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
Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division
Contents
Strategy
what is it, drafting, inputs, process
Croatia
Development of IA strategy
IA development in brief
Legal framework
Lesson learned
Conclusion
2
Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division
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
3
Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division
Strategy drafting - overview
INPUTS
(staff, IT,
informations,
equipment, projects)
PROCESS of drafting
strategy
OUTPUT
IA strategy
Learning
4
Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division
Strategy drafting
- inputs
INPUTS
(staff, IT,
informations,
equipment, projects)
PROCES of drafting
strategy
OUTPUT
IA strategy
Learning
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
5
Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division
Process of
drafting strategy
INPUTS
(staff, IT,
informations,
equipment, projects)
PROCESS of drafting
strategy
OUTPUT
IA strategy
Learning
PROCESS of drafting strategy
NO
Drafting
6
Check (by
workgroup
CORE and
EXTENDED)
Compliant
Yes
(i.e. DG
Budget)
Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division
IA development
strategy
INPUTS
(staff, IT,
informations,
equipment, projects)
PROCESS of drafting
strategy
OUTPUT
IA strategy
Learning
Part of PIFC (Public Internal Financial
Control) Strategy
PIFC = FMC + IA + CHU
FMC – Financial management and
control
IA – Internal Audit
CHU – Central Harmonisation Unit
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Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division
Croatia in brief
4,5 mil. Inhabitants - 7.700 € per capita
15 bil. € annual budget – central state
level
~3000 budget users
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Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division
Development of PIFC strategy
in Croatia + outputs
PIFC
strategy
2005
-IA rulebook
-IA rulebook
-PIFC law
-IA manual
-Certification
system for IA
Outputs
PIFC
strategy
2004
9
Action
plan for
PIFC until
end of
2008
-IA rulebook
-FMC
training
Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division
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.
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Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division
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
11
Start of EU funded project CARDS 2002
“Development of Public Internal Financial
Control and Internal Audit” Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division
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
12
Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division
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
13
Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division
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
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Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division
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
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Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division
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
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CHU
Code of ethics
Internal audit standards
Rulebook for budget users IA
Internal audit manual
SABs
PIFC Law
PIFC policy
State
Croatia - Legal framework for
Internal audit
Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division
Lesson learned
INPUTS
(staff, IT,
informations,
equipment,
projects)
PROCES of drafting
strategy
OUTPUT
IA strategy
Learning
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
Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division
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)
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Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division
For additional info visit:
CHU: http://www.mfin.hr/str/100/#509
CARDS 2004 and CHU: http://pifc.mfin.hr
19
Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division
Abbreviations
CAE- Chief Audit Executive
CFAA- Country Financial
Accountability Assessmentt
CHU – Central
Harmonisation Unit
CPIA- Certified Public
sector Internal Auditor
HRM – Human Resource
Management
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FMC – Financial
management and control
IA – Internal Audit
IAD - Internal Audit
Department
MoF – Ministry of Finance
SABs – State
Administrative Body
WB- The World Bank
Republic of Croatia - Ministry of Finance
Central Harmonisation Unit & Internal audit Division