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23/01/2020   Towards Improvement of Public Sector Institutional Framework – Review by the National Audit Office

The main objective of the public sector is to provide services to the population and its size is determined by political and economic factors. The optimal size of the public sector depends on a variety of circumstances, the OECD analysis of Public Governance Reviews shows that there is no single institutional framework model applicable to all countries, as stated by the National Audit Office, in its review of public sector institutional framework.

There are 4 109 legal entities in the Lithuanian institutional framework: Ministries, Chancelleries, Schools, Municipalities, state and municipality owned enterprises, etc. Policy implementing bodies account for 98 % of all public sector institutions in Lithuania (4 040), the vast majority of which – 3 431 (85 %) – operate at local government level. The public sector has 8 legal forms of institutions: 78 % out of which account for budget institutions, 15 % - for public entities, and 7 % - for state and municipality owned enterprises, limited liability companies, private limited liability companies and other bodies.

“The diversity of legal forms of public sector bodies is also due to the fact that the establishment of the institutions did not always involve an assessment of the compatibility of the legal form with the planned activities. This has led to similar or very similar functions being performed by institutions with different legal forms, such as budget institutions, public bodies and private limited liability companies,” says Jūra Ivonaitytė, Senior Adviser to the Governance Audit Department of the National Audit Office.

The remuneration of public sector employees is regulated by 20 legal acts. Regulations governing remuneration of institutions differ depending on the legal form of an institution, as well as their remuneration.

Since 2018, the Government has established criteria for determining when new institutions may be set up, to what area of governance they are attributed upon establishment, etc. Reviews of the functions of the bodies set up before 2018 could help to clarify the competences of all public sector bodies and improve the institutional framework. However, such reviews, although carried out, covered only 20 % of institutions, 13 % of areas of governance, a third of the planned reviews of the functions of institutions accountable to the Government have not been carried out.

The review prepared by the National Audit Office aims to strengthen public sector improvement initiatives in all areas of governance. This document is expected to trigger a debate in the Seimas, and the Government to ensure that reviews of the functions of the institutions contribute to the clarification of the performed functions and legal forms and to the optimisation of the institutional framework. The performed review is a tool for the public sector policy-maker in the area, the Ministry of the Interior, and other Ministries and Municipalities to review in detail the functions performed by the institutions at both central and municipal level.

 

Responsible for the information Communication Division
Last updated on 16 June 2020

National Audit Office of Lithuania

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