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Quality assessment of internal audit activities performed on a periodical basis Nikolina Bibić,

Quality assessment of internal audit activities performed on a periodical basis Nikolina Bibić, Ministr y of Finance , Central Harmonization Unit Republic of Croatia. Contents : Introduction 1.1 . Legal basis

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Quality assessment of internal audit activities performed on a periodical basis Nikolina Bibić,

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  1. Quality assessment of internal audit activities performed on a periodical basis Nikolina Bibić, Ministry of Finance, Central Harmonization Unit Republic of Croatia

  2. Contents: • Introduction 1.1. Legal basis 1.2. Overview of established internal audit units in the public sector of the Republic of Croatia 2. Development of the quality assessment model • Model 1 • Model 2 • Model 3 3. Conclusion

  3. 1.1. Legal basis Rulebook on Internal audit of Budget Users (2008 and 2013) Public Internal Financial Control Law (2006) CHU Service for Methodology and Standards Service for Coordination of Training and Quality Control Service for International Activities

  4. 1.2. Overview of established internal audit units in the public sector of the Republic of Croatia

  5. 2. Development of the quality assessment model

  6. Model 1 • Organizatioanal position of • the Internal Audit Unit • Staff • Methodology of work • Periodic reporting • Working papers Methodological Guidelines for Conducting Periodic Quality Assessment of Internal Audit Activities (2012)

  7. Model 2 Instruction for Conducting Periodic Quality Assessment of Internal Audit Activities (Version 2.0) 2013.

  8. Model 2 • Quality assessment performed on the basis of Annual Plan • Quality assessment performed by employees of the Central Harmonization Unit (team of two) • Minister of Finance issues a decision on appointment • Signing a Declaration of Confidentiality and Impartiality • Checks take about 7-10 days (2-3 days of field work)

  9. HEAD OF INTERNAL AUDIT UNIT INTERNAL AUDITORS MANAGEMENT Checklists for all assessment areas (11) • Survey for internal auditors • Anonymous survey Interview with management Anonymous survey for audited entities

  10. Reporting process Content of the report • Introduction • Purpose and scope of the assessment • Legal framework for conducting the assessment • Persons who conducted the assessment • Place and period in which the assessment is conducted • Quality assessment methodology • Assessment results (by areas of assessment) • Findings, assessments, opinions, recommendations • Conclusions • Annexes • Response of the head of internal audit unit to the draft report

  11. Reporting process Draft Report on Conducted Assessment Within 15 working days after the assessment Head of Internal Audit Unit Response of the head of Internal Audit Unit Within 7 working days after receipt of the draft report CHU Final Report on Conducted Assessment Within 5 working days after receipt of the response Head of Institution Head of Internal Audit Unit

  12. Assessment results

  13. Model 2 – identified weaknesses Focus on assessment of compliance, not on quality All questions in the checklist are of equal importance Questions were repeated by areas (11) Technical questions – not related to quality assessment The report is too detailed The conclusion did not provide a general / overall assessment

  14. 3. Model Instruction for Conducting Periodic Quality Assessment of Internal Audit Activities (Version 2.0) 2014.

  15. HEAD OF INTERNAL AUDIT UNIT INTERNAL AUDITORS MANAGEMENT Checklists for all assessment areas (8) • Survey for internal auditors • Anonymous survey Interview with management Anonymous survey for audited entities

  16. Reporting process Content of the report • Introduction • Purpose and scope of assessment • Methodology used for quality assessment • Opinion about performed assessment (by areas of assessment) • Findings, assessment, opinion, recommendations • Conclusion • Tabular presentation of proposed improvements (addressed to the head of budget user) • Tabular presentation of examined areas and quality level (addressed to the head of internal audit unit) • Comprehensive opinion (based on individual assessments by areas)

  17. Model 3 • The implementation of this quality assessment model will begin from march 2014 • According to the Annual Plan, quality assessment of 31 Internal Audit Units / budget users shall be performed in 2014 • Selection criteria: • Internal Audit Unit - established more than four years ago • Head of Internal Audit - appointed • The amount of budget funding • A user of EU funds

  18. 3. Conclusion Quality assessment has two parts: 1. complianceof the internal audit function and 2. functional efficiency assessment

  19. Thank you for your attention!

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