PEMD FAQs

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Why is it necessary to monitor this sector?
A considerable amount of public funds have been used to establish and then support the numerous public organisations that currently operate in Seychelles. These organisations are the principal suppliers of social services and infrastructure and are a significant source of employment. It is imperative for sustainable economic growth that they are operated in the most efficient and effective manner and that the public and government are well informed about their activities, objectives and performance.
What is the role of the board?

The role of the board varies depending on whether it is an advisory board or the board of a commercial enterprise but generally a board is responsible for setting the direction for the organisation and ensuring that the resources that are available are used in the most effective and efficient manner possible.

Boards sign off the annual budget, financial statements and business plans and should monitor important things like major capital projects. Board members may also have certain legal responsibilities and must remember that fundamental attention should always be given to the financial health of the public organisation.

In the commercial public entities, board members represent the shareholders (Parent Ministers) and are also responsible for protecting the assets and ensuring that there is an adequate return on investment.

Board are made up of a mixture of Non-Executive and Executive directors. Non-Executive directors do not work for the organization and are considered to bring to the board an independent opinion. They have equal rights and responsibilities to the Executive Directors who work for the organisation.

What is the role of the CEO?

Based on the direction of the board, the CEO:

  • Runs the organisation or the business
  • Manages the day to day affairs of the organisation or business
  • Responsible for operations and financial performance
  • Provides clear leadership to staff within the organisation
  • Senior Managers in the organisation report to the CEO
  • If there are any Executive Directors (directors who are also employees in the organisation) these should report to the CEO
  • Submits acquisition / investment proposals to the board and implements their directions
  • Develops organisation structures and manages succession planning
  • Together with Chairman, communicates to the shareholders (Parent Ministers)
  • Must ensure that any major issues that affect the organization are brought to the attention of the board.

 

How are board members appointed?
The President appoints the board members for the commercial public entities and the appointment of members to other public organisations is based on the individual establishing laws but generally the Parent Minister will appoint the members. Some laws specifically state how many members are to be sourced from the private sector and what composition is required, they may also state what public servants need to be on the boards.
How is board member honorarium calculated?
At present the honorarium for board members is in line with the standards established by the Department of Public Administration. Generally the amounts paid to board members are increased for those occupying the role of chairman, treasurer and secretary.
Is there any training offered to help board members understand their roles and responsibilities?
In early 2010 the “Welcome A Board” training course will be launched by the Seychelles Institute of Management (SIM) and PEMD. The course covers topics such as fiduciary liability, corporate governance, the legal framework, how to analyse financial statements, risk identification, ethics and fraud prevention and control. The course runs over four days and the course outline and other details can be obtained directly from SIM at www.sim.sc.
Why did the government establish the Public Enterprise Monitoring Division?
PEMD was established in recognition that the government should act as an informed and active owner of all of the public organisations and establish reporting systems that allow regular and centralized monitoring and assessment of public organisation performance.
What public organisations do PEMD monitor?

PEMD monitors all publicly owned commercial entities and the majority of the public organisations that are autonomous but reliant on the government for their ongoing funding. These are collectively known as public organisations.

In recognition that these different organisations have different risks, the reporting obligations and monitoring methods have been separated into three categories. The categories are:

A - Commercial Public Entities

B – Service Agencies

C – Regulatory bodies

How does PEMD monitor these organisations?

Category A

 

  • Legal Framework for monitoring Category A entities is established through the Public Enterprise Monitoring Act 2009
  • The entities are listed at Schedule 1 of the PE Act.
  • PEMD collect the following information: o Monthly financial reports (Profit and Loss, Cash Flow, Balance Sheets, Debt performance) o Annual Reports o Data from other government agencies for matching purposes
  • The boards develop a Statement of Corporate Intent which is a document that set out their performance targets for the next three years and PEMD help the boards develop these documents and advise the Parent Ministers
  • PEMD attend the majority of the board meetings as Observers (see Observer Protocol)
  • Where a need is identified, PEMD can engage industry experts to assess the entities subject to the approval of Parent Ministers including management audits, external audits and strategic assessments.

 

Category B

 

  • As these service agencies are dependent on funding from the government, the Public Finance Management Act enables the Principal Secretary of Finance to monitor their performance. The Principal Secretary has authorised PEMD to assist in this task.
  • In September 2009, most of the service agencies migrated to the governments purchasing system known as Treasury Single Accounting (TSA) and PEMD has read only access to this system.
  • TSA does not produce a profit and loss, balance sheet or cash flow statement so PEMD request these on a monthly basis from the service agencies.
  • PEMD officers attend the majority of the board meeting as Observers (See Observer Protocol)
  • PEMD encourage the service agencies to produce Annual Reports to coincide with the government’s budget process in a similar manner to the ones produced by the commercial entities.
  • PEMD actively monitor the audit program for the service agencies to ensure that the audits are completed in a timely manner and any recommendations are addressed.
  • PEMD use information from other government agencies for data matching purposes
  • PEMD can recommend an Internal Audit or Management Audit

 

Category C

 

  • The regulatory bodies must be treated at arms length as the majority of them have a quasi legal function. As such, reports from this category are tailored.
  • PEMD may have access to other reports provided to government
  • PEMD can recommend an Internal Audit or Management Audit

 

Who sets PEMD direction and work plan?

Internally

To a large extent PEMD sets its own work plan which is based on a three year strategic plan that was approved by Cabinet in September 2009. Through risk identification, PEMD may also identify the need for specific policies to be implemented which will form part of the work plan. Policies drafted by PEMD are subject to Cabinet approval.

Multilateral Partners

Some specific benchmarks for the Division are established through the Memorandum of Economic and Financial Policies supported by the IMF and other similar multilateral agreements. Wherever possible, these targets are incorporated in the three year strategic plan.

Government

Ministers can also give direction to PEMD to assess and analyse specific risks.

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