RIFIX IACOP Working Group
Concept Paper
Svilena Simeonova
Prague, March 2016
Purposes of the working
group
 To offer the "right model" of the distribution of the roles and
places of Internal Audit, Financial Inspection and External
Audit in public sector;
 To identify the ways for interaction between them;
 To offer an optimal strategy for modernization of the Financial
Inspection in connection with the introduction of PIFC system
in relant country;
 To achiev common understanding on the metter;
 To improve the knowledge of the IACOP members about the
functions of the three institutios in different countries;
 To offer a mechanisms/strategies for introduction and
implementation of the RIFIX products in the Member States
RIFIX outputs:
√ Concept paper on cooperation among public sector
audit and financial inspection entities
√ Template for Cooperation agreement between Internal
Audit, Financial inspection and External audit
√ Mechanisms for implementation of the rifix documents
in practice in the participating states
• Leadership of the Working Group – Sergij, Makar, Svilena
• Role of the external experts – Richard, Manfred, Diana
RIFIX activities
• St. Petersburg, Russia, September 2013
The RIFIX survey
• Moscow, Russia, May 2014
Definitions, common terminology, fundamentals of the group,
Development of the Concept Note for RIFIX
•
Astana, Kazakhstan, September 2014
Revision of the draft Concept note RIFIX
•
Erevan, Armenia, 2015
RIFIX draft Cooperation Agreement template
Application issues of the RIFIX Concept Note in countries
-
RIFIX results
• Common terminology
• Knowledge about good practices
• Common understanding about the differensis and
symilarities
• Common understanding about the benefit of the good
partnership between IA,EA and FI
• Draft Concept Paper
SIMILARITIES between
financial inspection and
external audit
SIMILARITIES:
 From outside (External)
 Ex post activities
 Covers all public sector
 Sanctioning power (where exists)
 Mandate to fight fraud and corruption
DIFFERENCES between
financial inspection and
external audit
DIFFERENCES FINANCIAL INSPECTION
EXTERNAL AUDIT
Position in the
state structures
and
reporting line
Subordinated to the Minister of
Finance.
Reports to the Minister of Finance
and to the Government
Reports to the Parliament and to the public
Initiation of the
activity
Acts on complaints and requests
from citizens and other institutions
Works according to the Annual plan and requests
from the Parliament
Aims and scope
of work
Focus on legality
Legality, but also Efficiency, Effectiveness and
Economy. Also verification of the financial
statements of the budget organizations
DIFFERENCES between financial
inspection and external audit 2
DIFFERENCES
FINANCIAL
INSPECTION
EXTERNAL AUDIT
Approach
Investigations of particular
cases of irregularities, legal
violations, fraud and
corruption - inspection
Analysis of implementation of the
government policy as intended
Types of checks
Inspection: legality check
Financial, compliance and performance
audits
Consequences of
the activities
Imposing sanctions, referring
cases of fraud to the
prosecutor's office, giving
mandatory instructions
Recommendations for improvement
Usually not (with exceptions) sanctions
SIMILARITIES:
SIMILARITIES between
financial inspection and internal
audit
SSSSS
SIMILARITIES:
 Generally ex post checks
 Independence
 Full access to information
 Competence to give recommendations as a result of engagement performed
DIFFERENCES between financial
inspection and internal audit
DIFFERENCES:
FINANCIAL
INSPECTION
INTERNAL AUDIT
Position and reporting
Outside of the organization
Reports to the Minister of Finance
and the Government
Inside of the organization
Report to the Head of the
organization and to Audit Committee
Initiation/basis for the
activities
Complaints and requests from
citizens and other institutions
Risk-based annual plan
Aims
Detecting violations and
corrective actions
Assessing Internal Control system
and recommending improvements
Assurance and consulting function
Scope
Mostly financial transactions and
procedures: legality
All activities and aspects of the
Internal Control System; legality and
performance
DIFFERENCES between financial
inspection and internal audit 2
DIFFERENCES:
FINANCIAL
INSPECTION
INTERNAL AUDIT
Perspective
Focused on individuals,
conclusions on legal compliance
Focused on the system
Direction of the results To the past - to find the facts
towards financial and budgetary
discipline
To the future - to help management
to improve the system
Responsibilities in
dedicating and
investigating fraud
and corruption
Detection, investigation,
sanctioning
Prevention, detection of indicators
Methodological
ground
No generally accepted standards
International standards of the IIA
RIFIX CONCEPT PAPER
• The concept paper explores the need for Internal Audit to cooperate
with other public sector organisations in the particular circumstances
that exist in many PEMPAL member countries.
• IACOP recognizes that there are formal and informal ways of promoting
cooperation. These can range from relatively simple coordination of
activities to more active ways of working together. This spectrum of
cooperation means that audit and inspection functions may cooperate
effectively at different levels of formality and effort.
• It may be helpful for cooperation to be formally recognized in an
agreement between one or more institutions. Annex A explores the
options for developing a cooperation agreement providing some
suggested wording that could be used in developing an agreement at a
country level.
RIFIX CONCEPT PAPER
The Concept paper:
• introduces the three functions and thier institutional
arrangement
• Descripes :
 the key features of the role and work, differnses and
similarities
 Main areas of potential overlap of the functions
 The benefits and risks of cooperation
 Cooperation framework – types and principles
RIFIX
Thank you!