Legal Framework and Structure

Public Internal Financial Control Strategy (11.11.2010) focuses on three activities

Institution of a Centralized Harmonization Unit (CHU), responsible for implementation of a public internal financial control system in compliance with international standards

Internal auditFinancial management and control based on

managerial accountability

CHU2010 – CHU was set up – Directorate for

Methodology of Public Internal Financial Control and Public Procurement within the Ministry of Finance of Armenia; the Directorate is responsible for coordination and monitoring of implementation of financial management, control and internal audit mechanisms developed in conformity with the international standards.

Legal Framework

Reporting line before the RA Law On Internal Audit was passed

Reporting line after the RA Law On Internal Audit was passed

Legal framework (1)RA Law On Internal Audit – 22.12.2010Professional standards of internal audit and rules of

conduct of internal auditors - 11.08.2011Methodological instructions on application of professional

standards of internal audit in Armenia - 08.12.2011 Instructions for development of internal audit guidelines

and Regulations (կանոնակարգ) of internal audit service in public sector of Armenia - 17.02.2012

Templates for internal audit units, internal auditors and regulations (կանոնակարգ) for internal audit units and how to keep them - 28.12.2011

Major requirements to Internal Audit Unit and Internal Audit Committee - 23.02.2012

Legal Framework (2)Regulations for definition of internal audit space and

functions in public sector entities -30.11.2012A template for Regulations of Internal Audit and details for

its elaboration -12.12.2012Procedures for internal audit assessment for the purposes

of quality assurance, as well as procedures for cooperation of internal audit with inspection authorities and external audit -08.08.2013

Draft procedures for certification of internal auditors and main requirements to entities regarding public sector internal audit

Public sector organizationsPublic entitiesLocal authorities, municipalitiesPublic and municipal non-commercial

entitiesCommercial entities with public or

municipal share of over 50 %

Internal audit scheme

Outsourcewho is entitled? Subject to a decision by senior management, it

can be practiced by Commercial entities with public or municipal share of

over 50 %, with a turnover or gross income of up to 2 billion Armenian Drams in the previous year.

Public and municipal non-commercial entities with a turnover or gross income of up to 2 billion Armenian Drams in the previous year.

Outsourcing is allowed only to entities with at least 3 certified internal auditors with at least 3 years of professional experience in internal audit

Head of internal audit unit must have at least 3 years of professional exeprience in internal audit

1 year of relevant experience = 1 year of experience in internal audit

2 years of relevant experience = 1 year of experience in internal audit

Experience in internal audit, control and revision (including Court of Accounts, President, Government, public entities, CB, commercial banks)

Other activities in civil or public service

Experience of members of revision committees in joint stock companies with public or municipal share

Experience of certified auditors in external audit

Internal Audit CommitteeInternal Audit Committee must have at least

3 membersA member of the Internal Audit Committee

must have at least 3 years of professional experience in internal audit

Timeframe for Implementation of Internal Audit System in Organizations01.04.2012г.- Public institutions01.07.2012г.- Public and municipal non-commercial entities

and commercial entities with public or municipal share of over 50 %, with a turnover or gross income of over 500 million Drams in 2011.

01.01.2013г.- City municipalities,Public and municipal non-commercial entities, as well as commercial entities with public or municipal share of over 50 %, with a turnover or gross income of up to 500 million Drams in 2011.

01.01.2016г.- Rural authorities

Presence of internal audit52 public institutions (President’s

Office, Government, People’s Assembly, ministries, commissions, committees, etc.) already have internal audit units

48 city municipalities

Retraining and certification of internal auditorsAccording to Art. 15 item 2 of RA Law On Internal

Audit, internal auditors in public sector who were active before 01.01.2013 became certified internal auditors after a retraining organized by the authorized agency (RA Ministry of Finance)

So far, 188 internal auditors have been retrainedIn 2013, continuous professional training have been

organized for internal auditorsIn 2014, certification of internal auditors

Thank you for attention!

Gayane Stepanyan

gayane.stepanyan@minfin.am