Competency Certification System

Proposed Competency Certification System for Local Treasurers : 

Proposed Competency Certification System for Local Treasurers ADB TA 4556 07 November 2007

Outline of the Presentation : 

07 Nov 20 Competency Certification System for Treasurers 2 Outline of the Presentation Overview: The Need for Competency Build-up Study Approach The Concept of Competency General Overview of a Treasurer Competency Certification System Treasurer’s Profile: Implications for Competency Requirements Proposed Competency Certification and Re-certification for Local Treasurers System Goals and Objectives Major Program Areas

Outline of the Presentation : 

07 Nov 20 Competency Certification System for Treasurers 3 Outline of the Presentation System Development and Administration System Design Phase System Implementation Phase Coverage and Validity of Certifications The Certification and Re-certification Process Incumbent Treasurers/Assistant Treasurers Aspiring Treasurers/Assistant Treasurers Eligibility Requirements for Competency Testing General Standards Education Standards Experience Standards Indicative Course Plan for Competency Build-up

Overview: The Need for Competency Build-Up : 

07 Nov 20 Competency Certification System for Treasurers 4 Overview: The Need for Competency Build-Up The local treasurer is a key fiscal manager of the three levels of local government units (LGU) in the Philippines — provincial, city and municipality. As such the local treasurer who is appointed by the Secretary of Finance is expected to be a professional who would perform and discharge their duties with the “highest degree of excellence, professionalism, intelligence and skill”[1] Being a professional implies competency for the position. [1] Section 4, Republic Act No. 6713 - Code of Conduct and Ethical Standards for Public Officials and Employees.

Study Approach : 

07 Nov 20 Competency Certification System for Treasurers 5 Study Approach Review Phase: Review of the BLGF Evaluation System for the Selection of Treasurers was reviewed. Profiling Phase: Profiling of the selected treasurers and budget officers (limited to 6 pilot LGUs) vis-à-vis the competency requirements for local treasurers/finance officers. System Formulation Phase: Identification of key competency areas for treasurers; development of a competency development agenda; and design of a system of competency certification and re-certification for local treasurers.

The Concept of Competency : 

07 Nov 20 Competency Certification System for Treasurers 6 The Concept of Competency Competency usually refers to the fitness or ability to perform or exercise a certain function or responsibility. A manual of the Local Government Academy (LGA) defines individual competency as a combination of knowledge, skills, attitude and experience.[1] For a local treasurer, it is the implicit internalized knowledge of a subject matter that a treasurer possesses and that enables the treasurer to properly and adequately discharge his/her function as keeper of the purse,” election officer, and such other functions assigned to him/her. This knowledge is honed by years of experience translated into skills acquired combined with the right attitude appropriate for the assigned duties and responsibilities. [1] Manual of Administration on “System of Competency Assessment for Local Governments”, page 3. Local Government Academy, Philippines.

General Overview of a Treasurer Competency Certification Process : 

07 Nov 20 Competency Certification System for Treasurers 7 General Overview of a Treasurer Competency Certification Process Any combination of training, education and experience may provide some or all of the required competencies to demonstrate a treasurer’s ability to perform the duties of the position. The process by which these acquired competencies are publicly made known and evaluated objectively is done through certification. The process usually requires documented qualifying entrance backgrounds in the form of a degree, certificates of attendance in formal and non-formal courses, and in many cases, minimum work-related experiences before a certification candidate will be allowed to be tested and his competency level certified. A degree related to finance and accounting as well as public administration and business/organizational management acquired through formal education in a tertiary institution providing undergraduate and/or postgraduate courses usually serves as a typical qualifying entrance background to the competency certification process. This demonstrates that a potential candidate for Treasurer is equipped with the general knowledge required for public finance and the other requirements. Certificates obtained by completing a seminar, workshop, or other formal and non-formal courses usually serves as additional evidences that a Treasurer-candidate has acquired specific knowledge and skills related to the performance of the functions of a treasurer during a learning event.

General Overview of a Treasurer Competency Certification Process : 

07 Nov 20 Competency Certification System for Treasurers 8 General Overview of a Treasurer Competency Certification Process - A minimum actual work experience in local treasury work and/or accounting also serves as an additional qualifying entrance requirement. The competency certification component tests the Treasurer-candidate and the test results provides objective evidence that candidate has required knowledge, experience, and has met pre-determined standards to practice as a treasurer. A certificate attesting to such a competency level as evidenced by both qualifying entrance requirements and the test result is then issued. Competency certification is not a one-time event because a treasurer must continue to learn and develop to keep skills sharp and maintain and even upgrade his/her credential. It takes a combination of experience, dedication, and hard work over the long haul to maintain and even upgrade certification to ensure general career success. Thus, there may be a need for a treasurer to be “re-certified” after a given length of time to maintain or even upgrade certification.

The Treasurer’s Profile:Implications for Competency Requirements : 

07 Nov 20 Competency Certification System for Treasurers 9 The Treasurer’s Profile:Implications for Competency Requirements Based on interviews with local treasurers in the six (6) pilot areas[1] chosen under the technical assistance and evaluation of the incumbents’ Personal Data Sheets (CS Form 212): Local treasurers spent an average of 18 years in government service (inclusive of treasury and accounting services) prior to being appointed as assistant treasurers; Average entry age level to assistant treasurer is 46 years; Average tenure as assistant treasurer before being appointed as treasurer is 7 years; Average entry age level to treasurer is 53 years; Average age of treasurer is 57 years; and Average total number of years spent in government service is 29 years. [1] Province of Negros Oriental, Municipality of Sibulan and City of in Negros Oriental, Bacoor (Cavite), Orani (Bataan), and San Fernando City (Pampanga).

The Treasurer’s Profile:Implications for Competency Requirements : 

07 Nov 20 Competency Certification System for Treasurers 10 The Treasurer’s Profile:Implications for Competency Requirements One might deduce from the foregoing observations that years of experience weigh very heavily in determining who is “best qualified” to be a treasurer. During those “years of experience” one might infer also that the person appointed as treasurer has undergone extensive training, both formal and experiential. The work of the treasurer has rapidly evolved and is continually evolving. The paradigm shift occasioned by the 1992 Local Government Code (LGC) has re-focused the work of the treasurer from one of just control and monitoring of LGU funds under his/her custody to a multi-tasking role that requires him/her to act: As “controllers” they direct the preparation of financial reports that summarize and forecast the LGU’s financial position, such as the statement of income and expenses. They might also take charge of preparing special reports required by various government agencies. They oversee the investment of funds and manage associated risks, supervise cash management activities, execute capital-raising strategies to support the LGU’s infrastructure projects

The Treasurer’s Profile:Implications for Competency Requirements : 

07 Nov 20 Competency Certification System for Treasurers 11 The Treasurer’s Profile:Implications for Competency Requirements As “cash managers” treasurers monitor and control the flow of cash receipts and disbursements to meet the operational and investment needs of the LGU. For example, cash flow projections are needed to determine whether loans must be obtained to meet cash requirements or whether surplus cash should be invested in interest-bearing instruments. As “collection managers” they monitor the collections of past-due accounts (unpaid taxes, fees and impositions). As “risk and insurance managers” treasurers oversee programs to minimize risks and losses that might arise from financial transactions and business operations undertaken by the LGU. As “local finance advisors” treasurers need to draft local revenue codes, investment codes, and do local policy impact studies. Treasurers now perform more data analysis and use it to provide advice to the local chief executive (LCE), and the LGU legislative council regarding the disposition of local government funds, and on such other matters relative to local public finance. They must have excellent communication skills to explain complex financial data to the LCE and other elected officials who might not have the academic preparation to read, comprehend and appreciate financial data.

The Treasurer’s Profile:Implications for Competency Requirements : 

07 Nov 20 Competency Certification System for Treasurers 12 The Treasurer’s Profile:Implications for Competency Requirements To accomplish these multiple tasks within tight time and human and administrative resource constraints — the Accounting office is no longer under them, local treasures have to keep abreast of the latest in computer technology in order to increase the efficiency of their treasury operations. Furthermore, they have to re-tool themselves from their pre-code “lone ranger” role to that of a “first among equals” with the two other members of the Local Finance Committee (LFC) — the Budget Officer, and the Planning and Development Coordinator so they have to have good interpersonal skills. The multiple tasks require that local treasurers be competent in the following subject areas: Treasury operations Business mathematics Public finance Capital budgeting General laws, banking laws and practices affecting LGU financial operations Computer equipment systems and procedures Effective communication skill General and applied principles of inter-personal skills, personnel supervision and training

The Proposed System of Certification and Re-certification for Local Treasurers : 

07 Nov 20 Competency Certification System for Treasurers 13 The Proposed System of Certification and Re-certification for Local Treasurers

System Goals and Objectives : 

07 Nov 20 Competency Certification System for Treasurers 14 System Goals and Objectives The program is designed to enhance the professionalism and productivity of local treasurers in the Philippines so that they may better serve their LGUs and the public. The proposed system recognizes practical experience and training already received in opening the certification system only to those who meet minimum education and work experience eligibility standards and blends it with written competency testing to come up with the initial competency certification Awareness of the continually changing needs of the treasury profession is built into the system via re-certification. As the system would be on a continuing basis, the BLGF could develop a roll of “best qualified” treasurers who could be appointed readily to fill up vacant positions within the shortest time possible.

Major Areas of the Program : 

07 Nov 20 Competency Certification System for Treasurers 15 Major Areas of the Program Certification. Certification increases the treasurer’s value within his or her LGU and within BLGF. It makes him or her more competitive for promotions and incentives, raises his or her sense of professional accomplishment, and enhances his or her level of administrative and functional expertise. Certification also is a credential he or she can carry beyond government service into other career pursuits. Continuing competency maintenance and buildup. Continuing education is vital for treasurers, who must cope with the growing complexity of treasury operations, changes in national and local laws and regulations, and the proliferation of new and complex financial tools and techniques. To ensure that competence is maintained through continuous professional development, re-certification at a pre-defined time interval is required by the system.

System Goals and Objectives : 

07 Nov 20 Competency Certification System for Treasurers 16 System Goals and Objectives The objectives of the certification and re-certification system are as follows: To enhance the quality of local treasury services provided to the LGUs and the public. To increase the value of treasury services to the LGU management group, especially the Local Finance Committee (LFC). To increase the professional competency of local treasurers. To encourage personal growth among local treasurers. To provide professional recognition of local treasurers. This program establishes standards that recognize professional attainment and provides a system through which the required standards can be met. On completion of these standards, the applicant is recognized professionally by both the Civil Service Commission (CSC) and the Philippine Association of Local Treasurers and Assessors (PHALTRA) as a Certified Local Treasurer of the Philippines (CLTP) eligible to be appointed as local treasurer/asst. treasurer anywhere in the Philippines subject to the residency requirements set in the LGC.

System Development and Administration : 

07 Nov 20 Competency Certification System for Treasurers 17 System Development and Administration The development and implementation of the system will be undertaken by BLGF/DOF with active collaboration and participation from the Civil Service Commission (CSC), the Local Government Academy (LGA), Professional Regulation Commission (PRC) the PHALTRA, and members of the academe System Design Phase The primary initiator and result user of the system will be BLGF. Valuable technical inputs will be solicited during the detailed system design phase from CSC, LGA, PRC, PHALTRA, and the academe via a Study Committee to be put up and chaired by BLGF.

System Development and Administration : 

07 Nov 20 Competency Certification System for Treasurers 18 System Development and Administration System Implementation Phase The first two years of running the testing component of the certification program will be directly handled by the CSC. After 2 years, all the local treasurer-members of the PHALTRA will already be certified local treasurers of the Philippines so that by the 3rd or 4th year of the program, control of the testing component can already be transferred to a Certification Committee within PHALTRA with a member of the Promotions Board of BLGF and a member from the CSC performing oversight functions within the certification committee.

System Development and Administration : 

07 Nov 20 Competency Certification System for Treasurers 19 System Development and Administration System Implementation Phase The running of the competency build-up component will be handled by an accredited network of training institutions/trainors drawn from the LGA network, the PHALTRA network, and from existing and capable academic institutions not presently part of the two aforementioned networks. Competency testing will be held every June of the applicable year. Competency certificates will be issued during the national convention of PHALTRA following the applicable June examination.

Coverage and Validity of Certifications : 

07 Nov 20 Competency Certification System for Treasurers 20 Coverage and Validity of Certifications All incumbent and aspiring local treasurers are required to pass the certification requirements required by their existing or aspired-for positions. Certifications expire in five years from the date of issuance. Each of the proposed three-level certification requirements should correspond to each major treasury position

Certification and Re-Certification Process for Incumbent Treasurers : 

07 Nov 20 Competency Certification System for Treasurers 21 Certification and Re-Certification Process for Incumbent Treasurers All incumbent treasurers will be required to take the certification tests except those who will be retiring within 5 years from the 1st year of implementation of competency testing. The minimum eligibility requirement for testing will be waived for incumbent treasurers. Incumbent treasurers who fail to make the grade in the initial testing will be given a “coaching” as to what remedial courses he or she should take and is given up to 2 years to pass the appropriate certification examination. In the meanwhile, he or she will be given a probationary competency certificate.

Certification and Re-Certification Process for Incumbent Treasurers : 

07 Nov 20 Competency Certification System for Treasurers 22 Certification and Re-Certification Process for Incumbent Treasurers Treasurers who fail the 2nd time will be encouraged to take voluntary retirement or be “terminated for cause” — incompetence. Since the average age of incumbent treasurers is 57 years, it would do them as well as the LGU they serve very little good to have them study further for another 2 years for a total of 4 years since he or she first took the certification examination.

Certification and Re-Certification Process for New and Aspiring Treasurers : 

07 Nov 20 Competency Certification System for Treasurers 23 Certification and Re-Certification Process for New and Aspiring Treasurers All aspiring treasurers and asst. treasurers must be competency certified for the position they are aspiring. Those aspiring to take the competency tests must first meet the minimum testing eligibility requirements in terms of education and relevant experience for them to be allowed to take the competency examination.

Certification and Re-Certification Process forNew and Aspiring Treasurers : 

07 Nov 20 Competency Certification System for Treasurers 24 Certification and Re-Certification Process forNew and Aspiring Treasurers New aspirants who fail the 1st time will be given coaching as to remedial courses and be allowed to retake the competency examination a 2nd time. After a 2nd failure, the applicant will be directed to formally take the entire prescribed competency course in an accredited institution before being allowed to take the test a 3rd time.

Eligibility Standards for Competency Testing : 

07 Nov 20 Competency Certification System for Treasurers 25 Eligibility Standards for Competency Testing Any applicant for competency certification testing must meet the following minimum eligibility standards: General Standards The candidate must be an incumbent or nominee local treasurer or assistant treasurer, or other municipal officer charged with the performance or supervision of treasury responsibilities. The candidate must believe in and practice the governing rules and regulations PHALTRA. The candidate must furnish a letter of sponsorship from any active member of PHALTRA. Written applications with support documentation and the required testing fee for the current year June test should be in no later than 15 January of the applicable year. The applicant must earn a minimum of documented or attested 100 Education and Experience Standards points.

Eligibility Standards for Competency Testing : 

07 Nov 20 Competency Certification System for Treasurers 26 Eligibility Standards for Competency Testing Education Standards A maximum of 60 points toward eligibility for certification testing may be earned from the following Education Standards: Completion with a grade of 2.0 (80) or better of college or university courses related to treasury work. One point per credit. Maximum of 25 points Attendance at a BLGF/PHALTRA-conducted treasury-related training. Ten points per training. Maximum of 50 points Completion of a bachelor's degree in public administration, accounting, finance economics, law, planning or a related field approved by the Certification Committee. 50 points. Completion of a bachelor's degree in an unrelated field. 15 points. Completion of a master's degree in a related field. 50 points. Completion of a doctoral degree in a related field. 50 points. Attendance at the annual PHALTRA conference. 5 points per year. Maximum of 20 points.

Eligibility Standards for Competency Testing : 

07 Nov 20 Competency Certification System for Treasurers 27 Eligibility Standards for Competency Testing Experience Standards A maximum of 60 points toward eligibility for certification testing may be earned from the following Experience Standards: Experience as local treasurer, assistant treasurer, assessor, LGU accountant or budget officer. Five points per year. Maximum of 25 points Administrative or legislative experience in local government before municipal treasury work. Two points per year. Maximum of 20 points. Administrative experience in national government or in business or industry before municipal treasury work. One point per year. Maximum of 10 points. Receipts of special awards presented by the PHALTRA, professional organizations and academic institutions in relevant fields. Five points each. Maximum of 15 points. Lecturer/resource person in an approved course toward certification. One point per hour of lecture or instruction. Maximum of 10 points. Publication of technical article in journals, newsletters, magazines and newspapers of national circulation (excluding tabloids). Two points per article. Maximum of 10 points.

Indicative Treasurer Competency Build-up Courses : 

07 Nov 20 Competency Certification System for Treasurers 28 Indicative Treasurer Competency Build-up Courses A ten-part course is proposed to constitute the competency development agenda for Certified Local Treasurers of the Philippines. This competency development agenda should be translated competency examination questions and competency build-up courses to be conducted by accredited training institutions either through formal classroom work or via distance education mode. The proposed courses are classified as to which will be required for meeting the competency requirements of the three competency grades — basic, intermediate, and advanced. Part 1. Treasury Operations (For Basic, Intermediate, and Advanced Treasury Professional Levels) Fiscal Organization of Local Governments 1.1 Political and Corporate Nature of Local Governments 1.2 Authority and Criteria for Creation of LGUs 1.3 Common Requirements for Creation and Conversion of LGUs 1.4 Division, Merger, and Abolition of LGUs Roles and Responsibilities of the Local Treasurer and Assistant Treasurer 2.1 General Functions 2.2 Specific Functions 2.3 Specific Roles

Indicative Treasurer Competency Build-up Courses : 

07 Nov 20 Competency Certification System for Treasurers 29 Indicative Treasurer Competency Build-up Courses Types of Local Income and Revenues Collected by LGUs 3.1 Taxing Powers of LGUs 3.2 Common Limitations on Taxing Powers 3.3 Non-Tax Revenues 3.4 Fees and Charges 3.5 Internal Revenue Allotment 3.6 Shares in Proceeds of National Taxes 3.7 Special Shares from National Taxes 3.8 Other Receipts Collection of Revenues and Other Receipts 4.1 General Controls on Collection 4.2 Control and Accountability for Accountable Forms 4.3 Policies, Rules and procedures in Recording of Receipts, Deposits, Remittances 4.4 Forms and Reports 4.5 Examination of Books of Accounts of Businesses Expenditures and Disbursements Management 5.1 General Classification of Funds 5.2 Types of Appropriations 5.3 Allotments System 5.4 Obligation of Local Funds 5.5 Government Expenditures 5.6 Requirements on Disbursements 5.7 Modes of Disbursements

Indicative Treasurer Competency Build-up Courses : 

07 Nov 20 Competency Certification System for Treasurers 30 Indicative Treasurer Competency Build-up Courses Part 2. Financial Environment (For Basic, Intermediate, and Advanced Treasury Professional Levels) 1. Financial Institutions: Functions and Services 2. Supervisory and Regulatory Agencies 3. Pertinent Legislations Part 3. Financial Accounting Basic Accounting (Basic Level) 1.1 Introduction to Financial Accounting and Financial Statements 1.2 Analyzing and Recording Transactions 1.3 Adjusting Accounts 1.4 Closing Entries and the Classified Balance Sheet 1.5 Internal Control and Cash 1.6 Receivables 1.7 Capital Assets and Goodwill 1.8 Current and Long-term Liabilities 1.9 Accounting for LGUs 1.10 Reporting and Analyzing Cash Flows 1.11 Analyzing Financial Statements

Indicative Treasurer Competency Build-up Courses : 

07 Nov 20 Competency Certification System for Treasurers 31 Indicative Treasurer Competency Build-up Courses Intermediate Accounting (Intermediate Level) 2.1 The Income Statement and the Retained Earnings Statement 2.2 The Balance Sheet 2.2 The Cash Flow Statement 2.3 Revenue and Expense Recognition 2.4 Current Monetary Balances 2.5 Inventories and Cost of Sales 2.6 Capital Assets, Goodwill, and Deferred Charges 2.7 Amortization and Impairment 2.8 Investments in Debt and Equity Securities 2.9 Liabilities 2.10 Shareholders’ Equity 2.11 Complex and Equity Instruments 2.12 Accounting for Corporate Income Tax 2.13 Accounting for Leases 2.14 Pensions and Other Post-Retirement Benefits 2.15 Financial Statement Analysis Advanced Accounting (Advanced Level) 3.1 Investments in Equity Securities 3.2 Business Combinations 3.3 Interests in Joint Ventures

Indicative Treasurer Competency Build-up Courses : 

07 Nov 20 Competency Certification System for Treasurers 32 Indicative Treasurer Competency Build-up Courses Part 4. Financial Planning and Analysis Financial Concepts (Basic Level) 1.1 Time Value of Money 1.2 Opportunity Cost 1.3 Cost of Capital 1.4 Nominal and Effective Interest Rate Capital Budgeting Decision Analysis Tools (Intermediate Level) 2.1 Net Present Value (NPV) 2.2 Internal Rate of Return (IRR) 2.3 Payback Periods (PP) 2.4 Discounted Payback Periods (DPP) 2.5 Return on Investment (ROI) 3. Other Decision Analysis Tools (Advanced Level) 3.1. Benefit-Cost Analysis 4. Developing a Financial Plan (Advanced Level)

Indicative Treasurer Competency Build-up Courses : 

07 Nov 20 Competency Certification System for Treasurers 33 Indicative Treasurer Competency Build-up Courses Part 5. Working Capital Tools (Intermediate Level) Credit and Accounts Receivables 1.1 Credit Policies 1.2 Credit Standards 1.3 Billing and Collection Methods 1.4 Accounts Receivables Monitoring and Control 1.6 Financing Accounts Receivables 1.7 Legislations Affecting Credit and Collection Accounts Payable 2.1 Disbursement System Considerations Part 6. Payment Systems (Advanced Level) Paper-Based Payments 1.1 Check Clearing Process 1.2 Settlement and Funds Availability 1.3 Regulations on Paper Payment Instruments

Indicative Treasurer Competency Build-up Courses : 

07 Nov 20 Competency Certification System for Treasurers 34 Indicative Treasurer Competency Build-up Courses Electronic Payments Payment System Risk 3.1 System Risk 3.2 Payment Risk Part 7. Cash Positioning (Advanced Level) Cash Management System Considerations Collections 2.1 Collection Float 2.2 Collection Process Improvement 2.3 Collection System Information Management Disbursements 3.1 Disbursements Products 3.2 Electronic Disbursement Methods 3.3 Managing Disbursement Information

Indicative Treasurer Competency Build-up Courses : 

07 Nov 20 Competency Certification System for Treasurers 35 Indicative Treasurer Competency Build-up Courses Part 8. Liquidity Management Cash Forecasting (Basic Level) 1.1 Objectives of Cash Forecasting 1.2 Forecasting Considerations 1.3 Short-Term Forecasting Techniques Short Term Investments (Intermediate Level) 2.1 Short term Investment Policy 2.2 Short Term Investment Policy 2.3 Investment Risk Considerations 2.4 Yield Calculations for Short Term Investments Short Term Financing (Intermediate Level) 3.1 Short Term Financing Considerations 3.2 Planning Credit Needs 3.3 Short Term Financing Objectives 3.4 Short Term Funding Alternatives

Indicative Treasurer Competency Build-up Courses : 

07 Nov 20 Competency Certification System for Treasurers 36 Indicative Treasurer Competency Build-up Courses Part 9. Auditing Principles (Intermediate Level) 1. Professional Ethics, Audit Objectives, Phases of the Audit, and Audit Evidence 2. Internal Control, Assessment of Control Risk, and Audit Program Concepts 3. Advanced Information Systems and Audit Sampling 4. Audit of Sales and Receivables Cycle 5. Audit of Purchases and Payables Cycle 6. Audit of Payroll and Inventory Cycles 7. Completion of the Audit, and Other Types of Auditing 8. Fraud Part 10.Technical Communications Development (Basic Level) 1. Technical Writing 2. Effective Business Writing 3. Document Design and Production Principles

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