Public funds, under the "magnifying glass" of European standards - Manual/ How internal auditing will be conducted and how violations are categorized
Albania will apply an international standard for internal auditing of public institutions with the aim of building a more efficient, transparent and accountable public administration.
The Internal Audit Manual for the Public Sector has been drafted by the Ministry of Finance in accordance with European legislation, as an obligation for membership, to help internal auditors perform their work professionally and in accordance with global standards and international best professional practices.
Internal audit is an independent, objective assurance and consulting service designed to add value and improve the operations of a public entity. It helps an organization meet its objectives by bringing a systematic, disciplined approach to assessing and improving the effectiveness of governance, risk management and control processes.
Internal audit in the public sector plays a vital role in: Improving public services for citizens; Protecting public funds from mismanagement; Increasing transparency and accountability; Strengthening internal control systems.
This manual serves as a compass for all internal auditors in public entities and includes unified practices.
According to the document, the audit is conducted by dividing areas into three categories. High-risk areas are audited no less than once a year, medium-risk areas once every two years, and low-risk areas once every three years.
To develop engagement findings, internal auditors compare the established criteria to the existing condition in the activity under review. If there is a difference between the two, internal auditors are asked to investigate further for possible findings. The assessment should identify: The root cause of the difference/variation/deviation, which is often related to a control deficiency and is a direct reason for the condition to exist. To the extent possible, internal auditors should determine the root cause, which is an underlying or deeper issue that contributed to that condition. At its simplest, determining the root cause involves asking a series of questions about why the difference exists.
Audit findings will be ranked by importance. Thus, for high-importance findings such as serious violations of the legal framework or procedures; Risk of significant financial losses; Significant control deficiencies; Violation of operational objectives, institutions will be required to take corrective action within 1 to 3 months.
Findings of medium importance such as incomplete procedures, risks of non-compliance or ineffective implementation of procedures are classified for corrective action or implementation within a period of 3 to 9 months. While findings of low importance such as administrative remarks, non-formalized rules can be documented for follow-up and for corrective action or implementation within a period of up to one year.
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