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Evaluation of the Internal Control System at Central Budgetary Institutions


Zoltán István Dormán
Auditor, State Audit Office of Hungary

Gábor Görgényi
Auditor Counsellor, State Audit Office of Hungary

Margit Horváth
Director of Audit, State Audit Office of Hungary

Published in: Public Finance Quarterly 2013/2 (p. 199-218.)


Summary: During the audit on the final accounts for 2011, the State Audit Office of Hungary (SAO) reported on the operation of internal controls in a separate report, the background and results of which are presented in the present paper. The assessment of the operation of the internal control system was conducted using a 400-question questionnaire, which in turn was evaluated by a proprietary algorithm, generating the qualification of the components and the whole of the internal control system. Based on the summary and evaluation of results, it was determined that in 2011, the development and operation of the internal control system of central budgetary institutions fundamentally fulfilled its function. The operation of internal controls proved to be 85 per cent partially or entirely compliant at the 28 institutions and chapter-managed appropriations audited. The assessment proved that if internal controls were missing or not adequately established at the budgetary institutions audited, the deficiencies in their operation could be linked to the errors uncovered in the budget reports; furthermore, a correlation could be observed between the quality of internal audit activity and the compliance of the operation of the internal control system.

Keywords: internal control, control system, internal audit, budget report, State Audit Office

Journal of Economic Literature (JEL) kód: H10, H3, H60


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