Transcript PIFC Public Internal Financial Control
SAIs and PIFC
Assessment policies
Ankara, 8 July 2008
Robert GIELISSE Head of unit DG BUDGET.B.4
European Commission
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The Message
• Strong incentives for all parties involved to assess on a regular basis the progress in the administrative reform of public internal control systems : – Ministry of Finance and other ministries; – External Stakeholders in reform: EC, ECA, SIGMA, Twinning partners, consultants) – The SAI 23/04/2020 2
Why PIFC?
• • • • • Good Governance PIFC is part of the Public Administration Reform In late 90s need for comprehensive public internal control concept, based on internationally accepted control and audit standards; PIFC has become “trade mark”; PIFC is reflected in Accession Negotiation Chapter 32, in SAAs and in ENP Action Plans 23/04/2020 3
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PIFC
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Question of defining
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PIFC = FMC+IA+CHU
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IC = FMC+IA
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Components of PIFC
• • • • Managerial accountability, reflected in adequate Financial Management and Control (FMC) systems; decentralised, functionally independent, internal audit (IA); Harmonisation and co-ordination of both FMC and of IA in all of the public sector (CHU); Four development stages: conceptualisation; legislation, administrative reform, training 23/04/2020 5
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Manager responsible for:
Setting and achieving the organisation’s objectives, thus spending wisely • Organising his financial management and control systems; • Developing objective risk analysis and management to reduce important risks in his services; • Adopting adequate FMC handbooks with detailed work flows to be used by the financial officers and the internal auditor; • Establishing an Internal audit unit, protecting its functional independence and for the follow-up on material audit recommendations); • Reporting on and being accountable for the organisation’s activities 23/04/2020 6
Public Internal Audit
Prime tasks of the internal auditor: • • Assess the functioning of the FMC systems and make recommendations; Advise manager to (better) achieve objectives, but take no managerial responsibility through: – Having functional but not total independence – IA Charter; – Showing highest degree of objectivity, integrity and professionalism (Code of Ethics); 23/04/2020 7
Status of Internal Audit
The internal auditor should :
• • • • • • Be certified as an experienced audit professional Enjoy the protection of the Internal Audit Law and IA Charter Be nominated, transferred and dismissed only after consultation/agreement from the CHU (at least the Head of the Audit Unit); Have adequate resources and salary Report to the highest management level Be free in many ways: 23/04/2020 8
Central Harmonisation Unit
• • • • • • • Is involved in conceptualisation/law drafting*, later in harmonising and co-ordinating standards and guidelines; Motivates and promotes best control and audit practice; Organises networking (internal/external) and public relations; Determines training needs for stakeholders; Assesses the follow-up of its guidelines and standards to clients; Prepares annual PIFC progress report to Government; Co-operates with the SAI 23/04/2020 9
Training
Sustainable training for managers, financial officers and internal auditors; 1. Governance and managers (make them aware of the added value to the organisation of good FMC systems and of internal audit); 2. FMC Financial officers for better understanding the meaning of sound financial management 3. Internal auditors: comprehensive curriculum (good practices, applied auditing (financial, systems-based audits and only later performance audit), interpersonal skills, risk management, accounting and financing, IT); Proper certification procedures; 23/04/2020 10
What did we learn from PIFC experience?
– Public internal audit can only be developed in wider framework of Internal Control; – High level support for and ownership of PIFC; – Long term strategy needs long term commitment and appropriate steps (PIFC Policy Paper and Action Plan) – Need for platform to discuss PIFC elements on national scale (CHU); – Benchmarking procedures for measuring progress over time 23/04/2020 11
The SAIs and DG Budget
DG Budget meets with SAIs to discuss Chapter 32 requirements: – Relating to external audit, but also to – The opinions of the SAI in relation to the current public internal control practice and to the achievements in implementing the PIFC reforms – PIFC developments are closely monitored by DG Budget until three years after the accession date; then it is hoped that the SAI will take over the role of external assessor 23/04/2020 12
PIFC assessments
• • PIFC can be assessed internally through self assessment exercises by the auditee or by the CHU or externally by the SAI, reporting to the national Parliament A basic question is: – Should the SAI confine itself to its findings of FMC and IA resulting from individual external audits? Or – Should the SAI produce an overall assessment of the quality of development of the entire PIFC system?
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Concluding Remarks
1.
No rules to SAIs other than those embodied in national legislation, the Lima Declaration and INTOSAI guidelines; 2.
Realising this, DG Budget would still appeal to SAIs to perform regular external assessments of the public internal control quality to improve public sector performance. 3.
PIFC-elements mentioned in this presentation or, in more detail, the brochure “Welcome to the World of PIFC” could be used to give structure to the external audit.
4.
Also, the Key Performance Indicators for benchmarking progress in the Action Plan (part of the PIFC Policy Paper), could be of substantial help.
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PIFC: More information
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1. Welcome to the world of PIFC
– Distributed on the spot •
2. Access to the FccWebsite
(for obtaining passwords) •
3. “PIFC: a European Commission initiative to build new structures of public internal control in applicant and third-party countries” (February 2007)
– www.pifc.eu
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4. Further information
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