Violation of public finance discipline and the liability of an official

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Improper and wasteful disposal of public finances has an impact not only on the operation of a specific administrative body. Due to the fact that these authorities do not generally earn their own income, all taxpayers suffer from their mistakes. Fortunately, mismanaged officials do not go unpunished. Currently, employees of budgetary units, apart from employee responsibility, are at risk of making non-economic decisions due to personal liability for violating public finance discipline.
An institution allowing for the imposition of a financial penalty for violating public finance discipline seems very necessary, because, unlike a private entrepreneur, an official does not have his property, but the funds earned by the entire society - therefore his liability should be tightened, and any manifestation of mismanagement should be properly punished. Unfortunately, not all employees of budgetary units bear this kind of responsibility. In this article, we will explain what public finance discipline actually is, who is responsible for violating it, and what penalties may be faced by officials for inappropriate disposal of public funds.

What is public finance discipline?

The public finance discipline is a desired state defined by the legislator, the provision of which is associated with the observance of a set of statutory legal norms related to the broadly understood financial management. On the other hand, a violation of this economy may result in prosecution.

The issue of public finance discipline and liability for violating it has been regulated in the Act on liability for violation of public finance discipline.

Who is responsible?

Pursuant to the Act on Liability for Violation of Public Finance Discipline, not only managers are responsible, but also employees of a budgetary unit listed in the Act.

It should be emphasized that specific persons are responsible for violating the discipline of public finances. So it will not be a given office or their bodies, but specific people who are part of them. As a rule, in order to be held accountable, it is necessary to determine whether a specific employee of the authority had appropriate competences in the implementation of the budget or financial plan of a public finance sector entity.

Among the entities responsible for the economy of public finances, we can distinguish:

  1. members of collective bodies in units of the public finance sector - persons belonging to bodies implementing budgets or financial plans of units of the public finance sector are responsible. As mentioned earlier, a collegial body, e.g. the management board, cannot be held responsible - the consequences of its actions are borne only by a specific member of this body who has shown incompetence. The most common examples of violations of public finance discipline is the adoption of a resolution which in its content is against the rational management of public finance. Such responsibility can be assigned to a person participating in adopting a resolution.Importantly, it should be attributed to both the person voting "for", "against" and the person who abstained. An objection is an exception - liability cannot be assigned to the person who raised an objection to the relevant resolution in writing or orally to the minutes;

  2. managers of public finance sector units - absolute responsibility for violation of public finance discipline of managers of public finance units results from the fact that in Art. 53 sec. 1 of the Public Finance Act, the legislator established that the head of the entity is unconditionally responsible for the entire financial management of the entity it manages;

  3. persons entrusted with the performance of duties - in accordance with art. 4 sec. 1 point 3 of the Public Finance Act, the following are liable:
    - employees of public finance sector units, entrusted with the performance of duties in such a unit by a separate act or on the basis thereof, the non-performance or improper performance of which constitutes an act violating public finance discipline;
    - other persons entrusted with the performance of duties in a unit of the public finance sector by a separate act or on the basis thereof, the non-performance or improper performance of which constitutes an act violating the discipline of public finance.

Contrary to the unit managers, holding the discussed group of employees to account requires fulfilling the conditions specified in the act, i.e. determining whether the given employee had appropriate competences in the field of public finances. Importantly, entrusting duties to employees of financial sector units does not in any way exclude the responsibility of the heads of this body;

  1. entities from outside the public finance sector - entities subject to liability also include persons who are members of management bodies, entities not included in the public finance sector and persons performing tasks on behalf of those entities to whom public funds have been transferred for use or disposal. Covering the indicated circle of entities with liability results from the fact that it is a constant practice that public finance sector entities entrust tasks to external entities which, as part of their activities, receive funds from the budget for management.

Catalog of violations of public finance discipline

The catalog of violations is indicated in the provisions of Art. 5-18c of the act on liability for violation of public finance discipline. It is very extensive and regulated in detail. It is a closed catalog, which means that in order for a given activity to be considered inconsistent with the proper economy of public finances, it must be subject to one of the above-mentioned regulations.

Pursuant to the Act, violations of discipline include failure to establish, collect or pursue amounts due from the State Treasury, local government unit or other public finance sector unit, improper allocation of income obtained by a budgetary unit, and changes in the budget or expenditure from public funds without authorization. Behavior consisting in wasting subsidies, e.g. by transferring or awarding a subsidy in violation of the rules or procedure for transferring or awarding subsidies, failure to approve the submitted subsidy settlement on time, or disbursement of the subsidy inconsistently with its intended use. The catalog of violations also includes the allocation of reserve funds for a purpose other than that specified in the decision on their allocation, failure to pay contributions on time by a unit of the public finance sector and incurring liabilities without authorization. A breach, which is connected with liability, is also a failure to perform an obligation of a public finance sector unit on time and a description of the subject of the public procurement inconsistent with the provisions.

Premises of responsibility

The conditions of liability are regulated in Art. 19 of the act on liability for violation of public finance discipline. This provision refers to the fundamental principle of criminal law, ie nullum crimen sine lege, according to which only the person who has committed an act violating the discipline of public finances specified by the law in force at the time of its commission is liable. Therefore, the basic condition of responsibility is that a specific behavior should be a typical violation of public finance discipline. Behavior that does not meet any of the standards set out in Art. 5-18c of the Act cannot be considered illegal. This is confirmed by the judgment of the Regional Audit Chamber in Poznań of May 8, 2012 (ref .: DB-0965/14/44/12), in which the Chamber stated that:

 "A person whose action or omission did not constitute such a breach may not be held liable for breach of public finance discipline, in the light of the regulations in force at the time of such act or omission, or does not constitute a breach on the date of the ruling. For the correct legal classification of the infringement and establishing the existence of statutory premises for liability for infringement of public finance discipline, it is therefore necessary to double-assess it, ie in the light of the law in force at the time of committing the infringement and the law in force at the time of adjudication ”.

Another premise of liability under Art. 19 paragraph 2 of the act is fault. It must be present at the time when the infringement was committed. This means that the lack of the possibility of a firm statement releases from liability, even when the conditions for the act considered as an infringement have been formally fulfilled. However, it should be remembered that, pursuant to the Act in question, a person who unintentionally violated the discipline of public finances may also be guilty.

Additionally, the legislator indicated three circumstances that exclude the guilt. It is due diligence by the person responsible for the infringement, insanity at the time of the infringement and justified ignorance of the unlawfulness of the acts. In the case of issuing an order, the responsibility for an act violating the discipline of public finances shall be borne by both the person who had to execute the order and the person who issued the order.

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What is the risk of violating discipline?

The act on liability for violating public finance discipline distinguishes such penalties as:

  1. reminder;

  2. reprimand;

  3. financial penalty - the amount of the penalty may be from 25% to 300% of the monthly remuneration of the responsible person, calculated as remuneration for the holiday leave - due in the year in which the violation occurred. If the monthly salary cannot be clearly established, the amount is from 25% to 500% five times the average salary;

  4. prohibition of performing functions related to the administration of public funds - a person sentenced to this type of punishment loses the ability to act as a manager, deputy manager or general director, member of the management board, treasurer, chief accountant or deputy chief accountant, manager or deputy head of the unit directly responsible for budget implementation or a financial plan for a period of 1 to 5 years.

The punishment of violation of public finance discipline shall cease if 3 years have elapsed since its commission.

Responsibility of officials for violation of public finance discipline - summary

It should be realized that the work of an official should be perceived as one of the most responsible work in our country. After all, it is their decisions that determine the functioning of the entire state and the standard of living of its citizens. The absolute duties of a state official is to protect the interests of the state, the rights and interests of its citizens, and to diligently carry out the official orders of their superiors.

Any act of lack of subordination should be punished accordingly. The provisions of the act on liability for violating public finance discipline are also intended to serve this purpose. It imposes on persons who have public funds an obligation to properly implement the financial plans of entities operating on the basis of these funds and regulates the mechanisms that are to affect officials who perform their duties in an improper and wasteful manner. It is a pity that this act does not cover all employees of a budgetary unit who deal with public finances, while the catalog of statutory violations is closed and therefore very inflexible.