Welcome to the Internal Audit Directorate page on the website of the Bulgarian Ministry of Finance.
After the EU accession of the Republic of Bulgaria the safeguarding of the public finance interests became more responsible task. Its execution by the Ministry of Finance is determined by observing the principles of transparency, good financial management and conformity with the law.
That is why all of us – the employees of the Ministry of Finance have to be an example for their implementation. Our obligation is carefully preservation and safeguarding of the assets of the Ministry of Finance – its financial resources, equipment, buildings and information, as well as observing the current law, internal policy and procedures. Correctness and honestly have to be a base of our institutional behavior.
In that connection the purpose of the internal audit is to help the Ministry of Finance by identifying and assessing the risks and adequacy of the systems for financial management and control as concerns to:
- identifying, assessing and control of the risk from the management side;
- compliance with laws, regulations and contracts;
- reliability and integrity of financial and operational information;
- effectiveness, efficiency and economy of operations;
- safeguarding of assets and information;
- performance of the tasks and achieving the objectives;
With reaching that goal internal audit contributes improving the Ministry of Finance work and ensures help in achieving its present and future goals.
Selection of audit engagements
The main functions of the Directorate are carrying out internal audit to all structures, programs, activities and processes at the Ministry, including the second level spending units under the Minister of Finance. Leading role in establishing which units will be audited includes the evaluation of risk, the results of previous audits. Each structural unit defined as a high risky is included in the annual plan for the relevant year. Internal Audit Directorate conducts approximately 20-30 audits annually.
Mutual expectations of the internal audit implementation
Although unannounced audits are initiated where appropriate, typically a representative of the Internal Audit Directorate will schedule a meeting with the management of the structural unit which will be audited to discuss the planned objectives, duration and scope of the audit. At this initial meeting, the management has the opportunity to discuss any questions about the audit, to identify any issues or areas of special concern that would like the audit to address, and to determine how can the audit process be facilitated. An audit engagement, which continues at an average between 20 and 40 working days, is an opportunity to receive an independent appraisal of the effectiveness and efficiency of the structural unit's administrative activities. A typical audit has several stages, including preliminary research; data collection (some by interview and questionnaire), analysis, and review; an exit conference; and preparation and distribution of an audit report. Control weaknesses identified during the audit will be noted in the audit report, and a follow-up review will subsequently be performed to determine whether corrective action has been taken.
Reporting of the audit findings
At the conclusion of the audit the management of the audited unit is provided with a draft of the audit report which contains the results of the implemented audit. Additional explanations and information or notes on the findings, conclusions and recommendations may be given within 5 business days from the receipt of the preliminary report. The final report is prepared within 10 business days from the concluding meeting and the submission of the preliminary report and it is addressed to the direct head/s of the audited unit. A summary of the final report is distributed to the Minister of Finance and the line Deputy Minister.
At reasonable period of time the Director of the Internal Audit Directorate plans follow up on the fulfilment of the given recommendations and improvement of the internal control in the relevant structural units.
Nature and importance of the internal control
Internal control is a process in which all employees of the Ministry participate. It has to be designed in a way to provide reasonable assurance that the Ministry:
- manages its resources effectively;
- achieves its goals in effective and efficient way;
- owns reliable financial-accounting system;
- follows applicable laws in the relevant areas.
Internal control is intended to:
- prevent or lessen the risk of errors or irregularities;
- identify problems;
- ensure that corrective action is taken.
Some examples of internal controls
Examples of common internal controls include:
- Procedures for allowance, approvement and authorization
- The Management should initiate the appropriate policies and procedures for allowance, approvement and authorization taking to account the following:
- The procedures for allowance refer to taking the decision by the authorized employee (head of structural units or other authorized people) which results in certain consequences for the organization. These procedures should be written according to the statute, organizational structure and the management of the organization (a privately-owned or collective leadership). The allowance means confirmation (certification) of transactions, data or documents for closing or validating processes, activities, suggestions and/or certain consequences. The allowance and approvement are performed by authorized employees only. The authorization means that the operations are performed only by these bodies who are operating in the framework of their authority. The process of authorization requires employees to operate according to the orders and in the borders established by the management or the law.
- Segregation of duties
- To guarantee effective checks and balance, the responsibilities should be divided so that no one employee has more than one responsibilities for authorizing, execution, accounting and control.
- Double signatures’system
- Double signatures’system gives assurance that undertaking obligation/ ordering payment are done by authorized people and the financial and budgetary discipline is observed.
- Ex-ante control
- Ex-ante control is a preventive control activity which requires before taking/completing the relevant decisions/actions they to be compared with the applicable law with a view to its observance.
- Procedures for complete, correct, accurate and in time accounting of all operations
- These procedures should be established by the management and developed in compliance with the Law for accounting, individual accountant ledger, Accounting standards and s.o., which aim to put down in the accounting document each operation in a certain moment, with a certain volume and mandatory requisites to allow taking the right decision.
- Procedures for monitoring and self-assessment
- The management should establish monitoring procedures as a part of the operative control. The procedures for monitoring on the work and its performance are fulfilled daily by the direct heads. The assigning of the tasks by the these employees who monitor the work don’t lessen their own responsibilities. They should give the other employees the needed instructions and advices to ensure understanding and non-admission of mistakes and abuses in the process of carrying out their duties and that assigned tasks are performed correctly.
To conduct a self-assessment of internal control in your organization/unit you can answer to this exemplary questionnaire for self-assessment: