What is internal audit?

Internal audit is an independent, objective activity for evaluating information, verifying their accuracy and giving advices in order to contribute in the improvement of the work of the subjects. It helps subjects to accomplish their objectives, by bringing a systematic, discipline approach to evaluate and improve the effectiveness of risk management, control and governance processes.

When did the process for establishing internal audit start?

The process for establishing internal audit in the public sector in the Republic of Macedonia started in 2000 with the formation of the internal audit unit in the Ministry of finance (centralized model). In 2004 started the process of establishment of internal audit units in the subjects from public sector (decentralized model). Because of the need of constant development and support of internal audit in the Republic of Macedonia, in April 2004 in the Ministry of finance was formed the Central Internal Audit Department with two units and in 2006 it was transformed in Public Internal Financial Control Department with four units.

Who performs internal audit?

The performance of the internal audit function shall be done by the organizational units for internal audit in the subjects from public sector.

Where the internal audit should be performed?  

The Internal Audit Unit performs internal audit in:

• the subject of public sector
• individual users,
• all structures
• programs
• activities and processes, including those of users of resources from EU funds, as in
• legal entities and individuals with whom the subject in which the internal audit is performed has a business relationship and who use public funds.

The Internal Audit Unit, in the subject responsible for managing the inter ministerial programs/projects, also coordinates the work of internal audit units of public sector subjects involved in implementing programs/projects.

Where are internal audit units established?

Internal audit unit must be established in the following subjects from the public sector: the Assembly of the Republic of Macedonia, National Bank of Macedonia, General Secretariat of the Government of the Republic of Macedonia, the Judicial Council of the Republic of Macedonia, ministries, Pension and Disability Insurance Fund of Macedonia, Health Insurance Fund of Macedonia, State Roads Agency of Macedonia, Employment Agency of the Republic of Macedonia and the Civil Servants Agency. Also, the internal audit units are compulsory based in all subjects from the public sector, whose average annual budget/financial plan in the last three years exceeds the amount of 50 million denars.

Which entities do not have an obligation for establishing internal audit units?

Subjects from the public sector, whose average annual budget / financial plan in the last three years doesn’t exceed the amount of 50 million denars, don’t have an obligation to establish internal audit units, but the internal audit compulsory organized by engaging in:

• internal auditor/s of internal audit units in other subjects from the public sector, based on an agreement concluded between the two heads of public sector subjects, or
• Auditor/s listed in the registry of certified internal auditors in the Ministry of Finance.

How independence of the internal audit unit is provided?

• Internal Audit Unit is organizationally and functionally independent and directly and solely responsible to the Head of the subjects in the public sector.
• The functional independence of internal audit unit is provided through its organizational independence from other parts of the subject in planning the work, the performance of internal audit and reporting.
• The head of internal audit unit and internal auditors are independent in the performance of internal audit, performing it professionally by using methodology based on international standards for internal auditing, principles and rules of conduct established by the Code of Ethics of the internal auditors as well as guidelines or instructions from the Minister of Finance.
• The head of internal audit unit and internal auditors should not perform tasks of financial management and control and other tasks in the subject do not arise from the internal audit function.
• The head of internal audit unit and internal auditors can not be fired or reassigned to another job for reporting on specific situations or provide specific recommendations.
• Before being taken disciplinary action, reassignment or dismissal of the head of internal audit unit and internal auditors, the head of the subjects in the public sector that is obliged to notify the Central Office for harmonization and to provide necessary documentation.
• Reassignment or dismissal of the head of internal audit unit and internal auditors are implemented after obtaining the consent of written Minister of Finance.

What are the competencies of the head of internal audit unit?

Head of Internal Audit Unit is responsible to inform directly the head of the subject from public sector over all audit issues, in particular:

• regularity, effectiveness and efficiency of execution of the budget /financial plan;
• the regularity and effectiveness of internal financial control, including asset management and
• consistency of accounting reports on the execution of the budget /financial plan with accounting standards.

Head of Internal Audit Unit provides feedback on internal rules and regulations of subjects from the public sector on matters relating to internal financial control and internal audit before these rules and laws come into force.

Head of Internal Audit Unit advises all heads in the subjects from the public sector over issues concerning the risk management.

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