ORDER OF THE GOVERNMENT OF THE KYRGYZ REPUBLIC

of June 27, 2008 No. 341

About approval of the Program of creation and development of system of internal audit of state bodies and organizations of the Kyrgyz Republic for 2008 - 2013 and Standards of internal audit for state bodies and organizations of the Kyrgyz Republic

According to presidential decrees of the Kyrgyz Republic "About approval of the Action plan on reforming of management system public finances of the Kyrgyz Republic" of June 29, 2006 337, "About the State strategy of fight against corruption" of June 21, 2005 No. 251, for the purpose of creation of bases of functioning of internal audit in the Kyrgyz Republic the Government of the Kyrgyz Republic decides No.:

1. Approve the enclosed Program of creation and development of system of internal audit of state bodies and organizations of the Kyrgyz Republic for 2008 - 2013 (further - the Program).

2. Approve the enclosed Standards of internal audit for state bodies and organizations of the Kyrgyz Republic (further - Standards).

3. To the ministries, the state committees, administrative departments, other executive bodies and their subordinated organizations and organizations to apply Standards and to be guided by the Program when implementing internal audit.

4. Determine authorized state body in the field of internal audit the Ministry of Finance of the Kyrgyz Republic.

5. To the Ministry of Finance of the Kyrgyz Republic to develop and approve methodology on functioning of internal audit on objects of internal audit.

6. This resolution becomes effective from the date of signing.

7. To impose control over the implementation of this resolution on department of finance and credit policy of Government office of the Kyrgyz Republic.

Approved by the Order of the Government of the Kyrgyz Republic of June 27, 2008 No. 341

The program of creation and development of system of internal audit of state bodies and organizations of the Kyrgyz Republic for 2008 - 2013

The program of creation and development of system of internal audit of state bodies and organizations of the Kyrgyz Republic for 2008 - 2013 (further - the Program) fixes the fundamental purposes and tasks of system of internal audit in the Kyrgyz Republic and determines the main directions of actions in the field.

I. Introduction

Methods by means of which state bodies and organizations manage public finances exert impact on economic and social climate in the state. Effective management of public finances requires:

- objective and realistic approach to forming of the government budget;

- creations of the system of the taxation stimulating private sector development and creating budget receipts;

- reasonable use of public funds.

State bodies and local self-government are the main contractors of expenses of the government budget.

In system of public administration of the executive authority the head of state body or organization is the responsible person who is responsible for effective use of the state resources. Control of efficiency of expenditure of budgetary funds is possible by creation in state bodies and organizations of internal control system and audit. Need of development of internal control for state bodies and organizations of the Kyrgyz Republic is also confirmed by annual reports of auditors of Audit Chamber of the Kyrgyz Republic on illegal use and wastes of budgetary funds.

Presidential decrees of the Kyrgyz Republic "About approval of the Action plan on reforming of management system public finances of the Kyrgyz Republic" of June 29, 2006 No. 337 and "About the State strategy of fight against corruption" of June 21, 2005 No. 251 set the task of increase in effective management of public finances by means of transparency and accountability of their use and purposeful eradication of corruption.

The government of the Kyrgyz Republic began work on creation of regulatory legal and methodological base for implementation in practice of activities of state bodies and organizations of the Kyrgyz Republic for implementation of internal audit. Successful realization of management reform by public finances in many respects depends on development of internal control system and audit in the Kyrgyz Republic. With respect thereto implementation of internal audit in state bodies and organizations is important task.

Necessary factor of successful development of system of internal audit is also interest of employees of state bodies in it and organizations and their subordinated bodies designed to provide its implementation.

Internal control is the management tool for providing the sales warranty of the tasks set by management of state bodies and organizations. The role of internal audit consists in assistance to management of state bodies and organizations in creation of internal control system and its improvement by carrying out the analysis and assessment of internal control system of the organization and provision to management of reports and recommendations about activities improvement.

Realization of provisions of this Program will allow to enhance activities for reforming of management system public finances in the country by means of implementation in practice of activities of state bodies and organizations of the Kyrgyz Republic of implementation of internal audit.

II. Concept, purposes and tasks of development of internal audit

Internal audit in this Program is understood as the independent and objective function which is carried out in object of internal audit, including the analysis, assessment and monitoring of adequacy of internal control system, reliability and reliability of financial and management information, effectiveness, profitability of activities and management, safety of assets and compliance with law of the Kyrgyz Republic.

The purposes of internal control system and audit in state bodies and organizations are:

- ensuring compliance with regulatory legal acts;

- increase in efficiency of activities;

- improvement of quality of implementation of the state functions.

Realization of effective objectives requires the solution of the following tasks:

- creation of internal control system and audit in state bodies for the purpose of observance of procedures, administrative and other regulations, carrying out and accounting of the corresponding transactions, their reflection in the reporting and respect for powers in case of their authorization;

- implementation of the analysis of the revealed variations from the established indicators of activities, the reasons which are the cornerstone of violations, introduction of offers for taking measures to their prevention;

- efficiency evaluation of the performed processes and transactions and use of financial and non-financial resources;

- assessment of feasibility of the performed processes and transactions, use of existing rules and rules of their maintaining;

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