Monitoring Activities byInternal Audit Coordination Board

Ömer DUMAN

Head of Internal Audit Coordination Board

Presentation Plan

Current audit structure in Turkey Change in audit New Public Financial Management and Control

System in Turkey Activities performed in terms of internal audit Current and potential problems and considered

precautions to be taken against them

AUDIT IN TURKEY

AUDIT AUDIT AGENCIES AGENCIES IN TURKEYIN TURKEY

Audit Units Established in

Accordance with the Constitution

Audit Units in Ministries

Audit Units of theAutonomous

Institutions

Change in Audit

Internal Audit nowadays ;

Is an audit system;– implemented by international institutions such as EU

Comission, IMF, World Bank, United Nations, NATO, OECD, European Central Bank

– and also recommended as reference for the member countries.

Internal audit has been introduced to Turkish system with Public Financial Management and Control Law No. 5018 (published on 24.12.2003)

New Public Financial Management and Control System in Turkey

Turkey has undergone an important change on public financial management and control in recent years.

The most important component of this change is the abolition of General Accounting Law No. 1050 which had been in force since 1927 and the entry into force of Public Financial Management and Control Law No. 5018.

What does the New Public Financial Management and Control System introduce?

With the Law No. 5018; Our public financial management and control system has been restructured again in accordance with

– International standards and– European Union practices.

Law No. 5018 is based on sound financial management principles such as;– fiscal transparency,– accountability,– effective, economic and efficient utilization of public resources.

With Law No. 5018, contemporary financial management and control practices have been included in our system such as;

– Strategic planning,– Performance based budgeting,– Internal control and– Internal audit.

Internal Audit in Law No. 5018

in Law No. 5018, Internal Audit is described in accordance with the international internal audit definition.

Internal Audit; is performed by the certificated internal auditors, is performed in accordance with generally accepted internal audit

standards, is performed according to risk based audit plans and programs

prepared by the Internal Audit Unit and endorsed by the head of public administrations,

is performed with a systematic and disciplined approach, is performed in accordance with functional independency principle, covers all financial and non-financial transactions.

Control and Audit Structure Stipulated in Law No. 5018

Ministry of Finance

Internal Audit Internal Control Central Harmonization Central Harmonization

Unit Unit

Public Administrations

Internal Audit Unit Financial Services Unit

Internal Audit Environment and Outsiders

INTERNAL AUDIT ENVIRONMENT AS PUBLIC ADMINISTRATIONS

MunicipalityEconomicEnterprise

State EconomicEnterprise

Regulatory andSupervisory Agencies

Activities Performed in terms of Internal Audit-1

Internal Audit by-laws have been published:– By-Law on the Working Procedures and Principles of Internal Audit Coordination

Board (October 2005)– By-Law on The Selection, Training and Certification of Internal Auditor

Candidates (October 2005)– By-Law on the Working Procedures and Principles Of Internal Auditors (July

2006) Communiques on Internal Auditor Appointment Procedure has been

published (08.09.2006 and 30.12.2006). For the harmonization of financial management and control system with

the international standards and EU norms; a Twinning Project has been performed between the Turkish and French Ministries of Finance (March 2005-December 2006)

For Internal Audit use; “Computer Assisted Audit Tools and Technics” (CAAT) software has tendered. It is almost done. (January 2006)

802 internal auditors from 210 public institutions are trained.

Activities Performed in terms of Internal Audit-2

Internal control and audit guide for top managers, Internal audit standards, Internal auditor code of ethics, Internal audit charter, Internal audit reporting standards, Principles and procedures on scoring of internal audit certificates, Principles and procedures on common working procedures of internal auditors, Internal audit plan-program preparation guide, Risk assessment guide, Internal audit strategy paper (2008-2010), Internal audit manual

have been published.

Internal audit quality assurance manual, IT auditing guide for internal auditors

have been drafted.

Problems encountered in Internal Audit

Internal auditor candidates’ old habits– Search for error and guilty

Administration’s inflexible point of view on auditing – Concealing the problems– Staying distant with the auditor and hands-off communication – Not to be in favor of auditing activity. (To be against the idea of

being audited)

Planned precautions to be taken against these barriers

Large-scale informing activity for heads of public administrations, managers and the personnel of the audited administrations,

Firm and sound establishment of the links between internal audit- external audit as well as inspection,

Collaboration with related institutions and organizations.

Conclusion

If the internal audit system is applied successfully:– Managerial responsibility principle introduced by Law No. 5018

shall be realized,– Assurance on internal control shall be provided to the Heads of

public administrations – Value shall be added to corporate activities,– Reliable information for public opinion and persons concerned

shall be provided, – Harmonization to international standards shall be ensured,– Efficiency and effectiveness of public institution’s activities shall

be increased.

Related Links for Internal Audit In Public(in Turkey)

www.idkk.gov.tr www.bumko.gov.tr www.kidder.org.tr www.icdenetim.org www.denetimnet.net

THANKS