2016-12-19 / Polisen / Polismyndigheten Stina Nilsson Kristiansson
Conditions for internal audit in the public sector in Finland, Sweden and Iceland
The Nordic Network for Public Sector Internal Auditors (NORPIA) has conducted a comparison of the conditions between internal audit functions in Finland, Sweden and Iceland. The purpose of this comparison has not been to explain the different systems/structures of the public sector between the countries but of course it influences the conditions. We can see that there are similarities but also differences. In this article we will very shortly go through what we have found out.
All three countries have a decentralized internal audit system where the auditors are directly employed by the agency/ministry etc. they work for. Some countries in Europe, Netherlands for instance, have a different system where there is a centralized body where all or some of the internal auditors are employed. None of the countries has a regulatory authority for internal audit. Island and Finland does not have a function for central harmonization unit (CHU) for internal audit whereas Sweden have no function formally named as CHU but in practice an agency is acting as CHU.
We can see that there are differences of the structure of the public sector between the countries. In Iceland there are two levels of government, national and local level. Finland has two levels, central and local government and Sweden has three levels including a county level.
Only Sweden has national legislation about internal audit and the Government points out which agencies that are obliged to establish an internal audit function. On the regional and local level there is no legislation about internal auditing. In Finland internal audit is mentioned in the state budget decree. The decree states that it is up to management to decide whether an internal audit function should be established or not based on the status of internal control within the agency. In Iceland there is a newly revised Public Finance Act which states that internal audit shall be established within the central government but this article has not yet been implemented.
If we compare the number (numbers are estimated) of internal auditors within the public sector we see some variations.
- Finland: 200 internal auditors (47 organisations)
- Sweden: 140 internal auditors (69 agencies)
- Iceland: 14 -16 internal auditors in audit units (4 units on the central level and 2 on the local)
Finland has the highest number and it includes auditors at municipal level and public owned companies. In Sweden there are some internal auditors employed at regional/county level and public owned companies but we don’t have any information about how many they might be.
Most of the internal audit functions are very small in all three countries and there are no regulations/criterias deciding the size of the function.
You will find some audit committees in Sweden and Iceland but not in Finland.
In Sweden the audit reports are public but there are exceptions. In Iceland only the reports from City of Reykjavik audit unit are in most cases public depending on the nature and subject. In Finland it depends on the subject and if the report deals with third party it is usually public.
None of the three countries have regulations about requirements of certification, experience or education of the internal auditors.
In summary we can see that there are things that Sweden, Finland and Iceland have in common but there are also differences between the countries. In 2017 a member of NORPIA will carry out a deeper study of the countries to compare internal audit in the public sector. This study will also will include Norway and Denmark. Hopefully the outcome of this study will be published in the IIA Magazine and give us a deeper knowledge and understanding about the conditions of internal auditing in the Nordic countries