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Public Internal Audit

Public Internal Audit. PEM-PAL Center for Excellence in Finance Ljubljana, 12-13 December 2006. Robert de Koning European Commission DG BUDGET.B.3 PIFC Team Leader. PIA or On its Own? Isolated? Scope: Financial Systems-based Performance/IT . PIFC (EU-model) (comprehensive)

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Public Internal Audit

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  1. Public Internal Audit PEM-PALCenter for Excellence in Finance Ljubljana, 12-13 December 2006 Robert de Koning European Commission DG BUDGET.B.3 PIFC Team Leader

  2. PIA or On its Own? Isolated? Scope: Financial Systems-based Performance/IT PIFC (EU-model) (comprehensive) 1. Managerial Accountability 2. Independent Internal Audit 3. Central Harmonisation Public Internal Audit (PIA)

  3. Public Internal Audit • Experience with PIA in framework of PIFC: • Be the owner of the project (you guide the process, not others (consultants-outsiders)); • Do not isolate PIA development from wider framework of Internal Control (PIFC); • Do not follow supply-driven proposals, have a strategy aiming at achieving international standards; • Be aware of the long term duration of the project (conceptualisation, legislation, organisation, implementation and training)

  4. Public Internal Audit Prerequisites: • Do not embark on the mission without support of the highest management levels; crucial! • Do not develop PIA without benchmarking your present systems against int’l standards (draft a strategy); • Do not work in isolation; create a wide platform for discussion and development and get stakeholders involved;

  5. Public Internal Audit Audit and Control: • Do not let internal control and internal audit get mixed up; management is responsible for internal control and auditor assesses the IC systems; • Do not let internal audit and inspection get mixed up; auditor assesses and recommends; inspection investigates and co-operates with the judicial authorities, eventually punishes (fraud and irregularities); • Make management responsible for drafting the audit trail

  6. Public Internal Audit • On Internal Audit legislation: • Make IA law connected to IC law, make a comprehensive cluster of laws: presentation; accessibility (see next slide for recommended structure under PIFC); • Make sure you have stakeholders on your side (management, SAI, Ministry of Interior for civil service Act) • Provide for adequate links to budget act, accounting act, procurement act, fight against fraud, etc.) • Do not hurry or push-through legislation;

  7. PIFC: legislation/regulation

  8. Public Internal Audit • On the Status of Internal Audit in a ministry: • Responsible to highest management level (Internal Audit Unit and CHU for Internal Audit): • Internal Audit Charter for relation with management • Nomination, transfer, dismissal in co-op with CHU (MoF) • Adequate resources and salaries • Ensure freedom to perform audit • Strategic audit plan and annual audit plans based on objective risk assessment; • Endorsement, not approval by management; • Do not allow ad hoc audits to become hindrance of your audit plans; • Free reporting of Audit findings: • Adequate contradictory procedures; • Adequate follow-up procedures; • Audit reports to management and to CHU • Central register of material audit findings

  9. Public Internal Audit On Training of auditors: • Not only training of auditors, also training of managers and financial officers; • Prepare for comprehensive curriculum for internal auditors (start for classical financial audits and enlarge for systems-based audits; in later stage for the more complicated performance audit); • Prepare for Certification procedures to create a coherent public internal audit profession (Code of Ethics); • Do not allow internal auditors to work in isolation, create a brotherhood;

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