1. EUROPEAN CONCEPT OF PUBLIC
FINANCIAL MANAGEMENT AND ITS
IMPELMENTATION
Nataša Prah
Ljubljana, 06. 06. 2013
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2. INTRODUCTION
1. European Concept of Public Financial
Management
2. Financial Management and Internal
Control System in Slovenia
3. Internal Audit System in Slovenia
4. Role of CHU in Slovenia
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3. Slovenia
Area: 20,273 km2
Population: around 2,000,000
Budget organizations: cca 2.400
Internal auditors: ca. 71
Internal audit services: ca. 44
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4. European Concept of PFM-PIFC
Three elements of PIfC
 Financial Management and
Control Systems
 Internal Auditing
 The Central Harmonization Unit
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5. Financial Management and Internal Control
System
The three pillars of PIFC
Responsibility of the highest management for the
setting up of the appropriate and efficient system of
FM/C
Functionally Independent Internal Audit Service
Central Body for Harmonization and Coordination
of PIC
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6. Financial Management and Internal Control
System
Managers of each Budget organization are
accountable to:
– comply with laws and regulations,
– economic, efficient, effective, transparent and
ethical performance,
– protect the resources against loss and
misuse,
– timely and reliable reporting.
They are responsible to define the mission and
goals of the organization.
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7. Financial Management and Internal Control
System
Decentralized system:
Risk identification
Risk evaluation (impact, likelihood)
Risk management (avoidance, transfer,
acceptance, mitigation)
Risk register
on the level of each Budget organization.
Depending on the assessed risks: designing a
suitable internal control system.
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8. Financial Management and Internal Control
System
INTERNAL CONTROLS:
They don’t refer to financial and accounting matters
only but to all processes, procedures and situations
Enable complete, timely and reliable reporting
Enable compliance with laws and instructions
Enable economic, efficient and effective use of
resources
Enable protection of funds against fraud and
negligence
Enable protection of goodwill, environment, equal
opportunities
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9. Financial Management and Internal Control System
Ministries
9
Minister
Directorate 1 Directorate 2,… General Secretariat
Internal Audit Service

10. Financial Management and Internal Control System
Ministries
10
General Secretariat
Legal Service
Personnel Service
Financial Service
Administrative and Investment Service

11. Financial Management and Internal Control
System
Managers should organize financial services to assure:
Transparency, reliability and accuracy of all the
evidences of his/her resources,
Prevent errors, fraud and misuse of resources,
Secure financial operations,
Continuously monitor financial operations,
Assure ongoing information regarding incomes and
expenditures,
Assure ongoing information regarding commitments and
spending rights on specific posts
Analyze budget execution,
Regularly report on budget execution.
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12. Financial Management and Internal Control
System
Accounting system:
Centralized in a special Directorate in the Ministry of
Finance
Centralized IT system
For each ministry special team of accountants
CIPFA training for certified public accountants
Professional training on voluntary basis, not required yet
(legal basis, influence on salaries,..)
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13. Internal Audit System - SLO
In-House IAS (obligation for the ministries)
Consortium IAS (recommended for smaller BO)
Buy-In of IA Services
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BO
IAS
BO
BO
BO
BO
IAS
BO
Chartered Auditors

14. Internal Audit System - SLO
INTERNAL AUDIT SERVICES:
Subordinated directly to management (In-house IAS)
Internal Audit Charter
Compliant with Guidelines for State Internal Auditing (Code
of Ethics, IIA Standards)
Free of executive tasks
Providing assurance, consulting
Reporting to the management on detected weaknesses and
giving recommendations
Yearly Reporting to the management on FM/C and to the
CHU
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15. Role of CHU in Slovenia
15
Director
(1)
Councel
(2)
Secretariat
(1)
Administrative services
(3)
EAGGF Audit
(7)
Cohesion and
Structural Funds
Audit
(11)
Budget
Inspection
(6)
Public Internal
Financial Control
(5)
A F C O S
(1)
Director
(1)
Counsel
(1)
Secretariat
(1)
Administrative services
(3)
EAGGF Audit
(9)
Cohesion and
Structural Funds
Audit
(21)
Budget
Inspection
(6)
Public Internal
Financial Control
(6)
A F C O S
(1)

16. Role of CHU in Slovenia
MISSION:
1.Taking care of professional development
in the area of FM/C and IA
2.Proposing systemic solution in the area
of FM/C and IA
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17. Role of CHU in Slovenia
ACTIVITIES
1.Drafting Guidelines on IA and FM/C
2.Compliance Assessment with the guidelines &
external quality assurance of IAS‘s
3.Annual Report on PIFC
4.Monitoring & Promotion of the implementation of
the PIFC, Position Papers on FM/C Issues, Help
Desk
5.Organization of Training, Keeping the Register of
SIA and VSIA
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18. 18
IAS
Ministries
IAS
Municipalities
IAS
Institutions
Budget Supervision Office of the RS
PIFC Sector
Help,
Training
Guidelines
on
State Internal Auditing
(IIA Int. Standards)
Compliance Assessment
Certificate
State internal Auditor

19. 19
Ministries Municipalities Institutions
Budget Supervision Office of the RS
PIFC Sector
Help,
TrainingDraft
Regulations
Draft
Regulations
Guidelines
on
Internal
Controls
Internal Controls
Internal Audit Risk RegistersObjectives Risks
Audit Trails

20. Role of CHU in Slovenia
Annual Report on PIFC:
A.Sources
B.Recipients
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21. 21
IAS
Ministries
IAS
Municipalities
IAS
Institutions
Budget Supervision Office of the RS
PIFC Sector
Copy of Annual
IAS Report
Copy of Annual
IAS Report BSO IAS
Questionnaire
BSO IAS
Questionnaire
Red Line
Report
Red Line
Report

22. 22
Ministries Municipalities Institutions
Budget Supervision Office of the RS
PIFC Sector
Annual Declaration on Internal Controls,
Weaknesses and Improvements
(an obligatory component of the Business Report)

23. 23
Budget Supervision Office of the RS
BSO IAS
Questionnaire
BSO IAS
Questionnaire
Annual
Declaration on
Internal Controls
Annual
Declaration on
Internal Controls
BSO PIFC
Sector
Activity
Report
BSO PIFC
Sector
Activity
Report
Annual Report on PIFCAnnual Report on PIFC
Minister of Finance
Government
CopyCourt of Audit

24. The end
 QUESTIONS
 REMARKS
 COMMENTS
?
Thank you very much for the attention
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