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Call key data

Support to the Public Internal Financial Control in Moldova

Funding Program

Neighbourhood, Development and International Cooperation Instrument – Global Europe

Call number

EuropeAid/184325/DD/ACT/MD

deadlines

Opening
18.06.2025

Deadline
22.09.2025 12:00

Call budget

€ 1,250,000.00

Estimated EU contribution per project

1250000

Link to the call

ec.europa.eu

Link to the submission

Call content

short description

The overall objective of the call is to improve the efficiency, effectiveness and transparency of the public finance management and the implementation of the EU acquis in the area of Financial Control.

Call objectives

The specific objevtives are to ensure that public sector’ resources are used in conformity with the good governance principles, internationally recognised frameworks, standards and EU good practice by implementing internal managerial control, internal audit and setting up the capacity for anti-fraud coordination service (AFCOS) in the public sector of the Republic of Moldova.

Background

The Public Internal Financial Control (PIFC) has been implemented in Moldova since 2010 under three development programmes. The last one was for the period 2018–2020. The implementation of the PIFC programmes resulted in a legal framework, standards and methodology for internal control and internal audit, organizational structures – internal audit units and designated internal control (financial management and control) experts among the senior managers in the budget organisations. The Central Harmonisation Department for PIFC (CHU) is functioning in the MoF since 2008. The Government of Moldova and the MoF in particular, have been committed to the reforms by adopting the necessary decisions and monitoring the implementation of the PIFC action plans.

The PIFC system is in developing stage in conformance with the COSO Internal Control Integrated Framework and International Internal Audit Standards. The implementation of the good governance principles, including risk management and benefiting from the internal audit function, requires longer time and goes hand in hand with the maturity of the public sector organisations and their management.

As part of the PFM, the progress in the area of PIFC has been assessed on a regular basis - PEFA, SIGMA OECD, and ad hoc for various EU budget support programmes and other donor projects. The PEFA report from July 2022, and the Monitoring Report on Public Administration of the Republic of Moldova, prepared by SIGMA OECD in October 2023 confirm the adequacy of the legislation with some deficiencies in the standards and in the methodologies. Both reports provide recommendations for strengthening the internal managerial controls and the internal audit capacity.

The first European Commission's Enlargement Report, chapter 32 “Financial control”, published on November 8, 2023, concludes that the PIFC has not yet been fully implemented and is not fully operational in the Republic of Moldova.

In brief the issues for the PIFC implementation are:

Difficulties to conform with the National Internal Control Standards (NSIC), including in organisations with designated coordinators for internal management control. This is caused by the persisting situation of unclear division between governing level, management of first and second level and the role of the internal audit. The risk assessment and management is in very early development stage, internal controls are not sufficiently integrated in the business processes to mitigate the risks. Subsequently, the internal auditors cannot fulfil their obligation to provide assurance and advice on the adequacy and effectiveness of governance and risk management.
The majority of the Internal Audit (IA) units remain understaffed. There are 131 IA units with 263 job positions, out of which 134 were occupied in 2023. 60% of the IA units had only one staff member. While this situation is a major obstacle for implementing the internal audit standards there is room for consolidation of the IA resources.
The CHU PIFC in the MoF provides oversight, methodological advice, trainings and monitors the reforms. The unit comprises 7 staff members, 4 positions being filled in, and has no division between the Internal Control (Risk Management, Managerial Accountability) and Internal Audit harmonization functions. The CHU functions should be clearly differentiated to meet the growing demand for implementing the COSO Internal Control and the Risk Management frameworks and for conformance with the internal audit standards. The work of the staff should be facilitated by adequate information and analytical tools with possibility to outsource some of the tasks.
The entire PIFC process does not benefit from the digitalization, apart from recently implemented software for collecting the PIFC reports by the CHU.
The State Financial Control Inspectorate (SFCI) conducts transaction-based compliance control. The size of the organisations included in the action plans varies from schools, municipal clinics, municipalities to state level’ agencies and state- owned enterprises. The periods vary from 1.5 to 5 years. In 2023 the SFCI carried out 635 inspections. The amount of the non-compliant transactions was under 1% from the overall inspected volume of financial means (646 266 t. Lei out of 69 266 562 t. Lei). Some 30% of the funds spent by violating financial regulations were recoverable.
The review of the EC on the progress for Chapter 32 “Financial control” indicates a potential risk of overlapping between the financial inspection and internal audit and even overarching the internal audit: “The State Financial Inspectorate operates a significant financial inspection function, with more resources and power than internal audit bodies, as it has the power to issues penalties. There is a risk that the Inspectorate could undermine the role of the internal audit.”
The system of protecting the EU financial interests needs to be developed. In the context of the EU Enlargement the institutional set up as well as the legal and strategic framework for the effective functioning of the protection of the EU financial interests in Moldova should be developed.

Expected results

The project has 5 components.

Component 1: Internal Managerial Control

Result 1.1: Concept and model for decentralized business process management, detailing the delegated management duties and responsibilities developed.
Result 1.2: Planning and reporting of the budget organisations based on risk management and performance indicators developed and piloted.
Result 1.3: Increased number of budget organisations with implemented procedures and enhanced capacity for organizing, monitoring and reporting on internal managerial control in the public sector.

Component 2: Internal Audit

Result 2.1.: Consolidated Internal Audit function at all levels in the public sector by concentration under the main budget spending units, or other forms of joint use of internal audit resources and reduction of the Internal Audit Units with one staff member.
Result 2.2.: Improved training and certification scheme for internal auditors facilitating the qualification and continuous professional development of the internal auditors.
Result 2.3.: Updated internal audit procedures, standards and manual for deploying up- to-date risk assessment and audit tools, including preparation of the Functional and Technical Specification for digitalizing the internal audit.

Component 3: Centralised Harmonisation and Coordination of the PIFC

Result 3.1.: Enhanced quality of the information and communication on the role, requirements and benefits from the PIFC and the responsibilities of the management in the public sector enabled by improved content of the PIFC report and strengthening the mandate of the PIFC Council.
Result 3.2.: CHU structure, capacity and resources adjusted to the mandate and the responsibilities for coordination and monitoring of the PIFC implementation.

Component 4: Methodology development for State Financial Control Inspectorate

Result 4.1.: Developing methodology for operation of the State Financial Control Inspectorate

Component 5: Setting up and operationalising the system of the protection of the EU financial interests (AFCOS)

Result 5.1 Strengthening the national framework for the protection of the EU’s financial interests (including AFCOS coordination)
Result 5.2 Operationalisation of the AFCOS-network
Result 5.3: Irregularity and Fraud Risk Assessment related to EU funds developed and conducted.
Result 5.4: Raising awareness on EU funds and increasing administrative capacities of the authorities involved in reporting on potential irregularities and fraud.

Eligibility Criteria

Regions / countries for funding

EU Member States, Overseas Countries and Territories (OCT)
Moldova (Moldova)

eligible entities

Other, Public Body (national, regional and local; incl. EGTCs)

Mandatory partnership

Yes

Project Partnership

This twinning project, as learning from the experience and direct transfer of expertise from EU Member States’ institutions is considered to be the most efficient approach when it comes to implementing the PIFC requirements and notably the EU regulations concerning AFCOS and aiming at conformance with the criteria, included in Chapter 32 Financial Control.

The implementation of the project requires one Project Leader (PL) with responsibility for the overall coordination of project activities and one Resident Twinning Adviser (RTA) to manage implementation of project activities, Component Leaders (CLs) and pool of short-term experts (STEs) within the limits of the budget. The team should have sufficiently broad expertise to cover all project’ areas.

Proposals submitted by Member State shall be concise and focussed on the strategy and methodology and an indicative timetable underpinning this, the administrative model suggested, the quality of the expertise to be mobilised and clearly show the administrative structure and capacity of the Member State entity/ies. Proposals shall be detailed enough to address the requirements of the Twinning Fiche, but are not expected to contain a fully elaborated project. They shall contain enough detail about the strategy and methodology and indicate the sequencing and mention key activities during the implementation of the project to ensure the achievement of overall and specific objectives and mandatory results/outputs.

The interested Member State(s) shall include in their proposal the CVs of the designated PL and the RTA, as well as the CVs of the potentially designated component Leaders- CLs.

The Twinning project will be implemented by close co-operation between the partners aiming to achieve the mandatory results in sustainable manner.

The set of proposed activities will be further developed with the Twinning partners when drafting the initial work plan and successive rolling work plan every three months, keeping in mind that the final list of activities will be decided in cooperation with the Twinning partner. The components are closely inter-linked and need to be sequenced accordingly.

other eligibility criteria

Only Public Administrations and Mandated bodies as per Twinning Manual of European Union Member State may apply through European Union Member States’ National Contact Points.