1. ESTABLISHMENT AND DEVELOPMENT OF THE PIFC SYSTEM IN BOSNIA AND HERZEGOVINA Fatima Obhođaš Assistant Minister THE CENTRAL HARMONISATION UNIT FEDERAL MINISTRY OF FINANCE (CHU FMoF)

2. The Basis for PIFC Establishment and Development in Bosnia and Herzegovina The Stabilisation and Association Agreement (signed in 2008, entered into force on 1 June 2015)  Bosnia and Herzegovina signed the document named the Stabilisation and Association Agreement between the European Communities and their Member States, on the one hand, and Bosnia and Herzegovina, on the other  TITLE VIII – Cooperation policies, Article 90 Audit and Financial Control Cooperation

3. Internal Audit in Bosnia and Herzegovina Based on the Stabilisation and Association Agreement, three internal audit acts have been adopted:  The internal audit domain is regulated by the Act on Internal Audit of Bosnia and Herzegovina Institutions on the institution level in Bosnia and Herzegovina;  On the Federation level, the Act on Public Sector Internal Audit in the Federation of Bosnia and Herzegovina has been adopted; and  On the Republika Srpska level, the internal audit domain is regulated by the Act on Public Sector Internal Audit in Republika Srpska;  On the Bosnia and Herzegovina level, amendments to the Act on Internal Audit have been adopted, while draft amendments to this Act are being discussed in the Parliament for the Federation.

4. Internal Audit in Bosnia and Herzegovina Based on the acts on public sector internal audit that have been adopted, three CHUs have been formed, and the heads of the three central harmonisation units are members of the Coordination Board of the CHUs, who adopt framework legislation and subordinate legislation in the field of internal audit and financial management and control, as well as further develop them within the entities.

5. Subordinate Legislation Regarding Internal Audit 1. The Public Sector Internal Audit Methodology (the experience from PEMPAL workshops was used) 2. Ordinance on the Criteria for the Establishment of Public Sector Internal Audit Units 3. Ordinance on the Requirements for Public Sector Internal Auditing (with the programme for internal auditor exam sitting agreed upon) 4. Code of Ethics/Code of Professional Conduct for Internal Auditors 5. Standards for the Professional Practice of Internal Auditing with explanations 6. The Risk Assessment and Public Sector Internal Audit Planning Guide (materials from PEMPAL workshops) From 2008 up until today, the following pieces of subordinate legislation have been adopted on the proposal of CHU, and with the support of the IPA projects:

6. - on the Bosnia and Hercegovina level, provisions regarding FMC were adopted in 2012 with the Act on Bosnia and Herzegovina Institution Financing; - in the Federation, a Bill on Financial Management and Control (FMC) for the Federation public sector has been produced; - In Republika Srpska, a Draft Bill on the Public Internal Financial Control System in Republika Srpska has been produced and referred to the adoption procedure; The adoption of these Acts has been followed by the adoption of subordinate legislation regarding financial management and control. Financial Management and Control

7. The PIFC Strategy In 2015, a new Strategy for the Development of Public Internal Financial Control in the Federation (the PIFC Strategy) was adopted for the period 2015-2018 and published on the web- portal of the Federal Ministry of Finance — CHU. In 2015, the Council of Ministers of Bosnia and Herzegovina gave the Ministry of Finance and Treasury and its CHU the task of preparing a proposal for the new PIFC development strategy in cooperation with the European Commission. The Strategy for PIFC Establishment and Development in Republika Srpska has been in force since 2010. The implementation of the PIFC Strategy will introduce a new approach to public financial management by making budget processes performance-oriented.

8. In cooperation with the European Union project “Strengthening Public Financial Management in BiH” (the SPFM Project), the CHUs in Bosnia and Herzegovina organized training sessions in the field of practical application of the adopted subordinate legislation regarding internal auditing, and these sessions were attended by employees from the field of internal auditing. The focus of the training sessions was on risk assessment and internal audit planning, quality management, performance audit, etc. With the aim of acquiring practical experience, the SPFM project also included on-the-job training for auditors during 14 pilot audits, including one IT pilot audit (realised together with the FMoF), and three performance audits. During 2015, employee training for the field of FMC took place on all government levels of Bosnia and Herzegovina within the frame of the SPFM Project.

9. - Organisation and implementation of the certification of public sector internal auditors in the Federation; - Drafting an ordinance on assessment/verification of the quality of internal audit work; - Work on the agreement regulating the relationship of internal audit, financial inspection and external audit. Planned Activities of FMoF CHU

10. THANK YOU FOR YOUR ATTENTION! THE CENTRAL HARMONISATION UNIT Mehmeda Spahe 5 71 000 Sarajevo 033 253 410 http://www.fmf.gov.ba