Strategic plan of the Internal Audit Department

Livia Jandîc,

Budva, Montenegro, March 3-5, 2014

The Ministry of Finance of the Republic of Moldova

Content

The aim and the necessity of activity planning The elaboration stages of the Strategic plan: ● SWOT analysis ● priorities and objectives ● distribution of the time resource The methodology of risk assessmentAnnual plan

The goal of the Strategic Plan

Resources

Requirements

The planning requirements

Toate sistemele /procesele operaţionale de bază ale entităţii au fost luate în consideraţie

Orientarea resurselor spre domeniile unde acestea sînt cele mai necesare

Conştientizarea sporită a obiectivelor, sistemelor / proceselor şi riscurilor de către managerii operaţionali

Insu

ranc

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Strategic plan content• Context• Mission• Vision• Values• The profile of the department• SWOT Analysis• Mid-term priorities• Strategic objectives• The audit requirements• The methodology of risk assessment• The necessary and available resources• Annual activity plan• Conclusions

Stages of developing the Strategic PlanI. Defining the mission, vision and values of the DIA and the

SWOT analysis of the curent situation;

II. Determining the activity’s priorities for the medium term;

III. Identification of the operational systems and processes for the Ministry of Finance;

IV. Risk assessment based on the manager’s expectations;

V. Determining the period of the Strategic Plan and frequency of the missions;

VI. Assessment of the needed and available resources;

VII. Defining the Strategic Plan and the Annual Plan of the DIA.

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SWOT AnalysisFactors Strength Weakness

Internal New division, without a negative experince, assessed by the auditors from the Court of Auditors as functional

Open attitude of the MF’ management

Objective and Independent character

•Focused on system and performance audit versus the compliace audit

•High level of theoretical and practical experience-4 from the 5 auditor have the Qualification Certificates

•Limited resources for the integral realization of the Strategic Plan

•The flow of personnel

•Lack of financial resources directed for the contracting of the spcialized audit services and/or specialized consulancy

8

Analiza SWOTFactors Opportunities Threats

External •The existence of a legal framework of the PIFC and IA accroding to the international standards

•Possibility of multipling the international experience through the study visits

•Access to different forms of professional training

•Low awareness of the operational management toward the role and function of the PIFC and IA

•Low tolerance of the operational managers toward the opposing views

•Low remuneration of the internal auditors

Mid-term priorities Correlated with the Public Internal

Financial Control Development Program and Strategic Development Program of the Ministry of Finance for 2012-2014:

• Increase the quality of the internal audit activity;• Development of the FMC system;• Promoting and disseminating the internal audit

function.

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Strategic goalsObiectiv nr.1 Dezvoltarea în cadrul Ministerului Finanţelor a sistemelor adecvate

de control managerial

Obiectivul 2. Consolidarea sistemului curent de evaluare, raportare a managementului financiar şi controlului, precum şi de emitere a declaraţiei

privind buna guvernare

Obiectiv nr.3 Consolidarea eficacităţii activităţii de audit intern

Obiectiv nr.4 Promovarea funcţiei audit intern pe plan intern şi extern

Obiectiv nr.5 Asigurarea unui cadru relevant de reglementare şi funcţionare a activităţii DAI

Distribution of the time resourceNr. Type of activity % from total resources

1. Performing the insuring audit mission, following how are implemented the recomandations

60%

2. Performing the insuring audit missions inside the subordinated institutions 10%

3. Performing the audit conciliation mission 5%

4. Following the standardization of the DIA to the national and international standards-supervising the audit missions

5%

5. Planning, assessment and reporting of the activity of the internal audit 4%

6. Coordination of the autoevaluation process of the MFS system of the MF 4%

7. Continuous professional improvment of the employees of the DIA, as well as trainers

3%

8. Performing ad-hoc audit missions 2%

9. Performing and update of the internal functioning acts of the DIA 2%

10. The activity as a member in councils, commissions and profile organizations 2%

11. Conciliation activity 1%

12. Maintaining the functionality of the MFC system inside the DIA 1%

13. Participation at the elaboration of the normative framework in PIFC 1%

TOTAL 100%

Risk assessment methodologyMateriality with a share of - 15 %Control environment - 10 %Sensitivity -10 %MF’ Management concerns-15 %Complexity of the process-10 %Changes of people and of system-10 %The integrity of the data processing environment-5 %The last audit mission-15 %The results of the last audit mission-10 %

Each criteria is marked with a point from 1 to 5 (1-lowest level of risk, 5-highest risk level)

Risk Matrix

Calculation of the risk score

Materiality * 15% Control environment * 10% Sensibility * 10% MF’s management concerns * 15% Complexity of the process * 10% Changes of people or system* 10% Integrity of the data processing environment * 5% The period of the last a.m * 15% The results from the last a.m. * 10%

19 june 2012

Risk score 5

Risk categories

Risk category The score of the risk Priority level

Very low< 20

low

Low20-40

Moderate40-60

medium

High60-80

high

Very high80 <

19 june 2012

Sample

Annual action plan 2014

Sample