Internal Control and Audit of the Subordinate Network in Public Governance Bodies

Abstract

The article considers the evolution of internal control and audit in public governance sector of developed countries, based on the INTOSAI standards and the publications of IMF, OECD and European Union, and on the documents regulating the internal audit in British ministries and agencies including their complicated network of subordinate organizations. This topic is very relevant, because in recent years, significant changes have occurred in this area. The author defines the substance of the concept of internal control and audit in the ministry or agency (including the central office and the subordinate network) according to the INTOSAI standards, analyses two main models of internal control’s institutional structure (i.e. the decentralized system basing on the internal audit services and the centralized system basing on the financial inspections) and the main direction of these models’ evolution. Then, EU countries with single and dual systems are identified and principles for interaction of internal audit services and financial inspections in countries with dual systems are specified. In addition, it is stated that it is necessary to establish the central harmonization unit which develops the uniform standards, methodology, model documents for internal control and audit, qualification criteria and training programs for internal auditors. The article describes in detail the system currently operating in the UK, which includes several intra-/interministerial or intra-/interagency internal audit services for one group of ministries and agencies and a central government internal audit service for another group of ministries and agencies. Based on a study of the experience of developed countries, conclusions are drawn on possible ways to increase the efficiency of internal control and audit in Russia’s public governance.

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