BULGARIAN NATIONAL AUDIT OFFICE

STRATEGIC DEVELOPMENT PLAN

2007 – 2012

INTRODUCTION

The Bulgarian National Audit Office (BNAO) is a governmentinstitutionestablished under the Constitution of the Republic of Bulgaria. The National Audit Office Act providesBNAO the authority to perform external audit of the budget and other public funds and activities.

BNAO is anindependent supreme audit institutionand conducts its operationsobserving the principles of legality, openness and transparency.BNAO is elected by the National Assembly andreports to the National Assembly. Itsindependenceentails that it is free to planits audit work and conduct itin accordance with the law and internationally accepted auditing standards.

BNAO’s work includes financial audits and performance audits. BNAO’s activities are designed to provide assuranceto the National Assembly and the public over the management of public funds and activities as tolegality, effectiveness, efficiency and economy.The main impact ofBNAO’s activity is to contribute to achieving better governance in the public sector bymaking recommendations.

BNAO, as part of the public sector in the Republic of Bulgaria, operatesin a dynamic environment.BNAO’s activity is influenced bythe requirements of European Union (EU) membership, theintroduction ofnew legislation, the adoption of new practices and the modernisation of public institutions.

The present strategic plan is a basic document settingout the long-term goals and priorities ofBNAO over the period 2007-2012. The plandevelops further the positive tendencies of BNAO’s policyfor strengthening its position of a supreme audit institution and independent government body. At the same time, the strategic plantakes account ofthe new challenges posed by arapidlychanging environment for the period 2007-2012.

The strategic plan will serve as a basis forthe medium-term and annual planning of BNAO’swork. The implementation of the strategic plan is a process involving both the management of the BNAO and its entire staff.

For the fulfilmentof this strategic plan,BNAO will seek wide public support in its implementation, monitoring and evaluation. The strategic plan will be implemented through annual workplans and a system of performance indicators for measuring achievement of objectives. The BNAO management willconduct the monitoringof the strategic plan implementationwith support from the Consultative Public Council.

VISION

BNAO agrees that its vision is the state of affairs it aimsto achieve as a result of the implementation of the present strategic plan.

During the period of strategic planning 2007-2012,BNAO’s vision is: protection of the public interest and strengtheningtaxpayer’s trust in the public sector.

MISSION

BNAO agreesthat its missionrelates to the activities it will undertake with a view to implementing its vision.

During the period of strategic planning the mission of the BNAO is to contribute to the improvement of the management of public funds and the quality of public services through conducting audits in an effective, efficient and economic way.

BASIC VALUES AND PRINCIPLES

In the performance of its activities,BNAO follows values and principles shared by the management as well asthe audit and administrative staff of the institution.

Independence and objectiveness

BNAO applies an impartial and objective approach in its activities, avoiding external influences and conflicts of interest and observing the law and the standardsof professionalconduct.

Consistency and predictability

BNAO operates in a consistent and predictable way. It applies a consistent practice, guaranteeing that in identical or similar situations identical or similar decisions are taken.

Professionalism and competence

BNAO operates in compliance with the professional standardsand strives to continuouslydevelop andimproveits policies, practices and procedures for the achievement of higher quality and reliability of the results of its work.

Credibility and integrity

The reputation ofBNAO is builtontheprobity of its staff corresponding to the highest professional and ethical norms.

Publicity and transparency

BNAO seeks to keep a range of usersadequately informedabout the management and organisation of its activities. The results of the audit activities are made public in a clear, understandable and accessible way.

Cooperation and constructiveness

As a prerequisite for work quality improvement, BNAO creates conditions for open and honest dialogue, an atmosphere of collegiality and team work forsharing experience and knowledge within the institution.BNAO maintains a balanced and useful dialogue with the auditees.

For the period 2007-2012, BNAO will directits efforts towardsthe following main areas:

  • audit activitydevelopment
  • institutional development
  • corporateimage.
  1. AUDIT ACTIVITYDEVELOPMENT

Objective 1.1

Achievement of higher standards of audit quality

The audit quality standardsBNAO seeks to achieverelate to:

  • planning audit work on the basis of risk assessment;
  • application of international standards and good practices in the audits;
  • effective and efficient management and conduct of audit work;
  • timeliness in performing audits and reporting the audit results;
  • usefulness of the audit results;

For the achievement of objective1.1, BNAO setsthe following sub-objectives:

1.1.1.Analysis and development of proposals for improvement of the legal frameworkregulating BNAO’s activity as a condition for the effective and efficient performance of its functions.

1.1.2.Development and implementation of a common methodology, comprising all possible aspects of the audit activity with a special emphasis on:

  • risk analysis in the annual planning process based on a preliminary examination of potential audit areas;
  • evaluation of the internal control systems of the auditees;
  • identification of risk areas for the auditee in the auditing process and formulation of relevant recommendations.

1.1.3 Studyingthe international audit experience as a mechanism for further

development of the audit methodology and dissemination and application of

good practice. For the realisation of this sub-objective BNAO will direct

itsefforts to:

  • further development of professional contacts within the framework of INTOSAIand EUROSAI through active participation in committees, working groups, workshops and conferences, as well as planning and implementation of joint and parallel audits;
  • exchange of experience through further broadening and developing bilateral cooperation with other supreme audit institutions on different levels;
  • following modern tendencies for development in the audit profession, analysis and dissemination of international experience and good practice;

1.1.4 Wideningand further development of BNAO’s contacts with national and

international professional organisations as well as exchange of information

andgood practice in the audit field with academics.

Objective1.2

Improvement of audit quality management policy

Audit quality management includes two elements:

  • quality control as a system of procedures implemented by BNAO in the audit activity designed to ensure continuous high quality;
  • qualityassurance as a process guaranteeing that quality control is continuously and properlyconducted in such a way that possible methods for its strengthening and/or improvement are identified;

For the achievement of objective 1.2, BNAO sets the following sub-objectives:

1.2.1 Putting in place a quality control and quality assurance system for the auditactivities.

1.2.2 Strengthening the capacity of staff and units responsible for the quality control in the audit activity.

1.2.3 Establishing mechanisms for measuring and assessment of the impact of BNAO’s activity, including self-assessment and external reviews.

1.2.4 Focusing quality assurancework, assigned to the Audit Quality EvaluationCommittee, on analysis of the auditing process with the aim of improvingits management.

Objective 1.3

StrengtheningBNAO’s role for goodmanagement and utilisation of EU funds.

BNAO takes into account the fact that the period 2007-2012,set for the implementation of the strategic plan,coincides with the accession of the Republic of Bulgaria to EU. BNAO will strive, within the framework of its competency, to contribute to the effective management and utilisation ofEU funds, working forthe protection of the Community’s interests and prevention of financial sanctions on the Republic of Bulgaria.

For the achievement of objective 1.3, BNAO sets the following sub-objectives:

1.3.1 Strengthening the capacity of BNAO for:

  • acquiring thorough knowledge ofCommunity lawconnected with the utilisation of EU funds;
  • analysis and evaluation of the national management and control system of EU funds;
  • formulationof adequate recommendationsfor the elimination of identified weaknesses.

1.3.2 Strengtheningrelations with the European Court of Auditors (ECA) through:

  • regular exchange of annualworkprogrammes, audit reports and other information concerning audit activities;
  • learning about the audit policies, procedures and practices applied by the ECA;
  • deepeningthe cooperation with the ECA in relation to its audit missions inthe Republic of Bulgaria.

1.3.3 Active participation of BNAO inthe meetings and initiatives of theContact Committee of Heads of SAIs ofEU Member States and the European Court of Auditors.

1.3.4 Improving the coordination and exchange of information between BNAO and the bodieshaving roles in the national management and control system of EU funds.

  1. INSTITUTIONAL DEVELOPMENT

The institutional development of the BNAOrelates to strengthening itsinstitutionalcapacity and becoming a model institutionof good governance in the public sector.

Objective 2.1

Strengthening the independence of BNAO

In the spirit of the Lima Declaration,requiring thatsupreme audit institutions be protected against outside influences,in the period of strategic planning 2007-2012, BNAOwill strive to strengthenits institutional and functional independence as well as the independence of its auditors.

For the achievement of objective 2.1, BNAO sets the following sub-objectives:

2.1.1 Consistent and full implementation of the principle of BNAO’s independence through analysis of the Constitutionand undertaking initiatives for supplementing it with specific provisionsdefining in greater detail the status of BNAO as an institution, as well as the status and mandate of BNAO as a collegiatebody.

2.1.2 Establishing internal mechanisms guaranteeing the independence of BNAO’s auditorsin the implementation of audit tasks.

Objective 2.2

Making BNAO a model of good governance

BNAO will become a model institutionin the public sector by generating, applying and disseminating leading management practices.

For the achievement of objective 2.2, BNAO sets the following sub-objectives:

2.2.1 Improving the financial management and control systems in the BNAO in a waywhich would guarantee implementation of activities andoptimalresource managementaimed at achieving its objectives.

2.2.2 Applying a flexiblemanagement approach in the institution, which takes stock of the requirements of the dynamic external environment and at the same time,ensurespredictability, continuity and stability of the management.

2.2.3 Establishing an open and professional style of management at all levels with clear messages as to the policy and priorities of the institution.

Objective 2.3

Strengthening the institutional identity

BNAO would like to beviewed as an attractive institution for professional development and will work for developing a modern institutional culture, based on shared values and common objectives, whose achievement will contribute to strengtheningits position as arespected and stable institution.

For the achievement of objective 2.3,BNAO sets the following sub-objectives:

2.3.1 Establishing a system of measures and mechanisms for promoting a feeling of institutional belonging and sharing BNAO’s mission and values among the staff.

2.3.2 Establishing and maintaining an institutional image presenting BNAO to the public as a responsible, reliable and honest institution.

Objective 2.4

Ensuring highly competentstaff, motivated for the achievement of better results

BNAO considershuman resources to be the most important factor for institutional success. In the period of strategic planning 2007-2012, BNAO will seek to recruit and retain responsible, energetic, ambitious and motivated employees with high professional qualificationsand ethical qualities who will contribute tothe effective implementation of the functions assigned to the BNAO.

For the achievement of objective 2.4, BNAO sets the following sub-objectives:

2.4.1 Improving the recruitment system of BNAO.

2.4.2 Establishing an appraisal and evaluation system with clear rules for professional andcareer development, and performance-related pay.

2.4.3 Establishinghigh professional standards through continuous training and upgrading staff qualifications.

Objective 2.5

Improvement of BNAO management throughintroduction and application of modern information and communication technologies

BNAO seeks to optimize its management process through using the latest IT achievements as well as to provide reliable information on the management and control of the budgetary and other public funds inthe Republic of Bulgaria.

For the achievement of objective 2.5, BNAO sets the following sub-objectives:

2.5.1 Improvement of the quality of audit activitiesand optimization of the audit process through introduction and application of computer assisted audit techniques.

2.5.2 Establishing a common internal information and communication environment within the BNAO.

2.5.3Establishing an adequate monitoring mechanism forthe information environmentwith a view to maintaining its high technological level.

2.5.4 ImprovingBNAO’sexternal communications through modernization and maintenance of an accessible, useful and up-to-date official website of the institution.

Objective 2.6

Achieving tangible results ofBNAO’s activities in the field of prevention and fight against fraud and corruption

The powers assigned to BNAO toconduct audits (including audits ofthe political parties) and ensuredisclosure of senior public officials’ financial interests, determine BNAO’s important roleand responsibilities for prevention and fight against fraud and corruption.

For the achievement of objective 2.6, BNAO sets the following sub-objectives:

2.6.1 Strengthening BNAO capacity for detecting and reportingcases of infringement of the law,fraud and corruption.

2.6.2 Increasing the impact of BNAO’s work through active fulfilment of its ‘signal’ function and improving cooperation with other controland law-enforcement agencies(e.g.prosecutor’s office, Public Financial Inspection Agency, National Revenue Agency, etc.)

2.6.3 Strengtheningcooperation with authorities specialized in theprevention and fight against corruption established with thelegislative, executive and judiciary branches as well as with non-governmental organisationsoperating in the same field.

2.6.4 Strengthening the role of BNAO as a factor ensuring transparency of the financing of political parties and publicity of senior public officials’ financial interests.

  1. CORPORATE IMAGE

Developingand establishing a good corporate image of BNAO

Havinga good corporate imagemeans thatBNAO is perceived by the publicas an independent and well-respected institution which works to protect the public interest and contributes to the good financial management in the public sector.

Objective 3.1

Raising public awarenessof the role of BNAO and enhancing its credibility

For the achievement of objective 3.1, BNAO sets the following sub-objectives:

3.1.1Elaboration of mechanisms for timely reporting and ensuring wide access to BNAO’s audit results which are presented in a way understandable to the non-specialist user.

3.1.2 Development of active relations with the media in a spirit of partnership and sendingclear messages ensuring objective presentation of the institution and the results of its activities to the public.

3.1.3BroadeningBNAO’s contacts with non-governmental organisations as meansof drawingthe attentionof civil society to problem areas in the public sector.

3.1.4 Initiation of and participation in public fora, professional debate and discussion with academicsto explore problem areas and trends inpublic funds management and the provision of public services.

Objective 3.2

Broadeningand strengthening relations with the National Assembly to support the control over the executive and the taking of adequate decisions by the legislature

The National Assemblyisthe main userof the results of BNAO’swork. The information provided to Parliament serves as a basis for its control over the executive and facilitates its legislative activity.

For the achievement of objective 3.2, BNAO sets the following sub-objectives:

3.2.1 Establishing a mechanism for cooperation and interaction withthe Public AccountsSub-committee to the Budget and Finance Committee.

3.2.2Enhancing relations with Parliament by presenting on a regular basis results of significant audits, expert opinion on legislative drafts, andbyparticipating actively in the budgetary procedure.

3.2.3Preparing analytical reportspresenting the state of affairs in certain public sector areas, the concurrentrisks and development trends as well as highlightingexamples of good practice and possible decisions (including through legislative amendments).

Objective 3.3

Strengthening auditees’confidence in the usefulness of BNAO’s workfor the improvement of their work

BNAO seeks through the achievement of high professional results in its work to be acknowledged by the auditees not only as a control body but also as a usefulpartner.

For the achievement of objective 3.3, BNAO sets the following sub-objectives:

3.3.1 To carry out audits focusing on the identification ofrisk areas, ascertainingthe root causes for detected weaknesses and irregularities and providingopportunity for formulation ofrelevant, clear andfeasiblerecommendations – a basis for taking adequate management decisions.

3.3.2 To promote the proper functioning of internal control, including internal audit, as a tool for good financial management inpublic sector organisations.

3.3.3 To develop and put in place feed-back mechanisms in order to be informed about the impact of BNAO’s work for improving management in the audited entities.

3.3.4 Winrecognitionas a disseminatorof good practice in the management of public funds and activities.

Objective 3.4

Making the BNAOan equal and desired partnerof other SAIsfor exchange of professional knowledge and experience

BNAO will work towards becominga modern audit institution,on the international level,which develops and applies good auditing practices.

For the achievement of objective 3.4, BNAO sets the following sub-objectives:

3.4.1 Active participation in international fora and activities for presenting BNAO’s experience and achievements.

3.4.2 Undertaking initiatives for and participating in international cooperation activitiesof common interest, such asparallel audits, workshops, etc.

3.4.3 Participation in initiatives for supporting the professional development and institution building of other SAIs.

The present strategic plan was adopted with a Decision No.200 of the BNAO dated 30.07.2007 (ProtocolNo.31).

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