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Auditing and Risk Assessment in Finance: A Key Component of Mozambique’s Public Financial Management

The Republic of Mozambique has made significant strides in its public financial management (PFM) system, with auditing and risk assessment playing a crucial role in ensuring transparency and accountability. The country’s PFM subsystem is composed of five main components, including:

  • Treasury
  • Budget
  • State patrimony
  • Public accountability
  • Internal audit

Internal Audit Subsystem

According to officials, the internal audit subsystem is responsible for examining the financial activities of government institutions, identifying potential risks and vulnerabilities, and making recommendations to improve financial management practices. The subsystem consists of several entities, including:

  • General Inspection of Finance and State Administration
  • Sectorial general inspections
  • Central, regional, and provincial audit institutions

Coordination and Risk Evaluation

The coordination between these institutions is essential in ensuring that planning, realization, and evaluation of activities are carried out effectively. Officials emphasize the importance of considering risk evaluation and materiality when conducting audits, as well as respecting the level and area of each institution’s responsibility.

Government Framework for Auditing and Risk Assessment

Mozambique’s government has established a framework for auditing and risk assessment known as the GOV (MPF) IAS COORDENATOR COUNCIL. This council is responsible for strategic-level decision-making, while sectorial- level general inspections and regional audits control activities at the operational level.

Achievements and Challenges

Since its creation, the internal audit subsystem has achieved several milestones, including:

  • Elaboration of a “White Book” for the internal audit system
  • Development of a strategic plan for 2005-2009
  • Issuance of bylaws to guide auditing practices
  • Conducting performance audits in various sectors

However, officials acknowledge that there are several constraints facing the internal audit subsystem, including:

  • Lack of a public auditor bylaw
  • Resistance to change
  • Insufficient quality and number of human resources
  • Fragility of internal audit institutions
  • Limited financial resources

Initiatives to Address Challenges

To address these challenges, Mozambique has initiated several initiatives, including:

  • An auditing basic manual
  • Partnership with other countries
  • Annual conferences for internal auditors
  • Certification of internal audit professionals

The country has also made significant progress in public accountability, with a computerized system that provides quarterly reports on budget execution and government financial statements.

Conclusion

Overall, Mozambique’s commitment to auditing and risk assessment is critical to ensuring transparency and accountability in its public financial management system. As the country continues to face challenges, it is essential that these efforts are sustained and strengthened to ensure effective financial governance.