state system.The effectiveness of audits can be seen from the angleof activities undertaken as a result of the implementationof audit recommendations. They add to theimprovement of the functioning of the audited entitiesand certain areas of the state alike. The NIK attachesconsiderable weight to the implementation of audit recommendationsand it also carries out audits on howit progresses.De lege ferenda proposalsDe lege ferenda proposals, i.e. proposals for changesin the law aimed at eliminating loopholes or inconsistencies,are an important result of the NIK’s auditactivity. They are mainly addressed to the legislativebody (the Parliament) and to the government. In 2009,the NIK voiced 93 de lege ferenda proposals.The effectiveness of NIK audits is also mirrored intheir financial outcomes. They can be divided into twogroups:– financial benefits, especially savings generated asa result of audits,– financial irregularities.22


Resultsof NIK auditsAmount and structure of fi nancial benefi ts in 2009Financial benefits in 2009Financial benefits received in 2009 as a result ofNIK audits reached PLN 740.6 million, which isthree times more than the costs that the NIK incurred.This means that the NIK’s activity paid foritself three times over.23


AnnualReportPresident of the NIK Jacek Jezierski presents the Polish Sejm with Analysis of the Execution of the State Budget andMonetary Policy Guidelines and Report on the Activity of the NIK. Warsaw, July 2009.Cooperationwith the ParliamentThe NIK is the supreme body of state auditing and itreports to the Sejm, which is the lower chamber ofthe Polish Parliament. The NIK presents the Sejm withpronouncements on the audits performed, in this wayaccomplishing its mission of informing the Parliamenton the condition of the State, including the situation ofpublic finance. The NIK also submits other importantdocuments to the Sejm, as set forth in the Act on theNIK. These are the analysis of the execution of thestate budget and monetary policy guidelines, the NIK’sopinion on the vote of approval for the governmentand its annual activity report. They are presented bythe President of the NIK at plenary sessions of theSejm.The NIK’s collaboration with the Sejm is not limitedto participation of the NIK President in plenary sessions.The NIK closely cooperates with the Committeeon State Auditing, which is tasked with giving opinionon the most important documents developed by theNIK and with periodic evaluation of the NIK’s activity.NIK representatives also participate in works of otherparliamentary bodies. In 2009, they took part in 932sessions of parliamentary committees and subcommittees.Moreover, NIK representatives are involved inlegislative works of Sejm committees. They areentitled to voice their comments and present the NIK’sstance with regard to draft bills, both elaborated by theMembers of the Parliament and the government.24


Budgetof the NIKIn 2009, the NIK’s expenditure stood at PLN 234.5 million, inaccordance with the Budget Act. It is worth comparing this amountwith PLN 740.6 million of recorded financial benefits for the statebudget and budgets of local self-governments received as a result ofthe audits carried out by the NIK.The NIK budget is also developed as a performancebudget. It is connected with the obligation to includein the Budget Act a justification that comprises,among other things, a list of tasks performed withinthe planned expenditure with their objectives andperformance measures. The NIK supports this methodfor budget development, as it adds to the transparencyof the State’s expenditure, which directly translatesinto a possibility of carrying out performance auditsin the public sector. The basic task of the NIK is toaudit the activity of the government administration,the National Bank of Poland (NBP), state legal personsand other public entities.of budgetary resources. It was also examined bythe internal auditor who positively assessed thefunctioning of the NIK’s financial and accountingsystem. The financial documents and statementsexamined, in a reliable and transparent mannerpresented all information necessary for assessing thefinancial and assets management as of 31 December2009. They were developed in accordance with thebinding regulations and on the basis of the accountbooks. The expenditures were realised as planned, inan economic manner and in accordance with the valuefor money principle.The implementation of the NIK budget was analysedand verified systematically with regard to thediscipline of expenditure and reasonable managementStructure of the NIK’s budget expenditure in 200925


AnnualReportPresident of the NIK Jacek Jezierski awards a nomination certificate to a graduate of the course for audit professionalsIntroductorypractical coursefor auditprofessionalsThe introductory practical course for audit professionals(Polish: aplikacja kontrolerska) is a specialist coursethat prepares NIK employees for the posts of auditors.According to the NIK standards, candidates forauditors have to take this course within the first threeyears of their employment. After they pass the finalexamination, they can become nominated employeesof the NIK.In 2009, 77 NIK employees participated in theintroductory practical course for audit professionals.The course covered 390 hours of lectures, seminarsand practical classes. The participants in the courselearned how to correctly elaborate documentation onaudit findings and how to develop documents requiredfor audit proceedings. They also got acquainted withthe tasks of the NIK as the Supreme Audit Institution,its internal organisation and the organisation of itswork. The curriculum of the course also comprisedsome legal issues, including the European Union’slaw. Among the lecturers of the training, there areboth experienced NIK professionals and academicprofessors.26


New auditors of the Supreme Audit OfficeNIK StaffAnnualReportNIKIn 2009, the NIK employed ca. 1,700 persons. NIKauditors and audit supervisors are supposed to becitizens of Poland, to have a university degree and tohave no criminal record. Our employees are experiencedpeople with various educational background, mainly inlaw, economy, technical sciences and agriculture.The recruitment for posts of auditors is conductedas an open competition, compliant with the INTOSAIinternational auditing standards and The AuditingStandards of the NIK. Candidates must possessbroad knowledge and skills, as well as appropriateprofessional experience. After they are qualified forposts of auditors, NIK employees must completea specialist course in auditing, tailored to the needsof our institution, called the introductory practicalcourse for audit professionals (Polish: aplikacjakontrolerska), and pass the final examination. Then,they are nominated for the posts of public auditors.The NIK provides its employees with a variety ofopportunities for development and improvementof skills, it guarantees experience exchange andfurther broadening of knowledge, as well as constantimprovement of audit methodology.27


International activity of the NIKAnnualReportInternational activity of the NIK covers two main fields:audits conducted in cooperation with foreign partners(cooperative audits) and initiatives related to exchangeof standards, best practices and knowledge, aimed tosupport audit activity, realised, for instance, throughparticipation in international organisations of auditinstitutions. The NIK is a member of the EuropeanOrganisation of Supreme Audit Institutions (EUROSAI)and the International Organisation of Supreme AuditInstitutions (INTOSAI). It is actively involved in theworks of the Contact Committee of the Heads of theSupreme Audit Institutions of the European Unionand the European Court of Auditors (ECA), as wellas in bilateral and multilateral contacts with SAIsof other countries. Since 2007, President of the NIKJacek Jezierski has been a member of the OECDAudit Committee and since June 2008, the Chair of theEUROSAI Governing Board.International Organisation of SupremeAudit Institutions (INTOSAI)The NIK is a member of the following INTOSAIbodies:Working Group on Privatisation, EconomicRegulation and Public-Private PartnershipsWorking Group on Environmental Auditing(member of the Steering Committee)Working Group on IT AuditPresident of the NIK Jacek Jezierski at the 35th session of the EUROSAI Governing Boardin Kyiv, 23-24 June 2009Working Group on Programme EvaluationWorking Group on Key National IndicatorsWorking Group on the Fight Against InternationalMoney Laundering and CorruptionTask Force on Financial CrisisSubcommittee 3 (of the Capacity Building Committee):Promote Best Practices and QualityAssurance through Voluntary Peer ReviewsIDI (INTOSAI Development Initiative) AdvisoryCommittee.European Organisation of SupremeAudit Institutions (EUROSAI)The NIK participates in the works of the followingEUROSAI bodies: EUROSAI Strategic Plan Task Force (chair)EUROSAI Working Group on EnvironmentalAuditingEUROSAI IT Working GroupEUROSAI Training Committee (ETC)EUROSAI Working Group on Elaboration ofGood Practices for Achieving Quality within anSAIEUROSAI Task Force on the Audit of Funds Allocatedto Disasters and Catastrophes.28


Works of the EUROSAI Strategic Plan Task ForceNIK’s Presidency ofAt the latest 7th EUROSAI Congress, held in Krakówon 2-5 June 2008, the NIK was vested with EUROSAIPresidency and President of the NIK Jacek Jezierskibecame the Chair of the EUROSAI Governing Boardfor the following three years.During its Presidency of EUROSAI, the NIK runs anInternet website at www.eurosai2008.pl which servesas a communication platform for the current Chair ofthe Governing Board and comprises the materials ofthe 7th EUROSAI Congress.EUROSAI Strategic PlanDuring the 7th Congress, a decision was taken toelaborate the first EUROSAI strategic plan, aimed atmaking the functioning of the Organisation more effective.Therefore, the Congress entrusted the EUROSAIGoverning Board with preparing the EUROSAI StrategicPlan, which has become the flagship initiativeof the Polish Presidency. This strategic document, tocover the years 2011-2017, is being developed by theEUROSAI Strategic Plan Task Force appointed by theEUROSAI Governing Board. The Task Force is chairedby the NIK and composed of representatives of theSAIs of Austria, Germany, the Netherlands, Norway,Portugal, Spain and the UK. Over 2009, the Task Forcehad three meetings dedicated to the development of thedocument whose draft is to be consulted on with themembers and observers of the Governing Board andcommented on by all EUROSAI members. The final versionof the Strategic Plan will be agreed by the GoverningBoard at the beginning of 2011 at the latest,translated into all official languages of EUROSAI andthen it will come up for debate at the 8th Congress, to beheld in Lisbon at the turn of May and June 2011. The documentis to define the mission and vision of EUROSAI, tolist activities and projects aimed at achieving EUROSAI’sstrategic goals and objectives, as well as to proposea new organisational structure of EUROSAI whichshould facilitate effective implementation of the newstrategic plan. The plan is also meant to contribute tothe performance of the INTOSAI strategic plan in Europeand to maximise the effective use of INTOSAI initiativesand products, so that to further develop publicsector auditing in the European region.Seminar on Raising Awareness ofInternational Standards of SupremeAudit InstitutionsThe NIK as Chair of the EUROSAI Governing Boardand the Danish Rigsrevisionen as Chair of the INTOSAIProfessional Standards Committee (PSC) organised apilot seminar on the International Standards of SupremeAudit Institutions (ISSAI) and INTOSAI Guidelines onGood Governance. The seminar was held on 28-29 October2009 in Warsaw. It gathered representatives of26 EUROSAI SAIs (including the European Court ofInternational activity of the NIK29


AnnualReportMeeting of the Heads of Nordic – Baltic SAIs, Sopot, 3-4 September 2009International activity of the NIKAuditors), 1 OLACEFS SAI and 1 ARABOSAI SAI.The main objective of the seminar was to increase theknowledge of EUROSAI SAIs on the content, structureand purpose of INTOSAI standards and guidelines. Theparticipants exchanged experience on the applicationof the standards on financial, compliance, performance,environmental and internal control auditing within theirnational organisations.All materials from the seminar are availableon the website of the EUROSAI Presidency atwww.eurosai2008.pl.NIK’s participation in parallel auditsin 2009Parallel audits, carried out in cooperation with foreignpartners, make a very important element of the NIK’sinternational activity. In 2009, the NIK participated insix audits performed with other SAIs:1. Audit of the sea environment monitoring and fisheryin the Baltic Sea area. The audit was performed bythe SAIs of Denmark, Estonia, Finland, Lithuania,Latvia, Germany, Poland, the Russian Federationand Sweden. It was divided into two parts: Latvia,Germany and Poland participated in the firstpart concerning the monitoring of the Baltic Seaenvironment, while Estonia, Finland, Lithuania,the Russian Federation and Sweden in the other,30dedicated to the Baltic Sea fishery. The SAI ofDenmark as the audit coordinator participated inthe two parts. Joint final audit report was signedin January 2009.2. Audit of the effectiveness of state bodies(services) in checkpoints on the border betweenthe Russian Federation, Belarus, Lithuania andPoland. The audit was carried out by the SAIs ofRussia, Belarus, Lithuania and Poland. The jointdocument presenting the audit results was signedin May 2009.3. Audit of preparations for the joint organisation ofthe UEFA EURO 2012 Football Championship inPoland and Ukraine. The first stage of the audit,conducted by the SAIs of Ukraine and Poland,took place between September 2008 and January2009 and covered the years 2007-2008. It wasconcluded with developing and signing a commonaudit report in June 2009. The second stage of theaudit started in September 2009 and it is to coverthe years 2009-2010.4. EUROSAI Audit on Climate Change, performedunder the INTOSAI Global Audit on ClimateChange. In the audit, concluded in December 2009,10 SAIs participated from the following countries:Azerbaijan, Cyprus, Denmark, Estonia, Israel, theformer Yugoslav Republic of Macedonia, Poland,Russia, Switzerland and Ukraine. The audit was


Meeting of representatives of the Supreme Audit Institutions of the Visegrad Group, Austria and Slovenia, Zakopane,5-6 November 2009coordinated by the SAI of Poland. The aim of theaudit was to assess the actions taken in the statesinvolved in order to implement the provisions of theUnited Nations Framework Convention on ClimateChange, the Kyoto Protocol to this Convention,Directive 2003/87/EC establishing a scheme forgreenhouse gas emission allowance tradingwithin the Community and the requirements of thenational legislation with regard to certain climaterelatedmatters.5. Audit of the implementation of programmessupporting employment of the disabled. TheNIK is the coordinator of this audit in which14 EUROSAI member SAIs participate. A jointaudit report should be ready by April 2011 andpresented at the 8th EUROSAI Congress inLisbon in June 2011. The audit is a part of thepackage initiatives in the field of professionalintegration of the disabled, inspired withthe Conclusions and Recommendations ofthe 7th EUROSAI Congress. The other partof the initiative was the seminar entitledPerformance Audit of Social Programmesfor Professional Integration of the Disabled:A Practical Approach to Evaluating Economy,Efficiency and Effectiveness, organised inJanuary 2010 by the NIK in cooperation withthe European Institute of Public Administration– the European Centre for Public FinancialManagement (EIPA Warsaw) which contributedwith expert knowledge.6. Audit of the management of programmes for theenvironment quality improvement co-financedfrom the European Regional Fund within regionaloperational programmes, performed by theSAIs of Denmark (coordinator) and Poland. InDecember 2009, representatives of the two SAIsmet in Copenhagen to sign a draft agreement onthe audit.Contact CommitteeThe Contact Committee gathers the Heads of the EuropeanUnion Member States’ SAIs and the EuropeanCourt of Auditors, and its aim is to facilitate cooperationamong audit institutions. NIK representatives areactively involved in the works of the following groupsof the Contact Committee:Task Force on Cooperation between NationalSAIs and the European Court of AuditorsWorking Group on Common Auditing StandardsWorking Group on Structural FundsWorking Group on VATWorking Group on National SAI Reports on EUFinancial Management.International activity of the NIK31


International activity of the NIKVisit of the Head of the European Court of Auditors to the NIK, Warsaw, 30 June 2009. From the left: Hendrik Fehr, Director,Vitor Manuel da Silva Caldeira, President of the ECA and Jacek Jezierski, President of the NIKAnnualReportNIKAt the annual Contact Committee meeting, held on 30November and 1 December 2009 in Budapest, the SAIHeads discussed the role of SAIs in counteracting thefinancial and economic crisis, threats to independenceof SAIs and the need to define common auditingstandards and comparable audit criteria in the field ofEuropean Union funds. The Contact Committee alsoadopted the tasks to be implemented or started in2010.One of the priority questions discussed at the meetingwas the independence of SAIs and the main areaswhere it is threatened. Concrete examples of threatswere presented and debated on. The participants remarkedthat audits conducted by “dependent” auditinstitutions are not audits and therefore they do notmeet their obligation to inform the citizens properly.They observed that constitutions of individual countriescontain provisions on independence of auditinstitutions, yet parliaments and governments arenot familiar with the basic documents that define theprinciple of SAIs’ independence, namely the Lima andMexico Declarations. The Contact Committee adopteda resolution on independence of SAIs.Cooperation with the European Courtof AuditorsThe NIK cooperates with the European Court of Auditors(ECA) during its audit missions conducted inPoland (13 such missions in 2009). This cooperationcovers, among other things, participation of NIK auditorsas observers in ECA audit missions in Poland,support for the ECA in dealing with Polish auditeesand in obtaining necessary data and documents, aswell as exchange of periodic work plans between theNIK and the ECA. Experience and information gainedthrough participation in ECA audit missions adds toNIK auditors’ knowledge on potential irregularities inthe field of European Union funds management. Thisinformation is also useful for the NIK in planning itsaudits related to EU funds.32


Our publicationsPublications of the NIK are addressed both to itsemployees and to all those interested in the NIK’s work.The NIK’s flagship periodical is the bimonthly entitledKontrola Państwowa (State Audit), published since 1956.It presents articles dedicated to auditing, economy, lawand social affairs, as well as to the NIK’s internationalcooperation. Another NIK’s periodical entitled PrzeglądMetodyczny (Methodological Review) is addressed to NIKauditors. It contains articles in which audit experiencesare shared and achievements in the field of auditmethodology are promoted.The NIK also publishes specialist titles dedicatedto training and methodology, which popularise theachievements of the NIK and Supreme Audit Institutionsof other countries, as well as occasional publications. Lastyear, Standards and Guidelines of Performance AuditsBased on INTOSAI Auditing Standards and Practices– ISSAI 3000 were issued in the Polish language (Polishtitle: Standardy i wytyczne kontroli wykonania zadań napodstawie standardów kontroli INTOSAI i praktyki – ISSAI3000). After the 7th EUROSAI Congress, held in June 2008in Kraków, a CD was published comprising Congressmaterials. The NIK also published a Polish and Englishversion of the joint report on the audit on climate changecarried out within EUROSAI.On the occasion of the 90th anniversary of the NIK,celebrated on 6 February 2009, two books were publisheddedicated to the history of our institution. The first is aseries of lectures by former NIK Vice-President ZenobiuszRugiewicz delivered in the 1930s during courses for publicauditors, a reprint of the 1937 edition. The other is anillustrated book dedicated to the NIK history entitled TheSupreme Audit Office – Tradition and Modernity (NajwyższaIzba Kontroli – tradycja i współczesność) written byemployees of the NIK. We have also published an albumwith photographs displayed at the exhibition dedicated tothe 90th anniversary of our SAI.Every year, the NIK publishes two large documents that aresubmitted to the lower chamber of the Polish Parliament,namely Report on the Activity of the NIK and Analysis ofthe Execution of the State Budget and Monetary PolicyGuidelines. An abridged version of the Report is alsopublished in English, addressed to foreign readers.33


90th Anniversaryof the NIKIn February 2009, the NIKcelebrated the 90th anniversaryof its establishment. On thisoccasion, NIK representatives laidwreaths at the memorials to Headof State Józef Piłsudski and firstPrime Minister of the independentPoland Ignacy Paderewski,who on 7 February 1919 signeda decree on the establishment ofthe Supreme Audit Institution. Onthe occasion of the anniversary, a special session of the NIKCollege was held in the building of the Parliament with theparticipation of numerous eminent guests, including the latePresident of Poland Lech Kaczyński, who was the Presidentof the NIK in 1992-1995 (in the photograph on the right withNIK President Jacek Jezierski).Regional ConferencesJubilee scientific conferences were organised in the NIK Regional Branches in Poznań, Łódź, Białystok, Wrocław, Kraków,Olsztyn, Gdańsk, Kielce and Katowice, dedicated to promotion of the NIK’s activity and its achievements. During thosemeeting, the proposed amendments to the Act on the NIK were also discussed. In this way, the history of the NIK was a goodopportunity to discuss future challenges of the institution.Jubilee scientific session, Adam Mickiewicz University, Poznań, 12 March 200934


NAJWYŻSZA IZBA KONTROLI (NIK)ul. Filtrowa 5702-056 WarszawaPolandwww.nik.gov.plwww.eurosai2008.ple-mail: wsm@nik.gov.plphone: +48 22 4445480Prepared by:DEPARTMENT OF AUDIT STRATEGYand INTERNATIONAL RELATIONS UNIT of the NIKTranslation: Kamila ŻyndulPhotographs:Krzysztof Andrzejewski (p. 6, 10, 12, 18, 21-27, 29-31),Danuta Bolikowska (cover and p. 4, 14, 16, 20, 32, 34),Grzegorz Haber (p. 28), Maciej Sterczała (p. 34 bottom),Zofia Swoczyna (p. 5, 6)Copyright by the NIKWarszawa 201035


Warszawa 2010Copyright by the NIKZofia Swoczyna (p. 5, 6)Grzegorz Haber (p. 28), Maciej Sterczała (p. 34 bottom),Danuta Bolikowska (cover and p. 4, 14, 16, 20, 32, 34),Krzysztof Andrzejewski (p. 6, 10, 12, 18, 21-27, 29-31),Photographs:Translation: Kamila Żynduland INTERNATIONAL RELATIONS UNIT of the NIKDEPARTMENT OF AUDIT STRATEGYPrepared by:phone: +48 22 4445480e-mail: wsm@nik.gov.plwww.eurosai2008.plwww.nik.gov.plPoland02-056 Warszawaul. Filtrowa 57NAJWYŻSZA IZBA KONTROLI (NIK)36

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