PEMPAL 2 nd Internal auditors Community of Practice

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PEM-PAL - 2 nd Internal auditors’ Community of Practice Workshop Chisinau, Moldova, June 20

PEM-PAL - 2 nd Internal auditors’ Community of Practice Workshop Chisinau, Moldova, June 20 -22 2007 Training and certification for CPIA (Certified Public sector Internal Auditors) in Croatia Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Contents Strategy and legal framework Overview Obligatory modules Optional modules Continuous improvement 2 Republic

Contents Strategy and legal framework Overview Obligatory modules Optional modules Continuous improvement 2 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

IIA standards 1230 – Continuing Professional Development Internal auditors should enhance their knowledge, skills,

IIA standards 1230 – Continuing Professional Development Internal auditors should enhance their knowledge, skills, and other competencies through continuing professional development. 3 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Decree on organisation of SABs Rulebook for job description of SABs Charter of internal

Decree on organisation of SABs Rulebook for job description of SABs Charter of internal auditors Working procedures of IAD Strategic/annual plan Internal audit programmes/guidelines Internal audit reports/Follow up 4 CHU Code of ethics Internal audit standards Rulebook for budget users IA Internal audit manual SABs PIFC Law PIFC policy State Croatia - Legal framework for Internal audit Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Central Harmonization Unit Two departments Internal audit functions: Coordination of the development of IA

Central Harmonization Unit Two departments Internal audit functions: Coordination of the development of IA Drafting rulebooks, documents, guidelines Training for the IA Providing on job assistance in the implementation of the written regulations Annual report on IA 5 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

IA results 2003 - 06/2006 CHU established by the Budget Law CARDS 2002 project

IA results 2003 - 06/2006 CHU established by the Budget Law CARDS 2002 project started 6 PIFC Law Cooperation Agreement with the European Commission – DG Budget BU’s IA Rulebook Development Strategy of PIFC New – Development Strategy of PIFC and other documents New Rulebook on IA of budget users CARDS 2004 started Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Strengths of the system CHU support Trainers – internal auditors- CPIA Paid for training

Strengths of the system CHU support Trainers – internal auditors- CPIA Paid for training Responsible for quality Team leader for each module Training committee Objective: To monitor and develop the training system Members: All modules team leaders 7 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Strengths of the system Workshop aproach: Presentation Open discussion Exercises form real life in

Strengths of the system Workshop aproach: Presentation Open discussion Exercises form real life in Croatia Procedure defined and accepted: Program for Training and Certification of Internal Auditors in Public Sector (2005) Examination Instruction for the Certification of Internal Auditors in the Public Sector (2005) 8 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Recent developments Change in the program to adress the recent developments and needs of

Recent developments Change in the program to adress the recent developments and needs of the internal auditors Target: CIA, CGAP tailored for the Croatian enviroment EU accepted CPIA 9 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Training and standard audit cycle 10 Republic of Croatia - Ministry of Finance Central

Training and standard audit cycle 10 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Prerequisites for entering the IA profession (Club) Rulebook for IA of the budget users:

Prerequisites for entering the IA profession (Club) Rulebook for IA of the budget users: Bachelors degree (4 years university) – no specific area of specialization State exam Declaration of the head For being the internal auditor in the institution For passing the education scheme and obtaining the certificate –> professional authorization (Croatian: stručno ovlaštenje”) 11 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Certification scheme of Public Internal Auditors – Obligatory modules 1. Module 7. Module 5.

Certification scheme of Public Internal Auditors – Obligatory modules 1. Module 7. Module 5. Module 3. Module 4. Module 6. Module Practical experience Certification 2. Module Approximately 12 months Evaluation for the Diploma level 1. Evaluation for the Diploma level 2. The European Union’s CARDS 2002 programme for Croatia: “Development of Public Internal Financial Control and Internal Audit” 12 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Obligatory modules Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal

Obligatory modules Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Module 1. - Best Practice Government Internal Auditing Introduction in the certification scheme Development

Module 1. - Best Practice Government Internal Auditing Introduction in the certification scheme Development of internal audit Corporate governance, risks, controls IA standards, Code of ethics Introduction in audit cycle Management of IA unit 14 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Module 2. - Applied Auditing Planning of audit assignment Determining and recording the system

Module 2. - Applied Auditing Planning of audit assignment Determining and recording the system Assessing the Controls Testing the application and effectiveness of controls Evaluating findings Reporting and follow-up Audit file 15 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Module 3. - Communication and interpersonal skills Communication Interviewing Negotiation skills Interpersonal relationships Presentation

Module 3. - Communication and interpersonal skills Communication Interviewing Negotiation skills Interpersonal relationships Presentation skills and reporting 16 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Module 4. - Governance, Risk Management and Control Corporate governance Role of IA Development

Module 4. - Governance, Risk Management and Control Corporate governance Role of IA Development Organizations and their environment Risk management Nature, cycle Internal audit and risks Internal control PIFC, Self-assessment 17 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Module 5. - Advanced Auditing Management of IA unit Consultancy Auditor and irregularities Auditing

Module 5. - Advanced Auditing Management of IA unit Consultancy Auditor and irregularities Auditing IT Audit and EU Value added auditing Audit techniques 18 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Module 6. - Accounting auditing Accounting environment, financial reports, key accounting standards Accounting management

Module 6. - Accounting auditing Accounting environment, financial reports, key accounting standards Accounting management Assets, cost accounting, creditors, financial indicators Public sector accounting Using accounting in auditing 19 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Module 7. - Auditing IT and using IT for auditing Introduction in IT Basic

Module 7. - Auditing IT and using IT for auditing Introduction in IT Basic information and risks in: Hardware and risks Software and risks Network, staff Security Using IT in auditing Databases, queries 20 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Certificate requirements Presence on all modules (M 1 ->M 7) Diploma level 1. (after

Certificate requirements Presence on all modules (M 1 ->M 7) Diploma level 1. (after M 3) Essay + presentation Diploma level 2. (after M 7) Exam (50 questions form all modules – 70%) Two practical audits (with mentor – certified internal auditor) 21 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Optional modules Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal

Optional modules Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Module 8. – EU funds auditing EU institutions, laws, regulations Performing EU audit Audit

Module 8. – EU funds auditing EU institutions, laws, regulations Performing EU audit Audit trail, planning the audit, risks, ICQ-s, control selfassessment Reporting, audit files and working papers Follow up Managing auditing of pre-accession funds Risk assessment and planning IA Capacity Organization of work Audit file 23 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Module 9. – Risk assessment and strategic planning Identification of missions, submissions Pondering of

Module 9. – Risk assessment and strategic planning Identification of missions, submissions Pondering of submissions Identification of processes and activities and risks linked with them Risk assessment Prioritization of potential audits Internal audit strategy and annual plan 24 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Seminars, conferences, … Annual seminars of IA in the public sector organized by CHU:

Seminars, conferences, … Annual seminars of IA in the public sector organized by CHU: 2005, 2006, 2007 planned Organized by other institutions: CEF – Seminar on internal audit EU - CHU conferences IIA conferences … 25 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Internal auditors network A strong emphasis was put by the CARDS project and taken

Internal auditors network A strong emphasis was put by the CARDS project and taken over by the CHU for the creation and the maintenance of network 26 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Training cycle vs. IA process M 4 Seminars, conferences, etc. M 1 M 2

Training cycle vs. IA process M 4 Seminars, conferences, etc. M 1 M 2 M 5 M 9 M 6 M 8 M 3 27 M 7 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Conclusion Give a man a fish, and you feed him for a day. Teach

Conclusion Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime. – (Chinese proverb) 28 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

Additional info CHU: http: //www. mfin. hr/str/100/#509 CARDS project: http: //pifc. mfin. hr 29

Additional info CHU: http: //www. mfin. hr/str/100/#509 CARDS project: http: //pifc. mfin. hr 29 Republic of Croatia - Ministry of Finance Central Harmonisation Unit & Internal audit Division

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