Declaration on Internal Controls

Transcription

1 of the Declaration on Internal Controls Paris, Nataša Prah, Director 1

2 of the Introduction WHAT IS THE DECLARATION ON INTERNAL CONTROLS? WHO HAS TO PREPARE IT? WHEN IT SHOULD BE PREPARED? HOW IT SHOULD BE PREPARED? WHY IT SHOULD BE PREPARED? TO CONCLUDE 2

3 of the WHAT? Legal Framework: Public Finance Act 2002 Regulations on Guidelines for the Harmonized Functioning of the Public Internal Control System Guidelines on Internal Controls Declaration on internal controls: The Declaration is a document, signed by the Head of the BSC explaining the situation in the field of the implementation of the processes and procedures of the Public Internal Financial Control. 3

4 of the WHO? Head of the Budget Spending Centre (BSC) should set up an appropriate system of Financial Management and Internal Controls to assure: implementation of the budget, timely and reliable reporting, economic, efficient and effective use of resources, prevention of corruption, fraud or negligence. 4

5 of the WHO? BSC (Total 2730, employing Civil Servants) Ministries (+ other governmental and non governmental BSC) Municipalities Heads of BSC signing Declaration on Internal Controls Ministers Mayors Institutions (education, social care, health,..) Directors 5

6 of the WHEN? According to the Instructions for the preparation of the final account of the state and local government budgets and for the methodology for the preparation of the report on the objectives achieved and results of the direct and indirect BSC, BSC were obliged to prepare Declarations on Internal Controls already for the year 2000 though the form and the methodology were not prescribed. The with the help of the Working Party composed of Internal Auditors of BSC and representatives of the Court of Audit prepared a modification of the Instructions introducing the Form of the Declaration and the Methodology for the preparation. The modified Instructions was tested voluntarily by 177 BSC in 2005 and enacted in

7 of the HOW? Professional Bases for the Declaration on Internal Controls: INTOSAI Guidelines for Internal Control Standards for the Public Sector COSO Internal Control Integrated Framework 7

8 of the HOW? The Head of the BSC assesses with 1-5: Control Environment Objectives Setting Risk identification & analysis Control Activities Information & Communication Monitoring incl. Internal Audit and outlines major weaknesses identified and improvements for the following year. 8

9 of the HOW? While preparing the Declaration Heads of BSC should take into consideration: Declaration of the Internal Audit on Internal Controls Self Assessments Findings of control bodies like The Court of Audit, Budgetary Inspection, BSO Auditors, EC,.. In the preparation of the Declaration the Internal Audit can and usually is involved as a coordinator, but the responsibility remains with the Head of the BSC by whom the Declaration must be signed. The probability that the Declaration is the subject of compliance audit by the Court of Audit contributes to it s importance 9

10 of the HOW? Methodology for the preparation of the Declaration on Internal Controls consists of the Model Declaration that expresses the responsibility for setting up an appropriate system of internal controls, contains the evaluation of internal controls according to each component and indicates activities for improvements, Description and purpose of internal controls in general and of each component, Self Assessment Questionnaire with detailed Instructions for use. 10

11 of the WHY? Preparation of the Declaration contributes to the general understanding and awareness regarding risk management in BSC, introduction of Risk Registers, Audit Trails, Internal Auditing,... Declarations representing a source of information for the, are analyzed and findings appropriately addressed (publication of results, trainings, reporting, Instructions improvements, other activities) 11

12 of the TO CONCLUDE In spite of a fairly complete legal framework adopted and support declared by Policy Paper, a major obstacle for its implementation in the environment of the highest ranking officials is the lack of awareness regarding the responsibility for internal controls. Methodology for the preparation of the Declaration is subject to continuous improvements. 12

13 of the TO CONCLUDE (2) A Declaration on internal controls personally signed and backed by from the Government independent Supreme Audit Institution appeared to be an appropriate measure with positive results though we were aware that: the Declaration is more adapted for the more advanced control environment the person signing the declaration must understand it s contents and purpose from the very beginning in the environment of the public administration taking into account restrictions and limitations regarding powers and resources an assurance declaration can not be demanded preparation of the Declaration takes considerable amount of the available time 13

14 of the THE END QUESTIONS REMARKS COMMENTS? Thank you very much for the attention 14