1. I. Annual audit plan and summary audit plan II. Annual audit report and annual summary audit report III. Information Supporting System of Internal Audit Activities Bernadett Gróf Ministry of Finance

2. I. Annual planning legal background: - Article 124 (2) u) of Act XXXVIII of 1992 on Public Finance (hereinafter Public Finance Act ) (PFA.) - Article 18 – 22 of Government Decree No. 193/2003 (XI. 26.) on Internal Audit of Public Budgetary Organizations (hereinafter Internal Audit Decree) (IAD.) in accordance with the strategic audit plan based on priorities defined by risk analysis ad hoc audits could be inserted and performed

3. The annual audit plan includes: analyses serving as a basis for the audit plan, especially risk analysis; the subject and scope of the planned audits; the aim of the audit tasks; the period to be audited; the audit resources needed; types and methods of audits; the schedule of the audits; identification data of the audited organisation or units.

4. Annual audit plan. Subordinated PBO Head of the IA. unit Head of the IA. unit Head of the IA. unit Head of the PBO managing the chapter Summary audit plan Annual audit plan Minister of Finance Annual audit plan Subordinated PBO Head of the IA. unit Subordinated PBO Head of the IA. unit

5. Guideline for planning review in every year practical assictance complete and refine the regulations of the IAD. annual audit plan has three annexes

6. Analysis by CHU based on annual audit plans and summary audit plans practical utilisation adequancy of the IAD. overlap of audits statistical aims previous observations

7. II. Annual audit report and annual summary audit report legal background: - Article 124 (2) u) of Act XXXVIII of 1992 on Public Finance (hereinafter Act on Public Finance) - Article 31 of Government Decree No. 193/2003 (XI. 26.) on Internal Audit of Public Budgetary Organizations (hereinafter Internal Audit Decree) (IAD.)

8. Annual audit report. Head of the PBO Head of the subordinated PBO Head of the PBO Head of the PBO managing the chapter Annual summary audit report of the PBO’s in the chapter Annual audit report Minister of Finance (CHU) Annual audit report of the ministry Government Head of the subordinated PBO Head of the subordinated PBO

9. The annual audit report or the annual summary audit report shall contain: a) report on the internal audit activity performed in the respective year: aa) the scope of activities comprised in the audit plan, the reasons for deviating from the plan, and the justification of the ad-hoc audits; ab) the quality, personal and material conditions of the audits as well as the factors promoting or hindering the audit activity based on self-assessment ; ac) the main findings of the audits; ad) number and short summary of cases reported of fraud and/or serious irregularities; ae) the main recommendations made in order to improve legality/regularity, economy, efficiency and effectiveness of the FM/C system; b) report on the realization of the audit findings and recommendations: ba) the implementation of audit recommendations and the realisation of action plans based on Paragraph (3) of Article 29/A. of IAD.; bb) proposals on the development of the internal audit activity.

10. Guideline for reporting explain and specify the provisions of IAD. promote practical utilisation review in every year publish on the website of MoF www.pm.gov.hu

11. Content and formal requirements of the report executive summary A. Description of the activities carried out by the internal audit (Article 31 (3) a) of the Internal Audit Decree) Aa) Evaluation of the completion of the tasks laid down in the audit plan, reason for any deviation from the plan and justification of audits in addition to those contained in the plan (Article 31 (3) aa) of the IAD.) Ab) Human and material resources available for the audits, factors facilitating and those hindering the activity (Article 31 (3) ab) of the IAD.) Ac) Key findings of the audits (Article 31 (3) ac) of the IAD.)

12. Content and formal requirements of the report Ad) the number and brief summaries of reports on suspicion of acts, failures or shortcomings identified in the course of the audits giving rise to the starting of criminal, infringement, liability or disciplinary proceedings (Article 31 (3) ad) of the Internal Audit Decree) Ae) Main proposals made to improve the regularity, economy, efficiency and effectiveness of the financial management and control system integrated (Article 31 (3) ae) of the Internal Audit Decree) B. Utilisation of the findings and proposals based on the internal audit Ba) Report on the implementation of the action plans and lessons drawn from the utilisation of the audit findings and recommendations (Article 31 (3) ba) of the Internal Audit Decree) Bb) Proposals for improving the internal audit activities (Article 31 (3) bb) of the Internal Audit Decree)

13. III. Information Supporting System of Internal Audit Activities Transition facility Improving Public Internal Financial Control (PIFC) system, Audit Mechanisms and Skills project the wider objective of the project 5 components Component 4: IT application for public sector internal auditing the main purpose of the project useage of the software

14. III. Information Supporting System of Internal Audit Activities The main purpose of the project is to improve the efficient functioning of the internal audit activity of the public sector organisations with the help of the establishment of IT support in the following three areas: to constitute a complete, integrated IT system for supporting public sector internal auditing; to cover planning and scheduling of internal audits, allocation of HR and other resources, creation of electronic working documents and reports and the follow-up of all activities of the internal audit units, serving the exact needs of internal auditors; to support the on-site activities of internal auditors with establishing the interface to a central database server in order to help the performance of internal audit activities by providing internal auditors with adequate information on-the-spot.

15. III. Information Supporting System of Internal Audit Activities The following concrete results are to be achieved: setting up of a database containing the organisational HR issues of the internal audit system; recording of internal audit activities (centralised handling of the worksheets and annexes of the template internal audit manual issued by the CHU of the MoF); forming of the individual working processes of internal auditing (planning, implementation of internal audit, standardised audit report, storage, follow-up of action plans); quality assurance, performance of supervision; performance of the reporting obligation.

16. General principle and expectations of the software Supporting of internal audit activities is the most important general principle of the system. General expectations of the system: handling of documents follow-up of the process registration of the audits entitlement, access

17. General expectations of the system Handling of documents The software will ensure for every organization to be able to store and to reach the general centrally published internal audit manuals and guidelines; help each organizations to store and to separate their own audit documents; use a well-developed system to reorganized the audit documents into different folders; help the users to make quick search among the documents. Follow-up of the process The software will support the process of the audit activity with deadlines and with statuses such as approval or review.

18. General expectations of the system Registration of the audits The software will fulfill the Article 32 of IAD. if the registration of the audits are recorded in the system; ensure registration and follow-up of action plans. Entitlement, access The software will ensure that the audit documents will not be reached by other organizations; make the datas, information and documents to be aviable only for those auditors who participate in the audit; be used by different users with variable roles.

19. Phases and schedule of the project 1. Preparing the concept: August – November 2007 2. Development phase: December 2007 – middle of April 2008 3. Pilot phase: middle of April - May 2008 4. Change over phase: July – October 2008 5. Closing phase: November 2008

20. Thank you for the attention! Questions? Bernadett Gróf Hungarian Ministry of Finance Central Harmonisation Unit Phone: + 36-1-327-9273 Email: pef@pm.gov.hu