Maximizing Accountability and Transparency in Government: Strategies for Puerto Rico

1. Commonwealth of Puerto RicoOFFICE OF THE COMPTROLLER Approaches to Maximize Accountability, Minimize Risks, Improve Transparency, and Reduce Fraud in the Government Manuel Díaz Saldaña Comptroller of Puerto Rico May 2, 2005

2. Every entity has to develop different methods or strategies to maximize accountability, minimize risks, improve transparency and reduce fraud. This is even more important when government entities are involved. The administrators or managers in public service assume a fiduciary responsibility in administering the governments’ resources. This fiduciary responsibility entails that the administrator of the goods will hand them over at the end of his tenure with an added value, improved or augmented, in quality and in quantity.

3. Programs developed in the Comptroller’s Office to maximize accountability, minimize risks, improve transparency and reduce fraud in the Government.

4. Mission, Vision and Values Mission • To oversee the transactions of public funds and property • To promote the effective and efficient use of government resources Vision • To be a world-class model for public office • To serve Puerto Rico as a true agent of change, integrating the efforts of the public and private sectors

5. Cont. Mission, Vision and Values Values

6. COMMONWEALTH OF PUERTO RICO CONSTITUTIONArticle III, Section 221952 The Controller shall audit all the revenues, accounts and expenditures of the Commonwealth, of its agencies and instrumentalities and of its municipalities, in order to determine whether they have been made in accordance with law. He shall render annual reports and any special reports that may be required of him by the Legislative Assembly or by the Governor.

7. Total Quality Management Based on principles of continuous revision of existing processes and constant measurement of the results • We have identified 230 processes • We have revised 151 (65 %) • 715 recommendations have been received and80% of these recommendations have been complied with

8. Cont. Total Quality Management • First Strategic Plan (1997) • Third Strategic Plan 2004 to 2007 - composed of five focus areas • Overseeing • Prevention • Human Capital • Technology • Customer Services

9. “If you have failed to plan, you are planning to fail.”

10. Strategies Directed towards : • Each of the focus areas and • Promoting the objectives or goals of maximizing accountability, minimizing risks, improving transparency in transactions and detecting and preventing or reducing fraud in the Government Two dimensions: • Internal • External

11. Internal Strategies • Anticorruption Policy (2000) • Ethic’s Committee - receives, investigates and decides the merits of ethics-related grievances or complaints • Hot-line • Internal Audit Advisory Committee (2000)

12. Cont. Internal Strategies • ISO 9000 certification • Comprehensive Annual Financial Report (beginning on 1997-98)

13. Cont. Internal Strategies • Promoting the use of technology • Virtual Office • TeamMateProgram in the audit function • Payroll payments by electronic means, using direct deposits

14. “That which isn’t measured can’t be improved.” Anonymous

15. Cont. Internal Strategies • Project Management Official • 116 active projects “The vision must be followed by the venture. It is not enough to stare up the steps – we must step up the stairs.” Vance Havner

16. Cont. Internal Strategies • Human Capital • A strict recruitment process • Continous education requirements • Reduction of employee turnover • Assessment of working environment

17. External Strategies Identified six strategies geared to improve public administration and fight corruption • Rigorous and constant oversight • Promoting education and training of public employees • Promoting an excellent administrative and financial system with emphasis on effective internal controls • Fair laws • Dissuasive punishments • Strategic alliances between related agencies

18. “Leadership and learning are indispensable to each other.” John F. Kennedy

19. Cont. External Strategies • Promoting education and training of public employees • Training of elected public officials on good management practices (Law Num. 222 of August 6, 1999) • Orientations and training on good management practices • Expositions in large commercial establishments

20. Cont. External Strategies • Massive disclosure of the role of the Comptroller’s Office

21. Cont. External Strategies “Education must stimulate the development of the capacity to create in human beings and their devotion to spiritual values. Education must also forge citizens with moral integrity and a will of service to the community. Education must be inspired by a demanding sense of excellence.” Luis A. Ferré, Former Governor of Puerto Rico

22. Cont. External Strategies “There is nothing permanent except change.” Heraclitus

23. Cont. External Strategies • Oversight function • Traditional oversight • New oversightmethodology (periodic evaluations) • Property Registers • Internal Audit Offices • Government University • Legislator’s Offices • Municipalities

24. COMPARISON OF MUNICIPALITIES (78) COMPLIANCE WITH ESTABLISHED CRITERIAS FISCAL YEARS 1997-98 AND 2003-04 (58%) (26%) Source: Special Reports M-99-4A and M-05-4G dated May 25, 1999 and April 14, 2005.

25. (95%) (26%) MUNICIPALITIES COMPLIANCEPREPARATION OF AUDITED FINANCIAL STATEMENTS WITHIN SIX MONTHS AFTER THE END OF FISCAL YEAR Due date extended to Jan. 2005 to comply with GASB 34 Source: Special Reports M-99-4A y M-05-4Gdated May 25, 1999 and April 14, 2005.

26. Cont. External Strategies - oversight • Annual evaluation of financial actions that adversely affect, from an economic point of view, government administration • Collecting information regarding civil suits against the government for unlawfully removing government employees– Our reports reflect that the loss of economic resources amounted to $65,066,295 in a ten year period ending on December 2004.

27. Cont. External Strategies • Actively participated in the approval of laws • In the year 2003-2004 and until March 2005, we have received and submitted comments on 105 drafts of legislative bills

28. Cont. External Strategies- laws Cont. Actively participate in the approval of laws • Continuous education and training of public servants • Contractual and ethics requirements for those who do business with the government • Controls and disclosure of governmental transactions • Oversight and protection of informants (whistle-blowers)

29. Cont. External Strategies • Recommend and promote that all government agencies use technology • Filing copies of all government contracts and other documents by electronic means • Use of the Internet to disseminate information of interest • Complaint register

30. “Leaders challenge the status quo. Continuous challenge produces continuous improvement.” Paul B. Thornton

31. WE COUNT ON YOUR COOPERATION TO IMPROVE THE OVERSIGHT FUNCTION AND ADMINISTRATION OF PUBLIC FUNDS AND PROPERTY