PROCEDURES
AND PRINCIPLES ON INTERNAL CONTROL AND EX-ANTE FINANCIAL CONTROL
SECTION ONE
Purpose, Scope, Basis
and Definitions
Article 1- The purpose of this Procedures and
Principles is to determine principles, works, transactions and processes regarding
internal control and ex-ante financial control activities of the public
administrations within the scope of general government excluding regulatory and
supervisory agencies.
Basis
Article 2 - This Procedures and Principles has
been prepared based on Article 55, 56, 57 and 58 of the Public Financial
Management and Control Law dated 10.12.2003
and numbered 5018.
Definitions
Article 3 - The
following terms included in this Procedures and Principles are defined as
follows;
Ministry:
Ministry of Finance,
Law: Public
Financial Management and Control Law dated 10.12.2003 and numbered 5018,
Administration: Each public administration within the scope of general government,
excluding regulatory and supervisory agencies,
Head of Public Administration: Respectively, in
ministries the undersecretary, in the Ministry of National Defense the
Minister, in other public administrations the highest administrator, in special
provincial administrations the governor and in municipalities the mayor,
Internal Control: Entire financial and other controls covering
the organization, method, process and internal audit established by the
administration in order to ensure that the activities are carried out in an
effective, economic and efficient manner in compliance with the purposes of the
administration and determined policies and the legislation, the assets and
resources are protected, accounting records are kept in an accurate and
complete manner and financial and management information is produced in time
and in a reliable manner,
Ex-ante financial
control: Control of
the financial decisions and transactions of the public administrations related
to the revenue, expenditure, assets and liabilities concerning their compliance
with the budget, budget item, available appropriation amount, expenditure
program, financing program of the administration, the central government budget
law and other financial legislation provisions and in terms of the utilization
of the resources in an effective, economic and efficient manner.
Letter
of opinion: Opinion in writing or
annotation written on the baseline document appropriate which is delivered as a
result of ex-ante financial control regarding whether the financial
decisions and transactions of the public administrations are deemed appropriate,
Financial services unit: The unit in public administrations which fulfills the duties set forth
in Article 60 of the Law No 5018,
The Procedures and Principles: This Procedures and Principles.
SECTION TWO
Internal Control
Objectives of internal control
Article 4- Objectives
of internal control are to ensure that
a)
public revenues,
expenditures, assets and liabilities are managed in an effective, economic and
efficient way,
b) public
administrations operate in accordance with the laws and other regulations
c)
irregularities and frauds are prevented in all
kinds of financial decisions and transactions,
d)
regular, timely and reliable reporting and acquisition of information are
assured for decision-taking and monitoring
e) the
assets are protected against any abuse, prodigality and loss.
Internal control standards
Article 5- Internal
control standards shall be defined and published by the Ministry within the
framework of the central harmonization duty. The administrations are obliged to
abide by and fulfill these standards in all their financial and non-financial
transactions.
Provided they are not violating the law
and internal control standards, standards regarding all kinds of methods,
processes and specific transactions may be determined by the administrations within
the framework of their duty fields.
Basic principles of internal control
Article 6- Basic
principles of internal control are as follows:
a) Internal control activities shall
be carried out within the framework of managerial responsibility of the administration.
b) Primarily the risky areas shall
be taken into consideration in internal control activities and arrangements.
c) The responsibility concerning internal
control shall cover all officials involved in the transaction process.
d) Internal control shall cover all
financial and non-financial transactions.
e) Internal control system shall be
evaluated at least once in a year and the measures to be taken shall be determined.
f) In internal control arrangements
and implementations, sound financial management principles such as compliance
with the legislation, transparency, accountability and economy, efficiency and
effectiveness shall be taken as basis.
Components and general conditions of internal control
Article 7- Components
and general conditions of internal control
are as follows:
a) Control environment: It is
essential that administrators and employees of the administration ensure a
positive view towards internal control and possess ethical values and an honest
management approach. Within the framework of performance based management
approach, it is ensured that duties, authority and responsibilities are assigned
to knowledgeable and competent persons through attaching importance to expertise
and the performance of the personnel is evaluated. Organizational
structure of the administration and the duties, authority and responsibilities of
the personnel shall be determined clearly.
b) Risk assessment: Risk assessment
is an activity which is performed by taking into account the changes occurred under
the existing conditions and which presents continuity. In order to achieve the objectives
and targets set forth in its strategic plan and performance program, the administration
shall evaluate the risks caused by both internal and external reasons.
c) Control activities: All kinds of preventive,
detective and corrective control activities shall be determined and applied.
d) Information and communication: All
kinds of information which will be required by the administration should be recorded
and classified appropriately and should be forwarded in a format and period of
time that will allow the concerned persons to fulfill internal control and
other responsibilities.
e) Monitoring: Internal control
systems and activities shall be monitored, reviewed and evaluated continuously.
Authority and responsibilities regarding internal control
Article 8- Heads
of public administrations shall be responsible for the establishment and supervision
of internal control system and the authorizing officers, within the framework
of their duty and authority fields, shall be responsible for the functioning of
internal control system related to financial decisions and transactions.
Financial services units of the
administrations shall work as regards the establishment of internal control
system and the implementation and development of standards and shall carry out the
ex-ante financial control activity. Accounting officers shall be responsible
for keeping the accounting records in accordance with the relevant procedure
and standards, in a transparent and accessible manner.
Heads of public
administrations, authorizing officers and other administrators, within the
framework of their duties and authority, shall be responsible for building
professional values and an honest management approach; assigning financial
authorities and responsibilities to knowledgeable and qualified administrators
and personnel; ensuring that defined standards are followed; avoiding
activities that contradict the legislation; and ensuring a suitable work
environment and transparency with a comprehensive management approach.
Heads of public administrations and
authorizing officers who are allocated appropriation through the budget shall
issue, annually, an internal control assurance declaration which states that
works and transactions have been realized in accordance with sound management
principles, control arrangements and the legislation and shall attach them to
the unit accountability reports and administration accountability reports.
Internal control arrangements and
functioning of internal control system shall be subject to evaluation at least
once a year and necessary me
Central harmonization duty
Article 9- Standards
and methods related to internal control shall be determined, developed and
harmonized by the Ministry. In this framework, the Ministry;
a) shall determine internal control
standards and monitor whether these standards are abided by,
b) shall determine standards and
methods on ex-ante financial control as well as the financial decisions and
transactions that are subject to ex-ante financial control and their control
principles and procedures,
c) shall ensure coordination among
administrations and provide guidance services for administrations in the field
of internal control,
d) shall establish cooperation with
the administrations for general and specific arrangements related to internal
control and ex-ante financial control, organize study meetings,
e) shall monitor the functioning of the systems
through taking reports and information from the administrations about internal
control and ex-ante financial control arrangements and implementations,
f) shall determine working
principles and procedures of the financial services units of the administrations,
g) shall search national and
international good practice examples, carry out activities for their
implementation,
h) shall prepare training programs
related to internal control and financial management and control system.
SECTION THREE
Ex-ante Financial Control
Scope of ex-ante financial control
Article 10- Ex-ante financial control duty shall be
carried out by the spending units and financial services unit within the
framework of managerial responsibility of the administrations.
Ex-ante financial
control consists of the controls carried out by the spending units and controls
carried out by the financial services unit. The ex-ante financial control to be
performed by the financial services unit consists of the controls determined by
the Procedures and Principles and controls foreseen to be performed by this
unit within the framework of the arrangements to be made by the
administrations.
Financial decisions
and transactions related to the revenue, expenditure, assets and liabilities shall
be controlled by the spending units and financial services unit in terms of their
compliance with the budget, budget item, available appropriation amount, detailed
expenditure program or financing programs of the administration, the central
government budget law and other financial legislation provisions. Furthermore, financial
decisions and transactions shall also be controlled by the spending units in
terms of utilization of the resources in an effective, economic and efficient
manner.
Quality of ex-ante
financial control
Article
11- Whether a
positive opinion has been granted or not as a result of ex-ante financial
control shall have an advisory and preventive characteristic, it shall not be
binding in the implementation of financial decisions and transactions by the
authorizing officer.
That
financial decisions and transactions are subject to ex-ante financial control
and that positive opinion is granted
as a result of ex-ante financial control shall not remove the responsibility of
authorizing officers and realization officers.
Ex-ante financial control process
Article 12- Financial
decisions and transactions that are subject to ex-ante financial control of the
financial services unit shall be sent to financial services unit to be controlled.
A letter of opinion shall be issued and sent to the concerned unit for the transactions
controlled by the financial services unit. In the event that letters of opinion
are issued as a result of ex-ante financial control, they should be detailed,
clear and accompanied by statement of reasons. Letter of opinion of the
financial services unit shall be kept in the relevant operation file and one
copy shall be attached to the payment order document.
Process control shall be performed
in spending units. In process control, each transaction shall be designed and
implemented so as to include the control of the previous transactions. Those
who assume duties in the execution of financial transactions shall control the
transactions concluded prior to the transaction they are to make. In order to
ensure process control, process flow chart of the financial transactions shall
be prepared and put into effect upon the approval of the head public
administration.
Authorizing officers shall assign
their deputies or one or more realization officers who are hierarchically
closest to their level to issue payment order documents. Realization officers
that are assigned with the duty of issuing payment order document shall apply ex-ante
financial control on the payment order document and the documents attached thereto. As a result of the control
performed by these realization officers, the payment order document shall be
annotated with “Controlled and deemed appropriate” and signed.
Control procedure
Article 13– Following
controls performed in the spending units and financial services units, provided
the financial decisions and transactions are deemed appropriate, the annotation
of “Controlled and deemed appropriate” shall be written on the baseline
document or a letter of opinion shall be issued.
In the event that the financial
decisions and transactions are not deemed appropriate, a letter of opinion clearly
stating the reasons shall be written and sent to the relevant unit by attaching
the documents of the financial decisions and transactions that are subject to
control.
In the controls performed by
financial services units pursuant to the
articles 17 and 26 of the Procedures and Principles, it is obligatory that a
letter of opinion is issued. In this letter, whether the financial decisions
and transactions are deemed appropriate or not after the control performed and
if not deemed appropriate, its reasons shall be stated clearly. Regarding the decisions
and transactions found to have deficiencies which can be corrected in line with
its relevant legislation, provided that these deficiencies and how they can be
corrected are stated and on condition that these are corrected, a letter of
opinion indicating the transaction is deemed appropriate may be issued.
Control authority
Article 14– Ex-ante
financial control authority belongs to the head of financial services unit. Letter
of opinion and control annotations issued as a result of the control shall be
signed by the head of financial services unit. Head of financial services unit
may delegate this authority in writing to his deputy or to the head of internal
control division of the unit on condition that he clearly defines the limits. In
the event that head of financial services unit has become the authorizing
officer, duty of ex-ante financial control shall be executed by head of
internal control division of the unit.
The
control of the financial decisions and transactions that are subject to ex-ante
financial control of the financial services unit shall be performed by the
internal control division of the unit.
The
duty of ex-ante control on payment order documents and its attachments in
spending units shall be performed by the realization officer assigned with
issuing payment order document.
Principle of segregation of duties
Article 15- Duties
of the authorizing officer and accounting officer cannot be given to the same person.
Those who carry out ex-ante financial control duty in financial services unit
shall not be assigned any duty in the processes of preparation and
implementation of financial decisions and transactions such as preparation of
approval document and its attachments, specifications and draft contracts,
documentation of financial decisions and transactions and accepting goods and
services and shall not be chairman or member of Tender Commission, Examination
and Admission Commission.
Financial Decisions and Transactions Subject To
Ex-ante Financial Control of Financial Services Unit
Calculation of financial burden of draft laws
Article 16- Draft
laws which will cause a decrease in revenues or an increase in expenditures and
which will bring liabilities to the administration shall be sent to the
financial services unit which shall ensure the calculation of their financial
burdens. The financial burdens of draft laws shall be calculated for a period
of at least three years and shall be evaluated within the framework of the
medium term program and medium term fiscal plan in terms of its effects on the
strategic plan, performance program and the budget of the administration. In
draft laws concerning social security, actuarial calculation for at least
twenty years shall be performed.
Commitment document and draft contracts
Article 17–
Whether subject to or not subject to the procurement laws, administrations’ commitment
documents and draft contracts which require expenditure and whose price exceeds
one million New Turkish Liras for goods and services procurements and two
million New Turkish Liras for construction works shall be subject to control. These
amounts do not include value added tax.
Works related to the projects
included in the annual programs which are approved by the Council of Ministers
and included within the scope of article 1 of the Law numbered 3833 and dated
2/7/1992 and commitment documents and draft contracts for all kinds of goods
and services to be locally supplied for the needs of the Turkish Armed Forces
Units that are dispatched abroad as required by the international agreements
and Decree of Council of Ministers along with the commitment documents
regarding the expenditures made within the scope of Expropriation Law numbered 2942 shall not be
subject to control regardless of their amounts.
Commitment
documents and draft contracts that are subject to control shall be brought
together in an operation file which will include all the related information
and documents and shall be sent to the financial services unit by the
authorizing officer.
Commitment
documents and draft contracts shall be controlled latest within ten workdays.
Letter of opinion to be issued as a result of the control shall be sent to the concerned
authorizing officer together with the operation file.
Appropriation dispatch documents
Article 18–
Distribution of budget appropriations shall be performed via appropriation
dispatch documents. Appropriation dispatch documents shall be sent to financial
services unit to be controlled after being signed by the authorizing officer.
Appropriation dispatch documents, which are controlled and deemed appropriate
in terms of their compliance with the central government budget law or budget,
budget item, detailed expenditure or financing program and the procedures and
principles on the distribution and utilization of budget appropriations, shall
be finalized latest within three workdays. Appropriation dispatch documents
that are not deemed appropriate shall be forwarded to the authorizing officer
accompanied by a statement of reasons.
Appropriation transfer transactions
Article 19– Appropriation transfers which the
public administrations within the scope of central government will make within
their budgets in accordance with the Law and the central government budget law and
the transfers which the other administrations shall make within their budgets
and upon the request of the spending agencies the framework of the related arrangements shall be
prepared by budget and performance program division of financial
services unit and shall be
controlled by internal control division prior to being submitted to the
approval of the head of public administration. Such transfers shall be
finalized latest within two workdays after being controlled within the
framework of the Law, central government budget law and the arrangements
related to the budget transactions according to their references.
Requests of transfers which are found in
contradiction with the related legislation shall be sent to the authorizing
officer accompanied by a statement of reasons.
Cadre distribution charts
Article 20– Cadre
distribution charts of the administrations that are subject to the Decree Law
on General Cadre and Procedures numbered 190 shall be subject to control upon
the assurance of conformity with the Ministry and State Personnel Presidency
within the framework of the said Decree Law and Regulation on the Procedures
and Principles of Cadre Creating, Release, Cadre Change and Use of Cadres.
Cadre
distribution charts of the administrations that are subject to the Decree Law
on the Cadres of the Academicians of the Higher Education Institutions numbered
78 shall be subject to control upon the approval of the Higher Education Board.
Cadre
distribution charts shall be controlled latest within five days. Payments to be
made to the relevant parties shall be according to these approved cadre distribution
charts. Any change on these charts shall be subject to control as well.
Creations and changes of cadre in the
administrations that are not subject to Decree Law numbered 190 shall be
subject to control within the same period.
The
provisions of this article shall not apply to the cadres of the Turkish Armed
Forces personnel and the cadres to be kept confidential due to national
security reasons.
Travel card lists
Article 21- The list of the personnel to be given free
travel card in accordance with Article 48 of the Travel Allowance Law numbered
6245 within the framework of the principles to be defined jointly by the
Ministries of Interior, Finance and Transport shall be controlled by financial
services unit following the evaluation of the unit proposals. Relevant requests
shall be controlled latest within three workdays after being controlled in
terms of their compliance with the principles stated above and the arrangements
done by the Ministry and also in terms of the adequacy of the budget
appropriation. Requests that are not deemed appropriate shall be sent to the relevant
unit accompanied by a statement of reasons.
Mobile duty compensation charts
Article 22- According
to the institutional structures and
necessities of administrations mobile duty distribution lists to be prepared for
each unit, region, province and district shall be controlled by the financial
services unit. These distribution charts shall be controlled latest within
three workdays after being controlled in terms of their compliance with the
Travel Allowance Law No 6245, the arrangements made based on this Law,
appropriations included in the budget for this purpose and the charts visaed by
the Ministry. Requests that are not deemed appropriate shall be sent to the relevant
unit accompanied by a statement of reasons.
Temporary worker positions
Article 23- Within
the framework of the authority determined in the central government budget law,
distribution in monthly and unit basis of the number of the temporary personnel
positions (person/month) to be employed in the administrations within the scope
of general budget, administrations with a special budget and social security
institutions shall be subject to control.
After the visa of the monthly
distribution of the number of temporary worker positions by the Ministry of
Interior (person/month) to be employed in the local administrations that have
not launched norm-cadre implementation, the charts indicating the distribution
of the temporary workers as to the units shall be subject to control.
Temporary worker positions shall be
controlled by the financial services unit latest within five workdays. The
charts that are not deemed appropriate after control shall be sent to the
relevant unit accompanied by a statement of reasons.
Fringe benefit charts
Article 24- Among the civil servants employed in the
administrations within the scope of the Civil Servants Law No 657 and the
annexed provisional Article 9 thereof, in accordance with the Decree of Council
of Ministers which entered in to force basing on the Article 152 of the said
Law relating to who will be paid increase and compensation according to the
duties they carry out and positions they hold, the amount of the increase and
compensation to be paid, payment procedures and principles; the charts prepared
over free cadres indicating the duty or cadre titles of the personnel to be
paid increase or compensation, classes, grades, numbers and service places, the
quantities of increase and compensation in line with these and the lists showing their distribution in
terms of units shall be subject to the control of financial services unit. The
control operation, process and the approval process of the charts by the head
of administration shall be carried out within the framework of procedures and
principles stated in the said Council of Ministers Decree.
Number of contractual personnel and their contracts
Article 25- The
contracts to be made with the personnel
to be employed by the public administrations in accordance with the charts and
the type contract visaed by the Ministry annually on the basis of each
administration and the contracts to be made with the personnel to be employed
without the visa of the Ministry as result of the relevant legislation shall be
subject to control. These contracts shall be examined in terms of their compliance
with the charts and the type contracts visaed by the Ministry, with the
relevant laws and other legislation and the arrangements foreseen in their
budgets and shall be finalized latest within five workdays. The contracts which
are not deemed appropriate shall be sent to the concerned unit accompanied by a
statement of reasons.
Foreign service rent contribution
Article 26- The
operation file including the documents regarding the foreign service rent
contribution to be paid to the personnel which are subject to the Civil
Servants Law No 657 and Turkish Armed Forces Personnel Law No 926 and to be
appointed to the foreign service cadres on a permanent basis shall be prepared
by their units and shall be sent to the financial services unit in order to be
controlled. The requests shall be examined in accordance with the annual central
government budget law in terms of their compliance with the procedures and principles
determined by the Ministry and positive opinion shall be granted for the
requests deemed appropriate latest within three work days. Requests that are
not deemed appropriate shall be sent to the relevant unit accompanied by a
statement of reasons.
SECTION FIVE
Other Provisions, Final
Provisions
Arrangements to be made by the
administrations
Article 27 –When
required by the administrations, arrangements may be made within the framework
of same principles and procedures regarding the control of financial decisions
and transactions by the financial services unit apart from the financial
decisions and transactions set forth in the procures and principles. The
arrangements to be made by the administrations in this respect shall be put
into force upon the approval of the head of public administration. By taking
into consideration the risky fields, financial decisions and transactions which
shall be subject to ex-ante financial control of financial services unit shall
be determined according to their type, amount and subject in these arrangements
and shall be evaluated once every year.
The arrangements regarding internal
control and ex-ante financial control shall be notified to the Ministry within
ten workdays upon its approval by the head of administration.
Financial decisions and
transactions which are not granted positive opinion
Article 28- In the
event that the transactions not granted positive opinion as a result of ex-ante
financial control are realized by the authorizing officers, such transactions
shall be recorded by the financial services unit and shall be notified to the
head of administration on a monthly basis. The said records shall also be
submitted to the auditors during internal and external audits.
Control periods
Article 29- Financial
services unit are obliged to finalize control and positive opinion processes
within the periods specified. In the determination of the starting date of the
periods specified in the Procedures and Principles, the workday following the
registration date of the incoming document in financial services unit shall be
taken as basis. These periods may be increased up to its one fold upon the
request of the financial services unit and approval of the head of public administration.
Regulation and coordination duty
Article 30- The
Ministry, within the framework of the provisions of the Law and Procedures and
Principles, shall be assigned and authorized to ensure coordination regarding
the methods and standards related to internal control and ex-ante financial
control.
Elimination of Hesitations
Article 31- The
Ministry shall be authorized to eliminate the uncertainties possible to occur
in the course of the implementation of this Procedures and Principles.
Entry into Force
Article 32- This
Procedures and Principles shall
enter into force on 1.1.2006.
Execution
Article 33- The
Minister of Finance shall execute the provisions of this Procedures and
Principles.