The concept of public
internal financial control (PIFC) describes the overall consolidated
system established by government ministries and state administration
bodies for controlling, auditing and reporting on the use
of financial resources. It involves ex ante approval, through
sampling and reporting techniques, as well as ex post internal
audit systems, including the need to constantly feed back
findings and recommendations from both systems, with the aim
of providing management with a tool for assuring economy,
efficiency and effectiveness in the use of its financial resources.
PIFC consists of three basic concepts:
· managerial responsibility and accountability
for the sound financial management and control of national
and EU budgetary funds;
· functionally, but also politically independent, internal
· centralised harmonisation unit
(CHU), responsible for developing
and harmonising methodologies and guidelines for implementing
both control and audit systems throughout the public sector,
including quality assessment via on-the-spot checking that
guidelines are properly followed-up.
A comprehensive PIFC structure establishes a coherent system
of internal financial controls and sound management irrespective
of the origin of financial means, which may come from national
and/or international sources.
In Croatia, the Ministry
of Finance - Directorate for Harmonization of Internal Audit
and Financial Control (CHU) has started in 2003
to develop a PIFC system in line with EU practice.
To support the project, the Ministry of Finance will provide
methodological guidance to government agencies and will coordonate
the overall process.
In Croatia, the Ministry of Finance has already undertaken
important reforms in the PIFC area, further progress is needed
to meet all EU requirements related to the Chapter 32. Financial
Control. In particular, the European Partnership lists the
following priorities with regard to public internal financial
· develop a policy for the establishment of a PIFC system;
· establish or reinforce public internal control functions
through the provision of adequate staff, training and equipment,
including functionally independent internal audit units;
· establish effective procedures for the detection, treatment
and financial, administrative and judicial follow-up of irregularities
affecting the Communities’ financial interests;
· develop a coherent legislative framework and efficient mechanisms
for monitoring, controlling and auditing public income and
· develop effective mechanisms for communicating to the Commission
about irregularities affecting the Communities’ financial
interests, and establish the necessary co-ordination methods.