Pifc in Albania

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Development of PIFC in Albania- a step on the road to European Integration Dr.Hysen Muceku1, MPA, Albana Gjinopulli2 CPA

1 Director, General Department of Audit, Ministry of Finance, Tirana, Albania, h.muceku@yahoo.com, hmuceku@minfin.gov.al

2Head of unit, Methodology and Training, General Department of Audit, Ministry of Finance, Tirana, Albania, agjinopulli@yahoo.com, agjinopulli@minfin.gov.al

Conference topic: regional development

Abstract
The concept of Public Internal Financial Control (PIFC) has been developed by the European Commission in order to provide a structured and operational model to assist national governments in re-engineering their internal control environment and in particular to upgrade their public sector control systems in line with international standards and EU best practice. The democratic changes affecting all areas of life in the last years, have led to reforms in the management of public finances of the public sector in the Republic of Albania. On the road to our accession to the European Union we are in the process of important conceptual, legislative and structural reform of the Public Internal Financial Control framework with the aim of strengthening the managerial accountability of the managers of public sector organizations and further develop independent internal audit. Actually the Ministry of Finance is completing the legal framework for FMC and IA in compliance with the EU requirements. Now, we have prepared and approved “The Law on Financial Management and Control”, Law “On Public Financial Inspection” and amendments in the existing Law “On Internal Audit in Public Sector”. Such laws and other by laws, professional guidance and regulations create the legal frame where PIFC System is based for implementation. In order to ensure the transparency of public resources’ management and spending, the legislator has introduced the requirement to the Council of Ministers (through the Minister of Finance) to report on an annual basis on the status of internal control in the Republic of Albania to the National Assembly. This paper includes findings from the annual reports on the status of financial management and control (FMC) and internal audit throughout public sector in Albania. The paper summarizes the self-assessment made by the managers of public sector organizations and the internal auditors regarding the state of FMC and internal audit. It also includes information about the activity of the Central Harmonization Units (CHUs) and respectively, for financial management and control and for internal audit at the Ministry of Finance, which are directly engaged in the harmonization of the internal control in the public sector of Albania. The paper aims to give some key issues regarding PIFC development in Albania such as: the level of transparency regarding the status of the financial management and control and internal audit in the public sector; the awareness of the Heads of public organizations about the importance of sound financial management and control and to enhance their managerial accountability; information about the self assessment of the heads of public sector organizations on the adequacy and the effectiveness of internal control and about the progress made.It also outlines the weaknesses, solutions and development opportunities based on the assessment of the status of the financial management and control systems as well as of the internal audit. Through conclusions it summarizes the main directions in which the Albanian institutions must be focused in the future for further development and improvement of management of public resources. The development of the new model of public internal financial control in Albania demands from all the participants in the process, leading to effective action in accordance with their roles and responsibilities. Only proper implementation of new legislation and efforts by all stakeholders can lead to achieving the goal - to create a...
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