methodology for comprehensive assessment of regulatory acts

MethodologyFor Comprehensive Assessment of Regulatory Acts

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Contents

1. The general logic of the evaluation

2. Assessment of whether the act is legal and up-to-date

2.1. Checking the Ministry of Justice registration

2.2. Check the basis for the adoption of the regulatory act

2.3. The results of applying the rule of law filters

2.4. The assessment of whether the regulatory standards adopted

pursuant to relevant international obligations (in the first stage - only

DCFTA)

2.5. Evaluation of whether an act is up-to-date

3. Evaluation of whether the act is needed

3.1. Verification of the regulatory act effectiveness

3.2. Checking whether the regulatory act is needed

4. Assessment of corruption risks

5. Assessing the impact on business processes

6. Assessment of the value (cost) of regulation

7. The effectiveness of the regulatory act (the ratio of the positive

effect of the action act and the costs of its implementation) *

6.1. Losses (costs)

8. Summary assessment of the regulatory act

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1. The general logic of the evaluation

1.1. To create a quality regulatory field in Ukraine, Office analyzes existing regulatory acts and norms.

The order, in which regulatory acts norms are analyzed, is determined through a

transparent and inclusive process, which will be based on the stakeholder views.

As a result of the assessment of each regulatory act, one of the following three

decisions is recommended: to maintain, amend (change) or delete (green, yellow

and red basket - respectively).

1.2. The assessment algorithm includes:

- Filters, their application may result in recommendation to maintain or remove;

- Evaluation criteria, their application may result in recommendation to maintain,

amend or remove;

- Prioritization criteria, their application may change the priority review level of the

individual regulatory acts.

1.3. Principle (map) of the comprehensive assessment of regulatory acts (Rolling review)

1.Legality: Legal / Illegal (if not protected by DCFTA)

2. Whether the act is up-to-date: Up-to-date / Outdated

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3. Need (existing regulatory impact analysis:

3.1. Effective / not effective / cannot be determined

3.2. Useful (>3) / conditionally useful (-3<3) / useless (<-3)

4. Corruption risks (1/10)

Acceptable risks (<3) / Moderate risk (>4) / high risk (>7).

5. The impact on business processes: Friendly (<3) / not friendly (>4)

6. Cost of regulation: revenues / expenses = cost of regulation

7. Efficiency

Benefit / cost of regulation = regulatory effect.

2. Assessment of whether the act is legal and up-to-dateFor the purposes of the rolling review, the definition of the legality of the act

consists of 2 stages:

- The establishment of the fact of registration of the regulatory act by the Ministry

of Justice of Ukraine (or lack of it);

- Establish the basis for its adoption (or lack of it).

2.1. Checking the Ministry of Justice registration

The fact of registration is checked by looking up the information on the registration

of regulatory act in the publicly available sources.

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This filter is implemented in the check-list as a question «Is a regulatory act registered

with the Ministry of Justice?» with three possible answers:

- «Yes» / considered to have passed the first filter;

- «No» / recommended for removal;

- not applicable as the act is not subject for registration with the MoJ / considered

to have passed the first filter.

2.2. Check the basis for the adoption of the regulatory act

Given the constitutional principles of limitation and delegation of powers and

assuming that the most important relationships should be regulated directly by

laws and, all secondary legislation must have basis in the primary law. There is

no doubt that it’s often impossible or impractical to provide highly detailed rules

directly in the text of laws, however regulation can only be deemed legal where

there is a clear basis in law for the adopted secondary legislation (in this case, the

law should contain appropriate referential or blanket norms).

The filter is implemented in the check-list in the form of question «Is there a law in

reference to the need for additional settlement of legal relations by enacting the

corresponding bylaw regulatory act?»

Valid are two options:

- «Yes» / considered to have passed the second filter;

- «No» / recommended for removal.

2.3. The results of applying the rule of law filters

In case the regulatory act provisionally recognized as a «legitimate» for both sides of

the filter, then it goes to the next evaluation stage - the «assessment of usefulness».

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In case the regulatory act arbitrarily deemed «illegal» at least one of the parts of the

filter, it will be checked for protected status under the international obligations of

Ukraine (DCFTA).

2.4. The assessment of whether the regulatory standards adopted pursuant to relevant international obligations (in the first stage - only DCFTA)

This step serves as a filter, designed to protect against removal of acts which were

adopted further to relevant international obligations of Ukraine (DCFTA).

This filter is implemented in the check-list as question «Does the regulatory

document rules adopted pursuant to relevant international obligations of Ukraine?».

Possible answers:

- «Yes» / document is recommended not for amendment.

- «No» / document is recommended for removal.

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3. Evaluation of whether the act is neededFor the purposes of the rolling review, the definition of whether the regulatory act

is needed consists of 2 stages:

- Effectiveness;

- Usefulness.

3.1. Verification of the regulatory act effectiveness

EFFECTIVENESS of a regulatory act is defined as the successful achievement of

the purpose for which it was adopted. This goal should be determined from the

accompanying documents prepared for its adoption - the explanatory note or

regulatory impact analysis. The success of its achievement should be determined

from the conducted regulatory impact analysis.

2.5. Evaluation of whether an act is up-to-date

A regulatory act is considered to be up-to-date when it is in line with the legislation

adopted thereafter which have significantly changed the regulation in the area of

regulation of the act, and has not been repealed by an administrative court.

Evaluation is conducted by an Office expert, which consecutively provides answers

to the following questions:

- Are there available any publicly available judicial decisions of administrative courts

abolishing the analyzed act? / If yes - that act shall be deemed not up-to-date, - if

not, then the next question.

- Are there available any publicly available legislation adopted thereafter which

have significantly changed the regulation in the area of regulation of the act? / If

yes - that act shall be deemed not up-to-date, - if not, then up-to-date.

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The check-list filter «effectiveness review» is presented as a set of consecutively

and variably presented questions, according to answers to which, effectiveness is

determined.

As a result, the act can be determined to be:

- Effective;

- Conditionally effective;

- Not effective;

- One, the impact of which is not possible to establish.

To start with the performance assessment should establish the fact of the

possibility of such an assessment. To this end, the Office expert must find the

following:

- Whether the purpose of the adoption of a regulatory act is clear (the problem it

is intended to solve)?

- Is this goal measurable?

- Are there any measurable projected effects of the adoption of the act in place?

a) For the purpose of determining whether the purpose of the adoption

of a regulatory act is clear Office specialist provides answers to the following

questions:

a-1. Is it possible to find a regulatory impact analysis or an explanatory

note to the act? / If yes - then the question A.2. - if not, it is considered that

the purpose of this act cannot be determined, and it is considered conditionally

effective. In such a case, the assessment of the act is continued to the next stage.

a-2. the explanatory note or RIA include an adequately defined the

problem, to the solution of which the regulatory act was adopted? / If yes - then

the question b) - if not, if not, it is considered that the purpose of this act cannot

be determined, and it is considered conditionally effective. In such a case, the

assessment of the act is continued to the next stage.

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b) If the purpose can be determined, it is necessary to determine whether it

is measurable. To this end, the Office expert answers the following questions:

b-1. Do these documents have clear and appropriate criteria for

assessing effectiveness? If yes, then the question b-2, if not - it is if not, it is

considered that the measurable purpose of this act cannot be determined, and it

is considered conditionally effective. In such a case, the assessment of the act is

continued to the next stage.

b-2. Has there been a basic analysis of the impact of the regulatory act

conducted (or another study that determines performance evaluation criteria at

the time of the adoption of the act)? Is it possible to get acquainted with this data?

If yes - then the question c), if not, it is if not, it is considered that the measurable

purpose of this act cannot be determined, and it is considered conditionally

effective. In such a case, the assessment of the act is continued to the next stage.

c) If a measurable objective is determined, the Office specialist generates an

information request to obtain data on the performance criteria for the effectiveness

assessment for the period of validity of the act and sends it to the competent

authority. After receiving the necessary information - compares the efficiency of

the act targets and actual data on it (like) figures for the period of action of the act.

The analysis may result in one of the following three conclusions:

1. The act is effective as its objective has been achieved. In such a case, the

assessment of the act moves to the next stage.

2. The act is conditionally effective as its objective has been substantially achieved.

In such a case, the assessment of the act moves to the next stage.

3. The act is not effective, as its objective has not been achieved. The act is

recommended for removal.

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4. The act is conditionally effective as its measurable purpose cannot be determined,

and it is. In such a case, the assessment of the act moves to the next stage.

3.2. Checking whether the regulatory act is needed

Assessment of whether a regulatory act is NEEDED is conducted through

interviewing key stakeholders (entities whose relationship is largely regulated by

the act, regulators, experts in the relevant segment of the sector).

To conduct the survey * on the usefulness of the regulatory act an Office specialist

prepares a special questionnaire in which, among other things, the following

questions are formulated:

1. In your opinion, what problems is the regulatory act was intended to solve?

2. In your opinion, has the act been successful in solving this problem?

3. In your opinion, has the regulation of the act been useful for your market? If yes,

what are its main favorable effects? Rate on 10-point scale.

4. In your opinion, has the regulation of the act been harmful to your market? If

yes, what are its main adverse effects? Rate on 10-point scale.

5. Does the act include rules that should be kept in case it is cancelled?

6. Does the act include rules that should be cancelled in case the act will be kept

in force?

The list of stakeholders for the survey is determined on the basis of the analytical

database of the Office. The result of the survey should be presented as the average

value in the range from «-10» to «10».

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The level of corruption risks is determined as an aggregate index of a series of

assessments of corruption in the regulatory act by responding to the following

questions:

1. Does the act provide for any procedure that requires mandatory interaction with

public authorities?

If yes, «1» rating - if not, «0».

2. Does the act provide for any procedure involving decisions to be made by public

official affecting a business?


3*. Does the act provide for a procedure that gives the power to a public official

to refuse resolution to business due to a defect of the subject (not on the basis of

4. Assessment of corruption risks

If as a result of this assessment, an act receives an average rating of «-3» or lower,

the regulatory act is recommended for removal, as it is considered unneeded by all

stakeholder groups. If in the process of analysis, a subset of rules included in the

act are listed as useful, these rules are analyzed separately.

If as a result of this assessment, an act receives an average rating of -2 or higher,

the assessment of the act moves to the next stage.

* - It should be noted that gathering information regarding the regulatory act must be

approached comprehensively, if the expert sends a request to determine whether the

act is “needed”, corruption risks and impact on business processes questions should

also be added.

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compliance with the requirements of business procedures)?


3.1. Are the requirements for the subject clearly defined and so that ambiguous

construction is prevented?

If yes, «0» rating - if not «1».

3.2. Is the list of requirements exhaustive? Can an official request from the

applicant any other document / information, except those that are listed directly in

the regulatory act?


4. Does the act include an exhaustive list of options for taking official action on

each of the situations that may occur in the implementation of the act?


4.1. Does the regulatory act include an exhaustive list of grounds (conditions)

under which it a given decision is made for each of the situations that may occur in

the implementation of the act?


5. Does the regulatory act include a clear deadline for all decisions made under

each of the situations that may occur in the implementation of the act*?


* - If the regulatory act provides for a number of different situations / periods, it is

necessary to evaluate each of them separately, but as a final evaluation assessment to

use the arithmetic mean value.

6. Is there an official duty to disclose / publish decisions of public officials?


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6.1. Is there a centralized public database of similar official decisions?


7. Does the act require the public official to justify the decision in writing in case of

an adverse decision?


7.1. Does the act require the public official to justify the decision in writing in

case of a favorable decision?


8. Is there a possibility to appeal the official decision at the administrative court?


9. Does the regulatory act directly provide or provide for a situation where business

is expected to interact with any other public authority or other entity, in addition to

the one to which the documents are submitted?


10. Is the business required to interact with the authorities more than twice?


Responses to the above questions are summarized («10» points - the highest risk,

«0» points - the lowest level of risk). If the score is 5 or more - an act considered to

be one requiring anti-corruption assessment (recommended for correction on the

grounds of corruption risks).

* - Value of a single group of questions ranges from «0» to «1» score. The final assessment

of the group is estimated as the arithmetic mean ratings of each of the questions.

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5. Assessing the impact on business processes

Assessment of the impact of the regulatory act on business processes is conducted

to determine the extent and nature of its impact on the freedom of doing business.

Evaluation is carried out by responding to the following questions:

1. Does the regulatory act provide for unconditional significant restrictions for

business (prohibition to engage in certain activities)?


If the answer is «yes», then please specify how many absolute prohibitions set.

1.1. Are there exceptions to the unconditional significant restrictions?


1.2. Does the regulatory contain an exhaustive list of exceptions to the

unconditional restrictions?


* 2. Does the regulatory act provide for conditional significant restrictions to doing

business (opportunities to engage in activities only subject to certain requirements)?


If the answer is «yes», then you must also provide the number of conditional restrictions.

2.1. Does the act contain an exhaustive list of conditions that must be fulfilled

to be eligible to carry out this economic activity?


2.2. Are the conditions worded sufficiently (so that ambiguous construction

is prevented)?


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6. Assessment of the value (cost) of regulationAssessment of the value (cost) of regulation is defined as the ratio of the following

indicators calculated on the basis of the method of calculation of regulatory impact

analysis (including M-test), namely:

3. Does the regulatory act directly provide or provide for a situation where business

is expected to provide the State (regulator / inspector) additional information (in

addition to the standard tax reporting)?


4. Does the regulatory act provide for mandatory payments (other than taxes

directly provided by the Tax Code)?


If yes – please specify the number of payments and the amounts.

5. Does the regulatory act provide for non-mandatory payments (other than taxes

directly provided by the Tax Code), the lack of payment of which can complicate

carrying out economic activity (including even a single business process)?


6. Does the regulatory act provide a regulator with power to make decisions that

may significantly affect the business environment?


7. Does the regulatory act make it necessity /mandatory for businesses to use the

services of third parties for the successful interaction with the state?


Responses to the above questions are summarized («7» points - the highest risk,

«0» points - the lowest level of risk).

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6.1. Losses (costs):

6.1.1. Business costs:

6.1.1.1 Number of business entities who are covered by the act;

6.1.1.2. The amount of funds that are directly (direct costs) to average spent

by a business entity to fulfill the requirements of the regulatory act;

6.1.1.3. The time that is spent to average business entity to fulfill the

requirements of the regulatory act;

6.1.1.4. Cost of 1 hour of the employee, which implements the requirements

of the regulatory act.

6.1.1.5. The number of times the procedures (pursuant to regulatory act) for

the year.

6.1.2. The costs to the state:

6.1.2.1. The size of the administrative costs incurred by the regulator to

ensure compliance with regulatory act (regulatory procedures).

6.1.2.1.1. The amount of funds provided for in the current year on the

financing of the agency, which is implementing the procedures provided for

by the regulatory act.

6.1.2,1.2. The total number of agency’s functions, which is implementing

the procedures provided for the regulatory act.

6.1.2.1.3. The unit cost of the function for the implementation of

procedures for the functions provided by the regulatory act.

6.1.2.1.4. Total number of employees of the whole agency tasked with

carrying out the implementation of the procedures provided for the regulatory act.

6.1.2.1.5. The number of employees within the agency, which directly

carry out the implementation procedures under regulatory act.

6.2.2.1.6. The average specific variable of the cost for the implementation

of regulatory functions.

6.1.2.1.7. The cost of implementing the function of regulation in the

year.

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6.1.2.2. The amount of the administrative costs incurred by the supervisory

agency (inspector) to ensure compliance with regulatory act (regulatory procedures).

6.1.2.2.1. The amount of funds provided for in the current year on the

financing of the body, which carries out control / oversight for compliance with

regulatory act provided for supervision.

6.1.2.2.2. The total number of agency’s functions related to performance

of control / oversight compliance procedures under a regulatory act.

6.1.2.2.3. The unit cost of financing of control function / oversight of

compliance with the procedures provided for the regulatory act.

6.1.2.2.4. Total number of employees of the agency overseeing /

supervising compliance procedures under regulatory act.

6.1.2.2.5. The number of employees within the agency who directly

oversee / supervise compliance procedures under a regulatory act.

6.1.2.2.6. The average specific variable of the cost for the implementation

of regulatory functions.

6.1.2.2.7. The cost of implementation of the control function / oversight

of regulatory compliance annually.

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8. Summary assessment of the regulatory act

8.1. According to the results of the analysis, Office prepares and issues a final

report with recommendations:

- Remove («illegal», «unneeded», «not effective»);

- Amend («high corruption risks», « high-risk for economic freedom adverse impact»,

«high-cost»);

- Keep.

The decision for the recommendation for removal is accompanied by a short but

clear rationale.

The decision for the recommendation for amendment is accompanied by the

legislation drafting technical assignment.

8.2. Rolling review assessment results taken in entirety can be used to create a

quality map of the regulatory system to be used by the Office for the development

of better regulation delivery legislative packages.

7. The effectiveness of the regulatory act ** - Assessment is carried out only if it is possible to evaluate the regulatory act according

to the criteria «effectiveness» and «cost».

7.1. Growth of units on effectiveness criteria (for the accounting period).

7.2. The cost of implementation for the implementation of the function of

regulation (for the accounting period).

7.3. The cost of performing the functions of the compliance review / oversight

of regulation (for the accounting period).

7.4. The unit cost of a unit of increase on performance criteria.

methodology for comprehensive assessment of regulatory acts

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