1. Monitoring Activities by Internal Audit Coordination Board Ömer DUMAN Head of Internal Audit Coordination Board

2. Presentation Plan Current audit structure in Turkey Change in audit New Public Financial Management and Control System in Turkey Activities performed in terms of internal audit Current and potential problems and considered precautions to be taken against them

3. AUDIT IN TURKEYAUDITAGENCIES IN TURKEY Audit Units Established in Accordance with the Constitution Audit Units in Ministries Audit Units of the Autonomous Institutions

4. Change in Audit Internal Audit nowadays ; Is an audit system; – implemented by international institutions such as EU Comission, IMF, World Bank, United Nations, NATO, OECD, European Central Bank – and also recommended as reference for the member countries. Internal audit has been introduced to Turkish system with Public Financial Management and Control Law No. 5018 (published on 24.12.2003)

5. New Public Financial Management and Control System in Turkey Turkey has undergone an important change on public financial management and control in recent years. The most important component of this change is the abolition of General Accounting Law No. 1050 which had been in force since 1927 and the entry into force of Public Financial Management and Control Law No. 5018.

6. What does the New Public Financial Management and Control System introduce? With the Law No. 5018; Our public financial management and control system has been restructured again in accordance with – International standards and – European Union practices. Law No. 5018 is based on sound financial management principles such as; – fiscal transparency, – accountability, – effective, economic and efficient utilization of public resources. With Law No. 5018, contemporary financial management and control practices have been included in our system such as; – Strategic planning, – Performance based budgeting, – Internal control and – Internal audit.

7. Internal Audit in Law No. 5018 in Law No. 5018, Internal Audit is described in accordance with the international internal audit definition. Internal Audit; is performed by the certificated internal auditors, is performed in accordance with generally accepted internal audit standards, is performed according to risk based audit plans and programs prepared by the Internal Audit Unit and endorsed by the head of public administrations, is performed with a systematic and disciplined approach, is performed in accordance with functional independency principle, covers all financial and non-financial transactions.

8. Control and Audit Structure Stipulated in Law No. 5018 Ministry of Finance Internal Audit Internal Control Central Harmonization Central HarmonizationUnit Public Administrations Internal Audit Unit Financial Services Unit

9. Internal Audit Environment and Outsiders INTERNAL AUDIT ENVIRONMENT AS PUBLIC ADMINISTRATIONS Municipality Economic Enterprise State Economic Enterprise Regulatory and Supervisory Agencies

10. Activities Performed in terms of Internal Audit-1 Internal Audit by-laws have been published: – By-Law on the Working Procedures and Principles of Internal Audit Coordination Board (October 2005) – By-Law on The Selection, Training and Certification of Internal Auditor Candidates (October 2005) – By-Law on the Working Procedures and Principles Of Internal Auditors (July 2006) Communiques on Internal Auditor Appointment Procedure has been published (08.09.2006 and 30.12.2006). For the harmonization of financial management and control system with the international standards and EU norms; a Twinning Project has been performed between the Turkish and French Ministries of Finance (March 2005-December 2006) For Internal Audit use; “Computer Assisted Audit Tools and Technics” (CAAT) software has tendered. It is almost done. (January 2006) 802 internal auditors from 210 public institutions are trained.

11. Activities Performed in terms of Internal Audit-2 Internal control and audit guide for top managers, Internal audit standards, Internal auditor code of ethics, Internal audit charter, Internal audit reporting standards, Principles and procedures on scoring of internal audit certificates, Principles and procedures on common working procedures of internal auditors, Internal audit plan-program preparation guide, Risk assessment guide, Internal audit strategy paper (2008-2010), Internal audit manual have been published. Internal audit quality assurance manual, IT auditing guide for internal auditors have been drafted.

12. Problems encountered in Internal Audit Internal auditor candidates’ old habits – Search for error and guilty Administration’s inflexible point of view on auditing – Concealing the problems – Staying distant with the auditor and hands-off communication – Not to be in favor of auditing activity. (To be against the idea of being audited)

13. Planned precautions to be taken against these barriers Large-scale informing activity for heads of public administrations, managers and the personnel of the audited administrations, Firm and sound establishment of the links between internal audit- external audit as well as inspection, Collaboration with related institutions and organizations.

14. Conclusion If the internal audit system is applied successfully: – Managerial responsibility principle introduced by Law No. 5018 shall be realized, – Assurance on internal control shall be provided to the Heads of public administrations – Value shall be added to corporate activities, – Reliable information for public opinion and persons concerned shall be provided, – Harmonization to international standards shall be ensured, – Efficiency and effectiveness of public institution’s activities shall be increased.

15. Related Links for Internal Audit In Public (in Turkey) www.idkk.gov.tr www.bumko.gov.tr www.kidder.org.tr www.icdenetim.org www.denetimnet.net

16. THANKS