1. PIFC development in Moldova
Past Future
FROM TO Inspection Audit

2. ‘EU aspirations generate support to introducing PIFC’
The EU and the Republic of Moldova Action Plan: contain provisions for the Public Internal Financial Control (PIFC) implementation
The Government set up the establishment of PIFC as an objective in various strategies
Establishment of PIFC is supported by the Public Financial Management Project, financed by the World Bank

3. Implementation Phases
I. Initial preparation phase ( ) – setting up a CHU, normative and legal framework, methodology, awareness-building, initial training, keeping existing inspection function
II. Centralized audit phase ( ) – Reorganization of Financial Control and Revision Service into Centralized Internal Audit Service for replacement of inspection with internal audit, piloting IA in 3 entities. Methodological and practical support and capacity building
III .Decentralized phase – after evaluation of pilots – Decentralized Internal Audit will be established in public sector entities

4. First steps Initial Phase 2005-2006:
15 staff of FCRS were trained by external consultants
6 staff made a one-week study tour on Internal Audit in UK
Concept of IC and IA System in the Public Sector was approved by Government
Awareness seminars
Initial IA Training
Initial Phase

5. Unintended Consequences:
5 decentralized IA units have been established without general legal and methodological basis
Challenge: make them as IA pilot units and guide them in following the emerging legal, normative and methodological framework
Initial Phase

6. Advantages PILOT IA UNITS
Pilot IA units could be created on basis of those 5 units, they need only methodological and capacity building support
No need to convince managers of pilots public sector units in the need for Internal Audit
PILOT IA UNITS

7. Disadvantages PILOT IA UNITS Weak professional skills in IA
Vague understanding of new objectives and functions
Manager’s confusion regarding
ex-post auditor functions with
“ex ante controller ” functions and
traditional financial inspection functions
PILOT IA UNITS

8. The road ahead
STRATEGY
The Draft PIFC Strategy contains provisions for 3 areas:
Legal
Institutional, and
Capacity building - training and professional development

9. 1. Legal Actions Drafting and submitting a Draft PIFC Law
STRATEGY
Drafting and submitting a Draft PIFC Law
Developing National Internal Audit Standards (NIAS) and National Internal Control Standards
Drafting Code of Ethics
Developing methodology

10. 2. Institutional area
STRATEGY
Strengthening Central Harmonization Unit in the Financial Control and Revision Service
Reorganizing Financial Control and Revision Service into Central Internal Audit Service
Creating PIFC Council
Starting pilot projects in 3 entities

11. 3. Capacity Building: Training and professional development
STRATEGY
Conducting awareness seminars with ministers and senior managers
Designing a program of training and professional development for internal auditors and managers
Conducting certification of auditors in accordance with national and international standards

12. Enabling factors The Government’s desire to change the existing system
Action plans posted in government acts
Approval of the Concept of IC and IA system in the Public Sector
Cooperation with the Court of Accounts on reform agenda
Collaboration with the Academy of Public Administration on capacity building
CHU established

13. Reform challenges
Weak understanding of the advantages of the PIFC System
Weak methodological basis
No PIFC experience
Low level of management skills
To orient the IC and IA to the operational activity of the public entities

14. Questions
1. What are the major challenges which can anticipated during the implementation of PFIC reforms and how can these be effectively managed?
2. How can the independence of the IA be assured in Moldova?
3. Decentralization:
When is the best moment to decentralize?
How should IA be organized within small entities, especially at the local level?

15. Questions (cont.) 4. Standards and certification:
To what extent is it necessary and/or desirable to develop separate internal audit standards and certification for the public sector and the private sector?
5. Suggestions on Strategy draft (Handout)