Public debt is in the large majority of countries one of the most important budget expenditures, very often the largest one. In addition to its relative size to total expenditures, in the majority of democratic countries, this is a liability that has seniority over other budgetary commitments, i.e. it has to be honoured first in case there are not enough budgetary resources to cover all obligations. The last International Organization of Supreme Audit Institutions (INTOSAI) Congress (XIX INCOSAI) that took place in Mexico City, 5-10 November 2007, devoted one full technical theme, out of two, to "Management, Accountability and Audit of Public Debt"(1).

The XIX INCOSAI report points out that debt policies currently implemented in many INTOSAI member countries confirm that high public debt levels impose severe constraints on financial policies, leading to risks of economic and social crises. Therefore, public debt issues are a concern in many countries, and in most of these countries the gap between revenues and government spending is closed by continuous public borrowing. Besides, numerous countries are faced with the problems of contingent liabilities that may be regarded as implicit future debt, which refers to debt that the government may assume as subrogate debtor in cases like pension funds and social security liabilities. In the longer run, these contingent liabilities, if not properly assessed and managed, will be a major burden on the sustainability of public budgets.

Democratic governments require that public debt and its medium- and long-term effects be made transparent. This is necessary to help ensure accountability and facilitate a better-informed public debate. In order to achieve this, it is of paramount importance that the necessary controls are in place regarding public debt management. In this regard, there are, first, the internal controls that are embedded within the daily Debt Office functions, but also controls that may be regarded as internal audit as they are undertaken by auditors belonging to the executive power, in most of the cases this controls are undertaken by the Ministry of Finance Comptroller's Office; and there are, second, external controls that are external audits undertaken in the initiative of the legislative power, those audits are undertaken by the Superior Audit Institutions (SAIs) that report directly to the Congress.

 

This course is oriented to government officials that may undertake audits of public debt management, either internal (Ministry of Finance Comptroller's Office) or external (Audit Superior Institution). It assumes that the trainee has already some background on accounting and audit of public sector. The course provides all the basic elements on public debt management for the auditors to acquire the necessary knowledge to undertake public debt audits.
 

This course is oriented toward those auditors that would be participating to internal or external audits of public debt management, on the first place, however, this course may be interesting for all professionals and persons belonging to the academia that are interested in public debt management issues, because it starts with an overall review of basic principles and knowledge of public debt management.
 

At the end of the course, the participants should have knowledge of:

• The algebra of debt and interpretation of different types of debt statistics.
  
• The legal and institutional framework of a Public Debt Management Office.
  
• The operational responsibilities of a Public Debt Management Office and its interrelations with other governmental bodies.
  
• How plan and undertake a Public Debt Management Audit.

Course Structure

The course is organised into four weeks: the first week is devoted to debt algebra and the legal and institutional framework for public debt management; the second week to the operational functions of a Public Debt Management Office, and its organisation in back, middle and front offices; the third week to auditing the risk and cost taken by the debt office and to debt sustainability analysis and the tools to undertake it; finally, the last week is devoted to auditing of internal controls and to how to conduct an audit on public debt management.

Each week corresponds to a module that may contain several lessons on different issues of debt management, there would be a text drafted by the author of the course and complementary readings proposed to the e-Students to read. Once the e-Student fills confident, he/she can take a quiz on the corresponding module. In addition to the quizzes, there would be a weekly subject for discussion and analysis on which the e-Students have to participate.

Course Outline

This course will comprise of the following modules:

• MODULE 1: INTRODUCTION AND INSTITUTIONAL FRAMEWORK
  • Introduction, Definitions and Debt Algebra
    • Why Public Debt Management Matters?
    • Definition of Public Debt
    • Debt Algebra
  • Legal and Institutional Framework
    • Legal Framework for Debt Management
    • Institutional Framework for Debt Management
    • The Operational Responsibilities of the DMO
      
      
• MODULE 2: DEBT OFFICE FUNCTIONS
  • The Back Office
    • Back office: the Recording Function
    • Back Office: the Operating Function
  • The Middle and Front Offices
    • Middle Office: Objectives, Strategies and Internal Control
    • The Front Office: Implications of a Debt Strategy
    • Debt Reorganisation and Creditor Clubs
      
      
• MODULE 3: AUDITING PUBLIC DEBT
  • Auditing Risk
    • Risk Indicators and Debt Management
    • Risk Modelling
  • Auditing Debt Sustainability
    • Debt Sustainability
    • Tools for Assessing Debt Sustainability
      
      
• MODULE 4: AUDIT OF PUBLIC DEBT
  • Auditing Internal Controls
    • Auditing Internal Controls of Public Debt
    • Audit and External Information
  • Conducting an Audit of Public Debt

This course is designed as an online course in which participants will be primarily responsible for their own learning. Each lesson will consist of the following components:

1) Basic Reading Materials (Compulsory Reading Materials): these materials are intended to educate the participants about the basic concepts and principles applicable to the subject-matter of the lesson. It will include, where appropriate, sample materials. These materials will constitute the required reading materials for the lesson

2) Advanced Reading Materials (Optional Reading Materials): this will consist of optional reading materials for participants who wish to learn more about the topic than what is covered in the lesson.

3) External Links: This will refer the interested participants to additional books, articles, documents, and websites that deal with the issues raised in the lesson.

4) Glossary: A glossary of terms tailored to the online course will be provided to the participants and act as a learning support during the entire course.

5) Quizzes and Case Studies: At the end of each module there will be a quiz and a case study. The quizzes and the case studies are designated to test the participant's understanding of the module. Participants are required to pass each quiz and obtain at least 80% or more passing grade. Participants are required to solve each study case and submit it to the course director for evaluation, which requires at least 80% or more passing grade. Participants obtaining passing grades of 80% or more in both quizzes and case studies are eligible for the certificate.

6) Community Discussion Board: There will be a community discussion board available on which participants can post questions or comments that can be seen by the instructor and the other participants. This discussion board will be moderated by the course director and UNITAR. Structured discussion strings will be posted on a weekly basis.

All successful participants will be eligible to a certificate after completion of this online course.