ORDER OF THE GOVERNMENT OF THE REPUBLIC OF MOLDOVA

of January 29, 2008 No. 74

About approval of the Strategy of development of the state internal financial control

The government DECIDES:

1. Approve the Strategy of development of the state internal financial control it (is applied).

2. To assign monitoring of implementation process of the Strategy of development of the state internal financial control to the Ministry of Finance.

Approved by the Order of the Government No. 74 of January 29, 2008

Strategy of development of the state internal financial control

I. Preface

Need of improvement of management of public finance for ensuring accomplishment of government tasks in the conditions of transparency, effectiveness and efficiency is the important purpose of activities of public sector. The Strategy of development of the state internal financial control (further - Strategy) which corresponds to Item 42 of the Action plan the Republic of Moldova - the European Union and represents conceptual and strategic base of implementation of modern system of the state internal financial control was for this purpose developed. This Strategy affirms on purpose: a) confirmations of the obligation on ensuring efficiency and control of activities by means of strengthening of responsibility in the public sector; b) reforming of the operating control system in the system of the state internal financial control (further - GVFK) recognized by the European Union; and c) determinations of tasks on creation of regulatory, institutional and instructive base and submission of the staticized action plan on implementation of GVFK in the public sector of the Republic of Moldova.

This Strategy notes achievements of different projects and development of activities in the field, represents the activities performed and subject to updating, considering process of implementation and results of work of pilot projects.

For this Strategy the following basic concepts are used:

internal audit - independent activities for provision of the objective guarantees and consultations directed to increase in value and enhancement of operational activities of organization. Internal audit is intended to help organization to achieve effective objectives, using systematic and consecutive approach to processes of management, risk management and control and developing recommendations for increase in efficiency of activities of organization;

the control ex-ante - complex of actions which are performed before decision making and before realization of certain transactions of organization. Transactions and related documents are exposed to check for the purpose of refining of their legality and compliance to the allocated resources. These checks can be regarded as internal control of ex-ante in case of their carrying out in organization or as external control of ex-ante in case of their carrying out by body out of organization;

the control ex-post - all types of the control which is carried out after completion of transactions or decision making. These checks are regarded as internal control of ex-post in case of their carrying out in organization or as external control of ex-post in case of their carrying out by body out of organization;

profitability - minimization of cost of the resources used for the planned results taking into account ensuring required quality of results;

effectiveness - ratio between the used resources and the received results. Assumes receipt of the maximum results with use of certain amount of resources;

efficiency - extent of achievement of the planned purposes, that is ratio between the planned and received impact. Specifies extent of realization of the offered purposes;

the subject - public institution or the authority which is using/managing public funds or public property;

the contractor of the budget - the head/manager of public organization given the right to perform expenses and/or to use/manage funds or public property;

public funds - means of the national public budget, the external financial aid provided to the Republic of Moldova or organizations/bodies of public management the external credits obtained under contracts or guaranteed by the state or organizations/bodies of public management and also the internal loans stipulated by organizations/bodies of public management;

managerial responsibility - responsibility of the contractor of the budget for set of obligations or tasks and for observance of the rules and standards applied in its professional activity. Consists in the permanent aspiration to achieve the best results connected with objectives, by means of optimization of the allocated resources;

results - those material values or services which are result of activities of organization, provided for the purpose of satisfaction of social needs, and any values or services provided for own final consumption.

II. Context

2.1. Action plan Republic of Moldova - European Union

Action plan Republic of Moldova - The European Union signed on February 22, 2005 (published in the official publication "International agreements", 2006, volume 38, by p. 401) determines strategic tasks of cooperation of the parties for the purpose of regulation of managerial system of the Republic of Moldova for ensuring efficient and long-term cooperation with the European Union (EU).

Item 42 of the Action plan provides measures for improvement of management of public finance and the state financial control by means of:

developments of strategy and the document on settlement of system of internal financial control;

establishments of the legislation of the state internal financial control;

gradual harmonization with international standards and the advanced practicians of the EU in this sphere.

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