The Swedish National Financial Management Authority, ESV, is an agency under the Government tasked with developing and administering the financial management of central government operations.
The Government has many ways of managing the administration. Among other things, the Government uses financial management and performance management (these constitute parts of the central government financial management). The Government also has other management tools, such as organisational management, management via the appointment of senior management, and procedural management, i.e., rules for how agencies are to operate.
The public authorities' fundamental instrument for financial control is the appropriation and allocation of grants, as well as rules and conditions for grants and contributions, sanctions and borrowing limits. The primary means of financing central government operations is via appropriations, contributions and subsidies.
In the Government's management of its agencies, performance management is carried out via instructions (or equivalent), appropriation directions and other decisions. The instruction includes the agency's objectives and tasks, as well as periodic reporting requirements. Where necessary, the appropriation direction sets out annual targets, tasks and reporting requirements.
In the annual report, the agencies report on their performance in relation to the tasks set out by the Government in the instruction and, where applicable, the appropriation directions or other decisions. The line ministries and agencies also discuss results in a government-agency dialogue. In performance management, there are also sources of information other than the annual report, such as investigations or evaluations of the agency's performance.
Evaluations of central government operations provide knowledge of how central government funds are used and what the results are. To make more room for new reforms, it may be necessary to review existing operations. This places demands on information that indicates whether or not the operations lead to desired changes in society. Evaluations thus provide a basis for developing and improving central government operations.
The agencies can formulate goals for the operations which can be presented in a plan of operations. The follow-up of operations is often conducted at regular intervals during the year. There are however no requirements for agencies to apply performance management to internal management.
Agencies' internal management
The Government appoints the agencies' top management. The top management is accountable to the Government for the agency's operations and must ensure that they are conducted effectively and in accordance with the law (according to applicable law and the obligations entailed by membership in the EU), and that the agency makes efficient use of central government funds and reports on this in a reliable and accurate manner.
Agencies are normally led by a head of an agency, in some agencies by a board of directors or a committee. An agency's top management has large freedom to formulate its own internal management based on the agency's conditions and on how it wishes to lead the organisation. There are opportunities for adapting its operations.
Regulation of the internal management
However, the agency's management does not have full freedom to formulate the internal management as it sees fit; there are limitations and regulations in different ordinances such as the Government Agency Ordinance (2007:515). The Government Agency Ordinance applies to all administrative agencies under the Government, unless otherwise specified by laws or other ordinances. The courts, for example, are not covered by this ordinance
Certain agencies must conduct internal audits and are thus also covered by more detailed regulations concerning risk-management. These agencies must also submit an assessment in their annual reports as to whether the internal control is satisfactory. However, all agencies must have an internal control which functions satisfactorily.
Internal control is the process which ensures with reasonable certainty that an agency fulfils its tasks and goals in accordance with the requirements of the Government Agency Ordinance.
An agency's top management is accountable to the Government for the agency's operations and must ensure these are conducted
- in accordance with applicable law and other obligations entailed by Sweden's membership in the European Union
- with a reporting ethic characterised by reliability and accuracy
- with efficient use of central government funds
Central government internal audit
Central government internal audit is the type of auditing conducted in accordance with the Internal Audit Ordinance (2006:1228). The Government tasks certain agencies with establishing internal auditing in accordance with the ordinance. The task is always documented in the agency's instruction. So that the internal audit can be considered established, the Internal Audit Ordinance imposes requirements for an internal audit director to be employed at the agency.
In accordance with the Internal Audit Ordinance, the internal audit must be conducted in line with both generally accepted internal audit standards and internal auditors' standards. For further interpretation of generally accepted internal audit and internal auditor standards in central government, guidance can be found in International Standards for the Professional Practice of Internal Auditing.