Internal Control and Audit in the Public Sector

New Rulebooks of the Ministry of Finance: Internal Control and Methodology of Internal Audit in the Public Sector

The Ministry of Finance has adopted two important rulebooks that further regulate the system of management, control, and internal audit in the public sector. This regulation aims to strengthen accountability, improve risk management, and ensure more efficient use of public funds.

The documents adopted on 20 October 2025 represent a significant step toward modernizing and aligning public sector practices with contemporary principles of management and control.

1. Rulebook on the Detailed Manner of Managing, Leading, and Performing Internal Control in Public Sector Entities

(“Official Gazette of Montenegro”, no. 120/25 of 20.10.2025)

This rulebook provides a more detailed regulation of the structure, processes, and responsibilities related to internal control in public sector entities. The focus is on:

• the manner of managing and leading entities,
• the implementation of internal control and risk management,
• the role of management bodies and heads of organizational units.

Key elements of the rulebook

The rulebook clearly defines the role of the management body, which is obliged to ensure:

• the establishment of a functional organizational structure,
• the determination of core values and ethical standards,
• strategic planning for a period of at least four years,
• adequate risk management in accordance with the methodology provided in Annex 2,
• effective communication with all interested parties.

Managers are particularly responsible for implementing internal control in accordance with the framework defined in Annex 1 of the rulebook, as well as for the efficient use of resources and achieving the objectives of the entity.

Termination of previous regulations

With the entry into force of this rulebook, three previous regulations in the area of financial management, control, and procedures regarding notifications of suspected fraud cease to be valid. This consolidates and simplifies the legal framework, with clearly defined responsibilities and processes.

2. Rulebook on the Methodology of Internal Audit Work and Document Retention

(“Official Gazette of Montenegro”, no. 120/25 of 20.10.2025)

The second rulebook adopted on the same day relates to internal audit in the public sector and prescribes:

• the methodology of internal auditors’ work,
• the manner and deadlines for retaining documentation created during the audit process.

This document provides the foundation for unified practices among all internal audit units in the public sector, enhancing professional standards and transparency.

Upon entry into force of the rulebook, the previous regulation from 2020 that governed this area ceases to be valid.

Importance of the new rulebooks for the public sector

The introduction of these two rulebooks represents a comprehensive approach to strengthening internal controls and the audit system. The new framework enables:

• better identification and management of risks,
• more transparent and responsible management of public funds,
• clearer accountability of managers and management bodies,
• modernization of internal audit processes in line with international standards.

This is a step toward strengthening public trust and improving the efficiency of institutions, with stronger control over processes and procedures relevant to the functioning of the public sector.