Opinion of the European Central Bank of 3 June 2016 on the internal audit of Българска народна банка (Bulgarian National Bank) (CON/2016/30)
Date: 2016-06-03
Institutions: European Central Bank
Subjects: Bulgaria, audit, central bank, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 3 June 2016  

on the internal audit of Българска народна банка (Bulgarian National Bank) 

(CON/2016/30) 

Introduction and legal basis 

On 27 April 2016 the European Central Bank (ECB) received a request from the National Assembly of the  

Republic of Bulgaria for an opinion on a draft law amending and supplementing the Law on the internal 

audit in the public sector and amending the Law on Българска народна банка (Bulgarian National Bank 

(BNB)) (hereinafter the ‘draft law’). 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third indent of Article 2(1) of Council Decision 98/415/EC1, as 

the draft law relates to a national central bank. In accordance with the first sentence of Article 17.5 of the 

Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion. 

1.  

Purpose of the draft law 

1.1   The purpose of the draft law is to amend the law on BNB in order to improve the organisation and 

the legal framework for the internal audit of BNB. The draft law provides that the internal audit of 

BNB is undertaken by an internal audit unit managed by a chief auditor. In order to be appointed 

BNB’s chief auditor and the auditors of the internal audit unit must meet the requirements set out in 
the Law on internal audit in the public sector2. 

1.2  Pursuant  to  the  draft  law  the  internal  audit  of  BNB  is  undertaken  in  compliance  with  the 

international  standards  for  the  professional  practice  of  internal  auditing,  the  Code  of  Ethics  of 

Internal Auditors, the rules of the Internal Auditors Committee of the European System of Central 

Banks (ESCB) and the rules of operation adopted by BNB’s Governing Council. 

1.3   The draft law provides that the objectives, powers, responsibilities, audit plan and activity report of 

the internal audit of BNB is approved by BNB’s Governing Council. 

2. 

Observations 

2.1   The  ECB  welcomes  that  the  draft  law  clarifies  that  the  internal  audit  of  BNB  is  undertaken  in 

compliance with the international standards for the professional practice of internal auditing and the 

rules  of  the  Internal  Auditors  Committee  of  the  ESCB.  In  this  regard  the  Audit  Charter  for  the 

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Council  Decision  98/415/EC  of  29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national  authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 

See Article 19(2) of the Law on internal audit in the public sector. 

 
 
 
 
 
                                                 
 
ECB-PUBLIC 

Eurosystem/ESCB and the Single Supervisory Mechanism3 (hereinafter the ‘Audit Charter’) refers 

to  and  supplements  the  Institute  of  Internal  Auditors’  (IIA)  International  Standards  for  the 
Professional  Practice  of  Internal  Auditing  (hereinafter  the  ‘IIA  Standards’)4  and  the  IIA  Code  of 
Ethics5.  In  particular  IIA  Standard  1210,  which  is  reflected  in  the  Audit  Charter,  provides  that 

internal  auditors  must  possess  the  knowledge,  skills  and  other  competences  needed  to  perform 

their  individual  responsibilities.  Moreover  the  internal  audit  activity  collectively  must  possess  or 

obtain the knowledge, skills, and other competencies needed to perform its responsibilities. 

2.2  Against  this  background,  the  draft  law  requires  that  BNB’s  chief  auditor  and  the  auditors  in  the 

internal audit unit meet the requirements for the appointment of internal auditors set out in the Law 
on internal audit in the public sector6. In accordance with these requirements internal auditors must 

have a ‘Public Sector Internal Auditor’ certificate issued by the Minister of Finance, an IIA ’Certified 
Internal Auditor’ certificate , or an IIA ‘Certified Government Auditing Professional’ certificate7. The 

ECB  notes  in  this  regard  that  the  IIA  encourages  internal  auditors  to  demonstrate  proficiency  by 
obtaining  appropriate  certifications  and  qualifications8.  The  draft  law  requires  internal  auditors  to 

have  one  of  these  certificates  when  they  are  recruited.  Although  this  requirement  does  not 

correspond  to  a  specific  IIA  recommendation,  the  objective  of  having  formal  professional 

qualifications  for  the  internal  audit  function  is  clearly  acknowledged  by  the  ECB.  However,  the 

limitation to specific certifications may unduly discriminate against other relevant and internationally 

recognised certifications and qualifications in the field of auditing, control, risk management, fraud 
and  corporate  governance9.  In  addition  the  ’Public  Sector  Internal  Auditor’  certificate  does  not 

appear to correspond to the specific tasks of a central bank and may be less pertinent to a central 

bank’s internal audit function than a requirement for higher education in a relevant field. Therefore, 

the ECB recommends that careful attention be given to not unreasonably limiting the recruitment of 

appropriately qualified technical experts into BNB’s internal audit unit, as this may affect the proper 

balance  and  mixture  of  skills  within  the  internal  audit  function,  thus  potentially  affecting  BNB’s 

autonomy in staff matters as referred to in paragraph 2.3. 

2.3   The  ECB  considers  that  the  date  of  entry  into  force  of  the  draft  law,  currently  foreseen  for  1 

January 2017, introduces an element of uncertainty as regards the feasibility of the provision, since 

BNB’s chief auditor and the auditors in the internal audit unit would have to obtain the certificates 

mentioned  in  paragraph  2.2  of  this  Opinion  by  that  date  unless  they  already  have  such 
certificates10. As noted in past ECB Convergence Reports, autonomy in staff matters, an aspect of 

the principle of central bank financial independence, implies that a national central bank may not be 

put in a position where it has limited control or no control over its staff, or where the government of 

a Member State may influence its policy on staff matters. The ECB considers it important that the 

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Published on the ECB’s website at www.ecb.europa.eu. 

The IIA  Standards are published on the IIA’s  website at www.theiia.org. 

The IIA Code of Ethics is published on the IIA’s website at www.theiia.org 

See Article 22(4) of the draft law. 

See Article 19(2) and §1 of the Law on the internal audit in the public sector. 

See the interpretation accompanying IIA Standard 1210. 

Such  as  the  certifications  offered  by  the  Association  of  Chartered  Certified  Accountants  and  the  certificates  of  Certified 
Public Accountant, Chartered Financial Analyst, Certified Fraud Examiner and Certified Information Systems Auditor.  

In  accordance  with  Ordinance  No.  6  of  the  Minister  of  Finance  of  29  June  2006  the  examination  for  the  ’Public  Sector 
Internal Auditor’ certificate is carried out once a year in June.   

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ECB-PUBLIC 

National  Assembly  of  the  Republic  of  Bulgaria  ensures  that  the  draft  law  provides  for  a  sufficient 

timeframe to give BNB’s chief auditor and the auditors in the internal audit unit the opportunity to 

meet  the  new  certification  requirements.  Therefore,  the  ECB  recommends  that  the  date  of  entry 

into force should be decided in close and effective cooperation with BNB, taking due account of its 

views so as to preserve BNB’s autonomy in staff matters. 

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 3 June 2016. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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