REFORMING INSPECTION OVERSIGHT: Alignment with global good practices and standards

Transcription

1 REFORMING INSPECTION OVERSIGHT: Alignment with global good practices and standards I. International inspection standards Public-private dialogue on the inspection oversight system in Serbia has resulted in agreement that a systemic, modern, efficient, and reforming Inspection Oversight Law was required to improve Serbia s business inspections and establish a stable and sustainable oversight framework that is able to contribute to greater predictability of both doing business and investing. Regulations, practices and standards for reforming inspection oversight and inspection bodies have been developed at the broader global, European and regional levels. These include analyses, research, and guidelines prepared by various international development institutions, including OECD; World Bank Group IFC; USAID; and others. Key publications that offer substantial and practical guidance in this field include: How to Reform Business Inspections: Design, Implementation, Challenges, World Bank; 1 Inspections Reforms: Do Models Exist?, World Bank; 2 Inspection Reforms: Why, How, And With What Results, OECD 3, and Regulatory Enforcement and Inspections, OECD. 4 Global, European, and regional good practice should be transposed into a systemic piece of legislation governing inspection oversight that is compatible with Serbia s legal, institutional, and economic system. To that end, this paper outlines the desired goals of this legislation and recommendations and guidelines for reforming inspection oversight in Serbia C7DA557CEE216C86187E7A81 1

2 II. Objectives, recommendations, and guidelines 1. Compliance Inspection oversight should aim at ensuring compliance by entities subject to oversight with legislation, and at eliminating and minimising harm caused by non-compliance. The primary means for achieving this goal should be preventive and corrective action by inspection services. Inspections should play a primarily advisory role and should aim at ensuring compliance chiefly through prevention, the most efficient form of intervention. Inspection services should avoid being focused on punishment, or rather being perceived as such by businesses, members of the public and government authorities (including inspection bodies themselves), but should nevertheless be able to take corrective action up to and including bringing misdemeanour charges where warranted. Inspections should primarily endeavour to act pre-emptively to reduce the extent and likelihood of harm (or hazard) and so efficiently manage risks to the public, instead of chiefly reacting to adverse events. It is much more effective to proactively prevent non-compliance, and any potential harm associated with it, if harmful consequences have yet to appear. Sound preventive action results in efficient allocation of inspection resources and better protection of both particular goods and general public interests. In the performance of oversight, and through professional, impartial, and courteous dealings with entities subject to oversight, inspections and inspectors should primarily build rapport and trust with businesses and members of the public, rather than engender fear and mistrust in them. Shifting the focus of inspections from intimidation to cooperation with legitimate businesses fosters sustainable compliance and contributes to a positive business environment and greater investment, safeguards and creates jobs, and promotes greater living standards and overall quality of life. Criteria for assessing inspection performance provide guidelines and instructions for achieving the objectives of inspection oversight. 2. Risk assessment A risk assessment system used in inspection oversight eliminates or minimises arbitrary behaviour, inconsistency, bias, corruption, and other forms of abuse in initiating and carrying out inspection oversight. It is also helpful in defusing any tensions that may arise if some businesses are perceived to be inspected more often and for longer periods than others. Inspections clearly cannot control all businesses (nor can they realistically be expected to), particularly not over the course of any one year, or discover and deal with all instances of non-compliance. In parallel with investing heavily into prevention, inspections should rank businesses by risk, depending on the magnitude and likelihood of any adverse event that may result from their non-compliance, and react in a timely manner and efficiently in cases where the estimated risk is high (or critical). Risk should be estimated when annual and multi-year inspection plans are drafted, as well as before and during the course of actual oversight, as required given the nature, circumstances, and needs of such oversight. 2

3 Inspections collect reliable and credible information on businesses that are subject to oversight through monitoring, by using information systems, and by preparing analyses. Risk levels are then established using pre-set criteria, and oversight actions are initiated and carried out. Following these steps ensures that oversight is planned and does not depend on tip-offs by members of the public; it also means that inspection resources (even if more inspectors are hired) can be devoted to oversight of areas, businesses, and sectors where they are most needed and where their employment can yield the best results in terms of managing risks to the public and safeguarding human health, the environment and other public goods and interests, whilst ensuring that high-risk businesses that persistently fail to comply are efficiently identified and penalised. Global experiences and practice have shown that, in general, businesses with a low level of risk can be inspected regularly, as a rule, once every five years. -risk entities can be inspected once every three years; whilst firms showing high risk of non-compliance should be subject to yearly inspection visits. Depending on its particular remit, an inspection body can envisage different timeframes and frequencies of inspection oversight; in addition, planned oversight can always be supplemented by unscheduled visits. Risk Assessment: Hazard/Confidence Matrix Likelihood of Compliance (with scores) or Very High High Not yet Low Very Low assessed Hazard Hazard Scores High Upper Lower Low Risk Categories High A Upper B Lower B Low C

4 3. Support for sustainable operations and growth The role of the preventive function in inspection oversight is to support sustainable operation and growth in compliance with legislation, and to broaden the range of compliant businesses. This takes the form of warning businesses of their requirements under legislation, providing technical assistance and advice, warning businesses of any adverse events likely to occur, etc., and should take precedence over the inspection s repressive function. Similarly, the response to a business s non-compliance should be commensurate to the estimated risk, extent of non-compliance, and economic power of the business in question. The business should be given a deadline to comply, and misdemeanour charges should be brought only if the business has failed to comply, rather than follow automatically where an inspector uncovers an instance of non-compliance or an omission, even one this is unintentional, purely formal, or of very little significance. In addition, if a business has complied with an inspector s opinions, recommendations and explanations, or with other advice given by the inspector, it should not be held accountable for non-compliance except in particular situations provided for under the law. Automatic misdemeanour charges do not really address illegitimate operation: they only provide an opportunity for corruption and other forms of abuse to thrive. 4. Co-ordination of inspection oversight Co-ordinating inspection oversight and ensuring collaboration between inspections and other government authorities and private-sector entities can reduce the administrative burden faced by businesses and keep it at a sustainable level. An efficient and sustainable public authority should be established to serve as the primary forum for co-ordinating inspection oversight. In addition, inspection bodies can communicate and co-ordinate their actions independently of this central authority if more than one inspection is tasked with overseeing the same business. If legitimate businesses were able to count on lower administrative burdens and support growth, they could allocate funds, property, and business resources in support of new investment and job creation. 5. Tackling the informal economy A level playing field for all businesses can be promoted if inspections have clear statutory authority to tackle firms operating in the shadow economy. In parallel with disseminating information and acting pre-emptively towards legitimate businesses, inspections need to penalise unregistered firms. To that end, an inspection that discovers an informal business under the remit of a different inspection should be able to immediately demand compliance rather than be forced to decline jurisdiction. 4

5 6. Transparency and consistency Businesses can enjoy greater legal predictability, security, and certainty if inspections operate more transparently instead of exercising broad discretionary powers, and if this transparency also extends to the byelaws used by inspections. These goals are more likely to be achieved if inspections treat all businesses in the same or similar circumstances consistently. Transparency entails preparing checklists outlines of priority areas for verification and actions that inspections are able to perform under their remit and posting them online. In addition, the central inspections co-ordinating body should adopt subsidiary enactments (opinions, explanations, recommendations, interpretations, etc.) to ensure consistent implementation of regulations; these documents would be binding on inspectors when posted on the co-ordinating body s web site. Checklists have great practical value in that they show businesses and sole traders in advance what their requirements are, what they should do to comply, and what exactly inspectors will focus on. Above all, checklists can be used to gauge compliance with legislation and provide sound factual basis for amending unsuccessful legislation or inefficient practices. 7. E-inspections Information systems for use by inspection services (so-called E-inspections) allow for better resource allocation at these services and reduce the administrative burden faced by both businesses and inspectors. Computerised systems enable the creation of comprehensive databases and make it possible for inspectors to access information and documents, efficiently exchange data and digitised documents, co-ordinate inspection visits, and assess risk when planning and engaging in inspection oversight. Using a common information system, an inspection could be able to see which other services visited a particular business, what the focus of the visits was, what the findings were, and which actions were taken. By doing so, inspectors could better prepare for visits and assess risks before going out into the field, and could refrain from asking businesses to provide public documents that can be obtained from other authorities through official channels. 8. Standardised procedures Businesses and inspections alike could benefit from greater legal predictability, security, and certainty brought about by a better definition of the types of inspection oversight and standardisation of first- and second-instance oversight and enforcement in compliance with legislation governing general administrative proceedings. 5