Developments And Achievements In Implementing Public Internal Financial Control (PIFC) Reform In Armenia EDGAR MKRTCHYAN, PhD Chairman of Executive Committee IACOP Head of FMC Methodology Division-Deputy Head of PFM Methodology Department of the Ministry of Finance of RA 11-12 June 2018, Tsaghkadzor, Armenia

Public Internal Financial Control (PIFC) Reforms Public Internal Financial Control Strategy (Government Protocol Decree No 44, On 11 November 2010) Revised Strategy of Public Financial Management System Reform (Government Protocol Decree No 6, On 18 February 2016)

Public Internal Financial Control Strategy 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 Financial management and control based on managerial accountability Internal audit

CHU Directorate Structure Public Financial Management Methodology Department (CHU Directorate) CHU in the MoF for FMC and IA Financial Management and Control (FMC) Methodology Division Internal Audit Regulation and Coordination Division Procurement Process Regulation Division

Revised Strategy of PFM System Reform Budget Cycle Policy-based fiscal strategy and budgeting Predictability and control in budget execution Accounting and reporting External scrutiny and audit Transparency of Public Finances Management of Assets and Liabilities Budget reliability Public Internal Financial control (PIFC)

Revised Strategy for PFM System Reform Action Plan for 2016-2020 Introduction of FMC system 2016-2018 Elaborating methodology for introduction of the FMC system Piloting of drafted FMC methodology in at least two public entities 2018-2019 Revision and specification FMC concept note and FMC law drafts according to the results of drafted and piloted methodology The drafts of FMC concept note and FMC law accepted by Government of RA 2019 Adoption of the Law on FMC by the National Assembly of RA 2019-2020 Adoption of the action plan for FMC law enforcement Practical introduction of FMC in public sector organizations of RA

Revised Strategy for PFM System Reform Action Plan for 2016-2020 Internal Audit Professional skills of internal auditors 2016 Internal auditors capacity assessment and development of capacity development programme Revision of internal auditors training programmes in line with international best practice 2017-2020 Capacity development of internal auditors Internal audit methodology revision Clarification of audit performance 2017 Emphasis on the management feedback on auditing disclosures and review process 2018 Emphasis on practical issues of internal auditing Evaluation of salary calculation and payroll audit   2018-2020 Provision of internal and external audit cooperation

2016 Results Drafted FMC documents: FMC manual Managerial accountability methodology Risk management methodology Internal Control Standards

Current activities FMC system piloting in at least two public entities 2017-2018 Results Gap analysis on currently existing internal control system in the public sector of Armenia Finalisation of the package of documents on FMC (manual, draft legal acts) Development of a detailed action plan for the new FMC system piloting Till the end of 2018 FMC system piloting in at least two public entities

Programme Budgeting (PB) Legal Grounds for the Fully-fledged Introduction of PB PB Methodology Institutional Issues - Enhancement of Internal Control Systems Human Capacity Development Automatization of PB Related Functions

PIFC vs Program Budgeting

Thank you for attention! edgar.mkrtchyan@minfin.am