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PEM-PAL - 2nd Internal auditors’ Community of Practice Workshop Chisinau, Moldova , June 20-22 2007. Development and implementation of internal audit strategy in Croatia for the change of public sector. Tomislav Mičetić, CPIA, CAE. Contents. Strategy

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PEM-PAL - 2nd Internal auditors’ Community of Practice Workshop

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Pem pal 2nd internal auditors community of practice workshop

PEM-PAL - 2nd Internal auditors’ Community of Practice Workshop

Chisinau, Moldova, June 20-22 2007

Development and implementation of internal audit strategy in Croatia for the change of public sector

Tomislav Mičetić, CPIA, CAE


Contents

Contents

  • Strategy

    • what is it, drafting, inputs, process

  • Croatia

    • Development of IA strategy

    • IA development in brief

    • Legal framework

    • Lesson learned

  • Conclusion


Strategy what is it

Strategy – what is it?

  • Management plan or method for completing objectives; plan of procedures to be implemented, to do something. (Source: www.answers.com)

  • IA Strategy – plan to implement IA according the internationally accepted IIA standards in the public environment


Strategy drafting o v er v ie w

Strategy drafting - overview

PROCESS of drafting strategy

INPUTS

(staff, IT,

informations,

equipment, projects)

OUTPUT

IA strategy

Learning


Strategy drafting inputs

Strategy drafting- inputs

  • Government support

    • European Union as target

  • Leader - CHU head

  • CHU with:

    • English skilled people – CORE WORKGROUP

    • External project assistance

    • Information of other countries examples of strategies

  • Extended workgroup

    • SAI, academics, inspection services

  • Administrative Cooperation Agreement with DG Budget

  • PROCES of drafting strategy

    INPUTS

    (staff, IT,

    informations,

    equipment, projects)

    OUTPUT

    IA strategy

    Learning


    Proces s of drafting strategy

    Process of drafting strategy

    PROCESSof drafting strategy

    PROCESS of drafting strategy

    INPUTS

    (staff, IT,

    informations,

    equipment, projects)

    OUTPUT

    IA strategy

    NO

    Check (by workgroup

    CORE and EXTENDED)

    Compliant (i.e. DG Budget)

    Drafting

    Yes

    Learning


    Ia development strategy

    IA development strategy

    • Part of PIFC (Public Internal Financial Control) Strategy

    • PIFC = FMC + IA + CHU

    • FMC – Financial management and control

    • IA – Internal Audit

    • CHU – Central Harmonisation Unit

    PROCESS of drafting strategy

    INPUTS

    (staff, IT,

    informations,

    equipment, projects)

    OUTPUT

    IA strategy

    Learning


    Croatia in brief

    Croatia in brief

    • 4,5 mil. Inhabitants - 7.700 € per capita

    • 15 bil. € annual budget – central state level

    • ~3000 budget users


    Development of pifc strategy in croatia outputs

    Development of PIFC strategy in Croatia + outputs

    PIFC strategy 2004

    Action plan for PIFC until end of 2008

    PIFC strategy 2005

    • -IA rulebook

    • -PIFC law

    • IA manual

    • Certification system for IA

    -IA rulebook

    -FMC training

    Outputs

    -IA rulebook


    Internal audit in pifc strategy 2005 example of output

    Internal audit in PIFC Strategy (2005) – Example of output

    • Contents:

      • Existing situation and weaknesses

        • Organisation of IA on goverment SAB’s

        • Job title: Internal auditor

      • Development of Internal Audit

        • PIFC law finalisation

        • Criteria for IA establishment

        • Endorsment of IA Charter

        • Development of methodology

        • Development of IA Strategy and Annual plans

      • Training of internal auditors

    • See: Croatia PIFC 2005 Strategy: Chapter 4.2.


    Pem pal 2nd internal auditors community of practice workshop

    2003

    • MoF department for internal audit and control established – CHU

      • Assistant minister + 3 civil servants

    • Budget law

      • introduction of IA in the public sector

      • managerial responsibility

      • budget inspection

    • Start of EU funded project CARDS 2002 “Development of Public Internal Financial Control and Internal Audit”


    Pem pal 2nd internal auditors community of practice workshop

    2004

    • Signed Administrative Cooperation Agreement (ACA) with European Commission - DG Budget in the area of the PIFC - Chapter 32.

    • Rulebook on budget users IA

    • PIFC strategy adopted by Government

    • TAIEX – PIFC presentation for Croatia

    • 2nd workshop for CHU – Hungary

    • Start of IA training and certification

      • Session held by CARDS 2004 project


    Pem pal 2nd internal auditors community of practice workshop

    2005

    • Change of MoF organizational decree

      • Department for harmonization of internal audit and financial control

      • Internal audit department

      • FMC department

    • WB - Country Financial Accountability Assessment (CFAA) - recommended:

      • Further development of legal documents

      • Strengthening capacity of CHU

      • Further promotion of documents

    • Updated PIFC policy paper – in force

    • IA training taken over by local trainers-professionals

    • 1st seminar of Internal auditors

    • New Rulebook on Budget users internal audit

      • Criteria for IA establishment


    Pem pal 2nd internal auditors community of practice workshop

    2006

    • 3th workshop of CHU- Bled-Slovenia

    • Start of CARDS 2004 project – “Strengthening of the PIFC structure in the Republic of Croatia“

    • Awareness raising seminars for managers and FMC persons

    • Explanatory and bilateral screening

    • 2nd IA seminar of IA

    • PIFC law passed


    Pem pal 2nd internal auditors community of practice workshop

    2007

    • FMC modules started for FMC champions

    • Drafting of PIFC policy for local self - government level

    • CHU Action plan on development and implementation of PIFC until end of 2008 – continuing the development of IA


    Croatia legal framework for internal audit

    Croatia - Legal framework for Internal audit

    State

    PIFC Law

    PIFC policy

    CHU

    Code of ethics

    Internal audit standards

    Rulebook for budget users IA

    Internal audit manual

    Decree on organisation of SABs

    Rulebook for job description of SABs

    Charter of internal auditors

    Working procedures of IAD

    Strategic/annual plan

    Internal audit programmes/guidelines

    Internal audit reports/Follow up

    SABs


    Lesson learned

    Lesson learned

    • Be not to ambitious

    • Start with good contents

    • Strategy – good tool for start of IA development

    • Transparency and marketing

    • EU – moving target

    • PIFC – IA – good tool for fight against corruption – preventive measure

    PROCES of drafting strategy

    INPUTS

    (staff, IT,

    informations,

    equipment, projects)

    OUTPUT

    IA strategy

    Learning


    Ia conclusion

    IA - Conclusion

    • “Change is the law of life. And those who look only to the past or present are certain to miss the future.”

      • (John F. Kennedy)

    • HRM – Staff is key of success!

    • “Success is the result of perfection, hard work, learning from failure, loyalty, and persistence.”

      • (Colin Powell)


    Pem pal 2nd internal auditors community of practice workshop

    For additional info visit:

    • CHU: http://www.mfin.hr/str/100/#509

    • CARDS 2004 and CHU:http://pifc.mfin.hr


    Abbreviations

    Abbreviations

    • CAE- Chief Audit Executive

    • CFAA- Country Financial Accountability Assessmentt

    • CHU – Central Harmonisation Unit

    • CPIA- Certified Public sector Internal Auditor

    • HRM – Human Resource Management

    • FMC – Financial management and control

    • IA – Internal Audit

    • IAD - Internal Audit Department

    • MoF – Ministry of Finance

    • SABs – State Administrative Body

    • WB- The World Bank


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