National Audit Office Act
Promulgated, State Gazette No. 98 of 14.12.2010, аmended, SG No. 1/4.01.2011, effective 4.01.2011
Chapter One
GENERAL PROVISIONS
Subject Matter
Article 1. (1) This Act shall regulate the structure, functions, organisation and operations of the National Audit Office, as well as the powers of its bodies.
(2) The National Audit Office shall exercise control over the implementation of the budget and of other public funds and activities in accordance with this Act and the internationally accepted auditing standards.
Main Task
Article 2. The main task of the National Audit Office is to control the reliability and truthfulness of the financial statements of budget-funded organisations, the legality, efficiency, effectiveness and economy of the management of public funds and activities, as well as to provide the National Assembly with reliable information thereof.
Independence
Article 3. The National Audit Office shall be independent in performing its operations and shall report to the National Assembly.
Basic Principles
Article 4. The operations of the National Audit Office shall be performed on the basis of the following principles:
1. independence, objectivity and good faith;
2. professionalism, integrity and impartiality;
3. consistency and predictability;
4. openness and transparency;
5. trust, co-operation and constructiveness.
Chapter Two
FUNCTIONS, STATUTE AND BUDGET OF THE NATIONAL AUDIT OFFICE
Types of Audits
Article 5. (1) The National Audit Office shall carry out:
1. financial audits;
2. compliance audits of financial management;
3. performance audits;
4. specific audits.
(2) The National Audit Office can carry out documentary and factual checks and other control activities regarding legal entities, assigned to it by virtue of special legislation, only within the framework of its auditing function and in accordance with the procedure set out in this Act.
Scope of the Auditing Function
Article 6. (1) The National Audit Office shall audit:
1. the state budget;
2. the budget of the public social security scheme;
3. the budget of the National Health Insurance Fund;
4. the budgets of municipalities;
5. other budgets adopted by the National Assembly.
(2) The National Audit Office shall also audit:
1. the budgets and extra-budgetary accounts and funds of spenders of budget appropriations under the budgets referred to in paragraph (1) and the management of their property;
2. the autonomous budgets of the Bulgarian Academy of Sciences, the universities, , the Bulgarian National Radio and the Bulgarian National Television;
3. the budgetary and extra-budgetary funds granted to entities engaged in business activities;
4. any resources coming from European Union funds and programmes, including their management by the relevant authorities and by the end users of such resources;
5. the budget expenditure of the Bulgarian National Bank (BNB) and the management thereof;
6. the generation of any annual surplus of income over the expenditure of the BNB that is payable into the state budget, and any other dealings of the Bank with the state budget;
7. the generation and management of the government debt, the government guaranteed debt, the municipal debt and the use of the debt instruments;
8. the privatisation and the granting of concession of state and municipal property, as well as the public funds and public assets placed at the disposal of parties outside the public sector;
9. the execution of international agreements, treaties, conventions or other international instruments, where so provided for in the respective international instrument or assigned by an empowered authority;
10. other public resources, assets and activities, where so assigned by law.
(3) The National Audit Office shall carry out audits of:
1. state enterprises referred to in Article 62, paragraph (3) of the Commerce Act.
2. commercial companies with over 50% participation of the state and/or municipalities in the capital;
3. legal entities having liabilities for which the state is the guarantor or liabilities guaranteed with state and/or municipal property.
(4) The National Audit Office shall carry out audits of the management and disposal of public assets and liabilities regardless of the grounds for this management and disposal and the legal status of the individuals or entities performing it.
(5) The National Audit Office shall prepare reports containing opinions on the implementation of the state budget, the budget of the public social security scheme, the budget of the National Health Insurance Fund and on the budgetary expenditure of the BNB and submit these reports to the National Assembly.
Annual Audit Programme
Article 7. (1) The National Audit Office shall adopt by consensus its annual audit programme. The National Assembly can, by virtue of its decision, assign to the National Audit Office to carry out up to five audits a year outside the audits envisaged in the annual programme.
(2) The National Audit Office shall adopt the programme referred to in paragraph (1) following the promulgation of the state budget of the Republic of Bulgaria for the corresponding year in the State Gazette, but not later than 31 December of the preceding year.
(3) The annual audit programme of the National Audit Office shall be made available to the National Assembly within 7 days of its adoption or amendment.
(4) The annual audit programme of the National Audit Office, in its part on auditing resources from European Union funds and programmes, shall be sent to the European Court of Auditors and the European Commission for information.
Co-operation with Institutions in the Republic of Bulgaria
Article 8. In the course of performing its functions the National Audit Office shall co-operate with:
1. government authorities for the purpose of increasing the effectiveness of the control system and fight against crime and corruption;
2. professional and non-governmental organisations for the purpose of exchanging good practices and professional development.
(2) The specific forms of co operation with the institutions referred to in paragraph (1) shall be set out in joint agreements.
Co operation with the European Court of Auditors and Other Supreme Audit Institutions. Representation
Article 9. (1) The National Audit Office shall co-operate with the European Court of Auditors and supreme audit institutions of other countries in the field of external audit and shall represent the Republic of Bulgaria in international organisations of supreme audit institutions.
(2) The National Audit Office can carry out joint audits with the European Court of Auditors of the funds referred to in Article 6, paragraph (2), sub-paragraph 4, and with supreme audit institutions of other countries of the execution of international instruments referred to in Article 6, paragraph (2), sub paragraph 9, where so provided in agreements signed.
Statute
Article 10. The National Audit Office shall be a budget-funded legal entity headquartered in Sofia.
Budget
Article 11. The National Audit Office shall have an independent budget, which shall be part of the republican budget of the Republic of Bulgaria.
Chapter Three
STRUCTURE, MANAGEMENT AND ORGANISATION
National Audit Office
Article 12. (1) The National Audit Office comprising a President and two Vice-Presidents shall be elected by the National Assembly.
(2) The President shall be elected for a period of 6 years and the Vice-Presidents – for a period of 7 years.
President
Article 13. (1) The National Audit Office shall be managed by a President.
(2) Eligible for president of the National Audit Office, hereinafter referred to as the “President”, shall be an individual who:
1. has completed a higher level of education, holds a master’s degree and has professional experience of at least 15 years in the field of audit, financial control, finance or accountancy;
2. has not been a member of the Government or a head of a central or local government authority over the last three years preceding his/her election;
3. has not been convicted of any premeditated crime of a general nature or deprived by a court of law of the right to assume the respective position.
(3) The President shall be entitled to a basic monthly remuneration of an amount equal to 90 per cent of the remuneration of the Chairperson of the National Assembly.
(4) The President may not be re-elected.
Vice-Presidents
Article 14. (1) The Vice-Presidents shall be elected by the National Assembly upon a proposal by the President.
(2) Eligible for Vice-Presidents shall be individuals who satisfy the requirements specified in Article 13, paragraph (2).
(3) The Vice-Presidents shall be entitled to a basic monthly remuneration in an amount equal to 90 per cent of the remuneration of the President.
(4) The Vice-Presidents may be re-elected.
Incompatibility and Conflict of Interests
Article 15. The President and the Vice-Presidents may not be individuals who, between themselves, are spouses or de facto cohabitees or relatives in a direct line of descent, with no limitations, or laterally, up to and inclusive of the fourth degree, neither individuals who are related in the meaning of the Conflict of Interest Prevention and Disclosure Act.
Election of a President and Vice-Presidents
Article 16. (1) The National Assembly shall elect a president of the National Audit Office three months prior to the expiration of the incumbent president's mandate.
(2) Within 14 days of the expiration of the mandate of the Vice-Presidents the President shall submit to the National Assembly a proposal for new election.
(3) The President of the National Audit Office, elected in accordance with paragraph (1), shall assume office on the date of the expiration of the mandate of the individual in whose position he/she has been elected.
(4) The individuals elected in accordance with paragraph (2) shall assume office on the day of their election.
(5) The President and the Vice-Presidents may not hold any other paid positions or perform any other paid activities except for research, teaching or activities regulated under the Copyright and Related Rights Act.
Oath
Article 17. The President and the Vice-Presidents shall take before the National Assembly the following oath: "In the name of the Republic of Bulgaria, I swear to abide by the Constitution and the laws of this country, to work for the implementation of the functions entrusted to the National Audit Office, and in doing so, to be guided by the principles of independence, objectivity and good faith in the discharge of the duties assigned to me by the law. I have sworn."
Premature Termination of Mandates
Article 18. (1) The mandates of the President and the Vice-Presidents shall be terminated by the National Assembly prior to the expiration of their term of office:
1. upon their personal request;
2. in case of inability to perform their duties which has continued for more than 6 months;
3. when they have been convicted of any premeditated crime of a general nature or deprived by a court of law of the right to assume the respective position;
4. due to incompatibility under Article 13, paragraph (2), sub-paragraph 3 and Article 15, which has occurred after their election;
5. upon entry into force of an act which certifies any conflict of interest under the Conflict of Interest Prevention and Disclosure Act.
6. in the event of death.
(2) In the event of termination of the mandate of the President, the National Assembly shall assign an acting president, who shall perform the former's responsibilities until a new president is elected.
(3) In the cases listed in paragraph (1), sub-paragraphs 2 to 5, the President shall submit to the National Assembly a motivated proposal for dismissal of the corresponding Vice-President.
(4) In the event of termination of the mandate of a Vice-President, the President shall, within one month, submit a proposal to the National Assembly to elect a new Vice-President.
(5) The newly elected President or Vice-President shall complete the term of office of the individual in whose place he/she has been elected.
Powers of the National Audit Office
Article 19. The National Audit Office shall adopt by consensus:
1. the budget and the report on its implementation;
2. Rules on the structure and organisation of the operations of the National Audit Office, Code of Ethics of the National Audit Office employees, manual on the implementation of the internationally accepted auditing standards and on the auditing activity of the National Audit Office, rules on the selection, appointment, training, performance appraisal and professional development of auditors and staff, strategies, policies, guidelines and other internal acts regulating the operations of the institution.
Powers of the President
Article 20. The President shall:
1. manage, organise and control the operations of the National Audit Office and represent it in the country and abroad;
2. determine the powers of the Vice-Presidents related to the management, organisation and control of the audit activity;
3. designate his/her deputy in the event of absence;
4. exercise the powers of a first-level spender of budget appropriations;
5. conclude, amend and terminate employment contracts with the National Audit Office auditors and staff in accordance with the rules stipulated in this Act;
6. participate in the meetings of the Consultative Council of the National Audit Office;
7. publish the internationally accepted auditing standards on the National Audit Office website.
Functional and Territorial Organisation
Article 21. (1) The audit activity of the National Audit Office shall be organised in directorates. Departments, sectors and work outstations in the territory of the country can be set up to the directorates.
(2) Directorates shall be managed by directors.
(3) Eligible for directors shall be individuals who satisfy the following requirements:
1. have completed a higher level of education and hold a master’s degree;
2. have served in previous employment and/or public service in the field of audit, financial control, finance or accountancy for at least 7 years;
3. have won a competition for a director;
4. have management experience of at least three years.
(4) In the absence of a director of a directorate, his/her responsibilities shall be performed by another director of directorate, as assigned under an order issued by the President.
Consultative Council to the National Audit Office
Article 22. (1) The Consultative Council to the National Audit Office shall comprise the President of the National Audit Office and five members with professional experience of at least 15 years in the field of audit, financial control, finance or accountancy. The President shall chair the meetings of the Consultative Council but shall not participate in the voting.
(2) The members of the Consultative Council shall be elected by the National Assembly for a period of 5 years. The members can be re-elected.
(3) The Consultative Council to the National Audit Office shall adopt:
1. Rules on the organisation of its activity;
2. rules on the conditions and procedure for holding examinations for appointing auditors to the National Audit Office.
(4) The Consultative Council of the National Audit Office shall express opinions on:
1. the audit reports on the results from the audits, assigned by the National Assembly, which opinions shall become an integral part of these reports;
2. the report of the Commission for certification of the annual financial statement of the National Audit Office to the National Assembly;
3. the report on the implementation of the budget of the National Audit Office;
4. the activity report of the National Audit Office;
5. the reports on the implementation of the staff training strategy and plan;
6. the performance appraisal and assessment of the professional development of the auditors and staff in the event of appeals filed to the Council or in the cases referred to in Article 34, paragraph (3);
7. instances of failure to comply with the norms of the Code of Ethics of auditors;
8. the appointment and dismissal of the head of the Internal Audit Unit, the status, the strategic and annual audit plan of the Internal Audit Unit, as well as its audit reports;
9. other opinions on issues, assigned by the National Assembly.
(5) The Consultative Council to the National Audit Office shall make recommendations:
1. on the draft budget of the National Audit Office;
2. on the draft annual audit programme of the National Audit Office;
3. on the draft strategy and plans for staff training;
4. for amendments to the instruments set out in Article 19, sub-paragraph 2;
5. on the organisational structure of the National Audit Office;
6. for improving the efficiency of the control over the implementation of the recommendations made by the National Audit Office.
(6) The Consultative Council shall perform twice a year a review of the quality of completed audits, selected using a sample approach, and of the audits assigned by a decision of the National Assembly. Reports with the summarised results of the reviews shall be sent to the National Assembly for information and shall be published on the website of the National Audit Office.
(7) Members of the Consultative Council may not be individuals who, between themselves, are spouses or de facto cohabitees or relatives in a direct line of descent, with no limitations, or laterally, up to and inclusive of the fourth degree, neither individuals who are related in the meaning of the Prevention and Detection of Conflicts of Interests Act.
(8) The members of the Consultative Council, except for the President, shall be entitled for their participation in each meeting to a remuneration amounting to one minimum wage for the country, but not exceeding 24 minimum wages per annum.
(9) The mandates of the members of the Consultative Council to the National Audit Office can be terminated by the National Assembly prior to the expiration of their term of office:
1. upon their personal request;
2. in case of inability to perform their duties which has continued for more than 6 months;
3. when they have been convicted of any premeditated crime of a general nature or deprived by a court of law of the right to assume the respective position;
4. due to incompatibility under Article 13, paragraph (2), sub-paragraph 3 and Article 15, which has occurred after their election;
5. upon entry into force of an act which ascertains any conflict of interest under the Conflict of Interest Prevention and Disclosure Act.
6. in the event of death.
(10) In the event of termination of the mandate of a member of the Consultative Council, the National Assembly shall elect a new member, who shall complete the former member’s term of office.
Chapter Four
RIGHTS AND OBLIGATIONS OF THE NATIONAL AUDIT OFFICE MANAGING BODIES AND STAFF
National Audit Office Managing Bodies and Staff
Article 23. (1) The managing bodies of the National Audit Office shall be the President and the Vice-Presidents.
(2) The National Audit Office staff shall be the directors of directorates, the auditors and the staff employed in the administration.
Rights and Obligations under Employment Terms and Conditions
Article 24. (1) The employment terms and conditions of the National Audit Office staff shall be governed by the provisions of the Labour Code.
(2) The managing bodies of the National Audit Office shall enjoy all rights granted under the employment terms and conditions as set out in the Labour Code except for those rights that are incompatible or contravene with their legal status.
(3) The individuals referred to in paragraph (1) shall be obliged to abide by the requirements of the Code of Ethics of the National Audit Office employees and the manual on the implementation of the internationally accepted auditing standards and on the auditing activity of the National Audit Office. In the event of failure to abide by these requirements, the National Audit Office staff shall be subject to disciplinary measures under the conditions and in accordance with the procedure set out in the Labour Code.
Auditors
Article 25. (1) Eligible for appointment as auditors in the National Audit Office shall be individuals who:
1. have completed a higher level of education, hold a master’s degree and have served in previous employment or public service for at least three years, and
2. have passed successfully the examination for auditor in the National Audit Office in accordance with the rules on the conditions and procedure for holding examinations for appointing auditors to the National Audit Office, or hold a certificate of an auditor;
3. have won a competition for appointment in accordance with the procedure set out in the rules on the selection, appointment, training, performance appraisal and professional development of National Audit Office auditors and staff.
(2) The auditors’ positions shall be auditor, senior auditor first degree, senior auditor second degree and principal auditor. Promotions shall be given in accordance with the rules on the selection, appointment, training, performance appraisal and professional development of National Audit Office auditors and staff.
(3) For trainee auditors individuals shall be appointed who have completed a higher level of education, hold a master’s degree and have won competitions in accordance with the rules on the selection, appointment, training, performance appraisal and professional development of National Audit Office auditors and staff. Trainee auditors shall assist the audit activity.
(4) Auditors shall carry out audits in audit teams. Audit team leaders shall be determined by the corresponding director of directorate and shall be responsible for the professional guidance and quality completion of audits.
Incompatibility for Holding a Position
Article 26. (1) Eligible for appointment as National Audit Office staff shall be individuals who have not been convicted of any premeditated crime of a general nature or deprived by a court of law of the right to assume the respective position.
(2) If changes should arise in the circumstances referred to in paragraph (1), the respective individuals shall be obliged to notify, in writing and within 7 days, the President, who must act in accordance with his/her legal powers.
Length of Service
Article 27. (1) The length of service of the directors of directorates, auditors and staff from the administration occupying managerial positions and expert positions with managerial functions, when acquired in the respective positions with the National Audit Office, shall be recognised as public service in the respective specialist field when applying for jobs for which a length of public service in the respective specialist field is required.
(2) (Amended, SG No. 1/4.01.2011, effective 4.01.2011) The length of service of individuals with higher education in law, when acquired in the respective positions with the National Audit Office, shall be recognised as service under Article 164, paragraphs 1 – 7 of the Judiciary Act and under Article 8, paragraphs 1, sub-paragraph 3 of the Notaries and Notarial Activities Act.
Entitlement to Clothing for Official Occasions
Article 28. The National Audit Office staff shall be entitled to clothing for official occasions in the amount of up to three minimum monthly salaries for the country; the funds shall be provided for in the budget of the National Audit Office.
Distinctions and Awards
Article 29. The National Audit Office staff may be awarded, on a one-time basis, by distinctions or awards in cash or in kind of up to their base salary amount for completing specific tasks within the funds available in the National Audit Office budget for the corresponding year. Distinctions and awards and the conditions for their award shall be determined in the Rules of Structure and Operations of the National Audit Office.
Prohibition to Perform Paid Activities
Article 30. (1) Directors of directorates and auditors may not hold any other paid positions or perform any other paid activities except for research, teaching or activities regulated under the Copyright and Related Rights Act.
(2) The circumstances under paragraph (1) shall be verified to the employer through a declaration.
Remuneration
Article 31. (1) Basic monthly remuneration amounts for the National Audit Office staff shall be determined by the President in accordance with the internal rules on salaries and the disposable resources in the budget for the corresponding year.
(2) National Audit Office employees may receive additional remuneration for results achieved, in accordance with a procedure set out in a law or a decree of the Council of Ministers, or the internal rules on salaries.
Obligation to Protect Information
Article 32. (1) The individuals referred to in Article 23 and the members of the Consultative Council shall be obliged to keep the classified information, constituting state or official secrets, as well as the trade, bank or other secrets protected by law and must not disclose any facts or circumstances that have come into their knowledge in the course of, or in connection with, the performance of their duties.
(2) The individuals referred to in Article 23 and the members of the Consultative Council, when assuming their positions, shall sign a confidentiality declaration for the protection of secrets and non-disclosure of any facts or circumstances referred to in paragraph (1).
Training and Professional Qualification
Article 33. (1) The National Audit Office staff shall be obliged to take part in the training organised by the National Audit Office for maintaining and enhancing their professional qualification.
(2) The expenditure under paragraph (1) shall be covered from the budget of the National Audit Office.
Performance Appraisal. Consequences
Article 34. (1) The National Audit Office staff shall be subject to annual performance appraisals.
(2) Performance appraisals shall be carried out under the conditions and in accordance with the procedure set out in the rules on the selection, appointment, training, performance appraisal and professional development of staff.
(3) The employment contract of a member of staff can be rescinded where the respective member has been awarded two consecutive lowest grades in the annual appraisals.
Insurance
Article 35. Managing bodies, auditors and directors must be covered by life and accident insurance at the account of the budget of the National Audit Office.
Chapter Five
AUDIT ACTIVITIES. RIGHTS AND OBLIGATIONS OF THE MANAGING BODIES, DIRECTORS OF DIRECTORATES AND AUDITORS
Assignment of Audits
Article 36. (1) Audits included in the annual audit programme shall be assigned with an order by a Vice President.
(2) Audits based on decisions of the National Assembly shall be assigned with an order by the President.
(3) Audits shall be carried out in the audited entity and/or on the premises of the National Audit Office on the basis of a programme approved by a Vice-President or the President in the cases referred to in paragraph (2).
Powers in the Course of Carrying Out of Audits
Article 37. (1) In the course of and in connection with the audits carried out auditors, directors of directorates and management bodies of the National Audit Office shall be entitled to:
1. free access to the official premises and all documents, reports and assets, related to the financial management of the audited organisations, including to request the provision of the annual financial statements of companies with state and municipal participation, which are subject to audits, and the minutes of the meetings of their authorities;
2. request the provision, within time limits set by them, of summary information, certified copies of documents and other information relevant to the preliminary study and the conduct of audits, including in electronic format;
3. request oral and written explanations by officials, including former officials, about facts established in the course of the audits, and on issues related to their work;
4. request summary information, certified copies of documents and other information from natural persons, legal entities and sole proprietors other than the audited entity that are related with possible cases of illegal operations affecting the financial and property interests of the audited entity or resources from European Union funds and programmes;
5. request and obtain information from all authorities in Bulgaria, and access to their databases in relation with the activity of the National Audit Office;
6. attend meetings of the authorities of the audited organisations and entities, if their agendas are related to the audit carried out.
(2) In the course of the exercising of the powers specified in paragraph (1) the access to classified information shall be performed under the conditions and according to the procedure set out in the Protection of Classified Information Act.
(3) National Audit Office auditors may request that inventory is taken in connection with the audits.
Obligations of the Heads and Officials of Audited Organisations
Article 38. (1) Heads and officials of audited organisations shall be obliged to provide assistance to the individuals referred to in Article 37, paragraph (1) in the course of the exercising of the powers of the latter and shall provide appropriate premises and technical equipment for the conduct of the audits, including access to telecommunication devices.
(2) The individuals referred to in paragraph (1) may not refer to any state, official, trade, bank, or other secret protected by the law in the conduct of audits by the National Audit Office.
(3) In the event of refusal to provide assistance for the exercising of the powers specified in Article 37, including in the event of failure to provide the information requested, the President, following a written warning, may make public the unlawful behaviour of the corresponding officials.
(4) In the event of refusal to provide the information specified in Article 37, paragraph (1), sub-paragraph 4, the President shall have the right to issue an order that a check is performed of the legal entity or sole proprietor in relation to the information refused.
(5) In the event of the legal entity or sole proprietor obstructing the check referred to in paragraph (4), the National Audit Office shall refer the matter to the authorities of the prosecutor's office.
(6) The written evidence collected in the course of the check referred to in paragraph (4) shall be an integral part of the documentation of the audit conducted in the audited organisation.
Liability for Damages Caused
Article 39. The management bodies of the National Audit Office, the directors of directorates and auditors shall not be held pecuniary liable for any damages caused in the exercising of their powers, except where they have committed a crime or have acted with intent.
Incompatibility and Conflict of Interest in the Conduct of Audits
Article 40. (1) Any individuals who are related in a direct line of descent, with no limitations, or laterally, up to and inclusive of the fourth degree, to the officials of the audited entity whose activity is related to the collection or spending of budgetary and other public resources and to the management of property as referred to in Article 6, or who are spouses or de facto cohabitees thereof, and any individuals who have worked for the audited entity or have participated in its management over the past 3 years, or who have any private interest as set out in the Conflict of Interest Prevention and Disclosure Act, may not participate in the audit.
(2) The circumstances under paragraph (1) shall be reported in writing prior to the commencement of the audit to a Vice President.
(3) In the event that the incompatibility referred to in paragraph (1) is established in the course of the audit, such individuals shall be obliged to disqualify themselves.
(4) The reports referred to in paragraph (2) and the disqualifications referred to in paragraph (3) shall be an integral part of the documentation of the audit conducted.
External experts
Article 41. (1) In certain cases, for the purpose of examining specific issues in the course of audits, external experts may be hired, while observing the provision of Article 40 and of the internationally accepted auditing standards.
(2) The individuals referred to in paragraph (1) shall sign confidentiality agreements undertaking the protection of secrets and non-disclosure of any facts or circumstances referred to in Article 32, paragraph (2).
Measures in the Course of the Audit in the Event of Illegal and Damaging Actions
Article 42. Where, in the course of the audit, it has been found that certain actions allow for unlawful collecting or spending of budgetary or other public funds, as well as for damaging the property of the audited entity, the responsible Vice-President, upon a proposal by the audit team leader and the director, shall notify the relevant competent authority so that measures can be taken to discontinue such actions.
Preparing a Draft Audit Report
Article 43. Within 14 days of the completion of the audit the audit team leader shall prepare a draft audit report in accordance with the audit programme adopted and in compliance with the requirements of the law and the internationally accepted auditing standards.
Powers of Directors of Directorates
Article 44. (1) Directors shall exercise control over the compliance of the draft audit report with the requirements set out in Article 43, assess the evidence with regard to its reliability and sufficiency and their relevance to the findings, conclusions, evaluations and recommendations made.
(2) Within 14 days of the submission of the draft audit report the director shall express an opinion in a well-reasoned decision in writing by which he/she:
1. approves the draft audit report;
2. returns the draft audit report with instructions for further development and eliminating of the omissions made.
(3) Within 14 days of the decision referred to in paragraph (2), sub-paragraph 2 the audit team leader shall submit the revised draft audit report to the director for approval.
(4) In the event of disagreement with the instructions given, the audit team leader shall file an objection in writing with the responsible Vice-President.
(5) The Vice-President shall review the objection and shall express his/her opinion in a motivated written decision, which shall be final.
Draft Audit Report Prior Notice
Article 45. (1) The head of the audited organisation shall be notified by sending the draft audit report, as shall be the individuals who have been heads of the organisation during the audited period, no later than one month following the completion of the audit.
(2) Regardless of the obligation for notifying referred to in paragraph (1), the announcement of the presentation of the audit report shall be published in the internet site of the National Audit Office, and the corresponding management body of the National Audit Office can undertake other actions for the timely notification of the former heads of the audited organisation.
(3) The head of the audited organisation and the individuals referred to in paragraph (2) shall be entitled to make written objections to the draft audit report, providing additional evidence and/or additional written explanations, within 14 days of the sending of the draft report.
(4) Upon a request in writing by the head of the audited organisation the responsible Vice-President can extend the deadline specified in paragraph (3) by 7 days.
(5) The Vice-President shall prepare a well-reasoned conclusion on the objections referred to in paragraph (3) within 14 days of their receipt and shall submit it to the President together with written motivated proposals for changes in the findings, conclusions, evaluations or recommendations.
(6) In the event where the audited organisation has been closed down, the draft audit report shall be sent to the head of its successor. Where no successor has been assigned, the draft audit report shall be sent to the authority which took the decision for such closing down, for information.
Final Audit Report
Article 46. (1) The president or a Vice-President authorised by him/her, other that the Vice-President referred to in Article 45, paragraph (5), shall issue the final audit report on the basis of an overall evaluation of the evidence and of the objections and explanations of the individuals referred to in Article 45, paragraph (3), and in doing so can:
1. accept or reject, fully or partially, the conclusion referred to in Article 45, paragraph (5) and the proposals for changes made to it, and as a result accept, change or reverse, fully or partially, findings, conclusions, evaluations and recommendations in the audit report;
2. completely reject the audit report because of omissions and irregularities in it which cannot be eliminated.
(2) In the cases where the changes in the audit report result in conclusions for violations, for which graver liability is envisaged, the President shall inform of this the head of the audited organisation.
(3) The head of the audited organisation can file an additional written objection to the changes in the findings, evaluations and conclusions, referred to in paragraph (2), within 14 days of receiving the notification.
(4) The President shall express a final opinion on the additionally filed objection referred to in paragraph (3).
Sending the Audit Report to the Audited Entity
Article 47. (1) The President shall send the final audit report to the head of the audited organisation within 7 days of its issuing.
(2) In the cases where the audited organisation is a second- or lower level spender of budget appropriations, the report referred to in paragraph (1) shall also be sent to the first-level spender of budget appropriations for information or for undertaking specific actions in accordance with the latter’s legal powers.
(3) The President can also send the report to other authorities, to which the completed audit is relevant, for information or for undertaking specific actions.
Follow-up on Recommendations
Article 48. (1) The President or a Vice-President authorised by him/her shall organise the timely follow-up on the recommendations and shall regularly inform the Consultative Council to the National Audit Office of it.
(2) The head of the audited organisation must take measures to implement the recommendations and must notify the President of these measures in writing within a time period specified in the report, which needs to take into account the nature of the recommendations.
(3) In the event of failure to implement the recommendations, the President shall send a report including proposals for actions to be undertaken respectively to the National Assembly, the Council of Ministers or the Municipal Council.
Measures in the Event of Violations of the Public Procurement Regime
Article 49. (1) Where violations have been established of public procurement procedures, the audit report, in its part concerning violations of procedures, shall be sent to the Public Procurement Agency so that the latter undertakes the relevant actions.
(2) The reports referred to in paragraph (1) shall be sent within 7 days of the adopting of the audit report.
Request for Dismissal of a Responsible Official
Article 50. In the audit report, the President can request the dismissal of an official with managerial responsibilities, as a result of whose actions or failure to act laws have been violated or recommendations made by the National Audit Office not been implemented..
Proposal for Spending Restrictions on an Audited Organisation
Article 51. (1) After the issuing of the final audit report, as well as in the event of disclaimer of certification of a financial statement, the President can propose to the Minister of Finance to impose spending restrictions on an audited organisation which violates the law or systematically fails to implement the recommendations made, until the violations are eliminated.
(2) The proposal referred to in paragraph (1) may not contain measures which would result in a suspension of the business of the organisation concerned.
Applying the Administrative Procedure Code
Article 52. For issues which are not regulated in the procedures set out in Articles 36 – 47, the provisions of Chapters Two, Five and Seven of the Administrative Procedure Code shall be applied.
Financial Audit
Article 53. (1) The National Audit Office shall carry out financial audits of:
1. annual financial statements of budget-funded organisations that are first-level spenders of budget appropriations, and of budget-funded organisations that are second-level spenders of budget appropriations implementing independent budgets pursuant to special laws;
2. annual financial statements of municipalities the budgets of which exceed 10 million levs;
3. other financial statements, where so provided for by law.
(2) The National Audit Office shall carry out financial audits of the annual financial statements of municipalities with budgets not exceeding 10 million levs on the basis of risk assessment and with regularity decided upon by it.
(3) Financial audits shall be carried out in accordance with the procedures set out in this Act, the instruments for its implementation and the internationally accepted auditing standards.
(4) The periodic reports on the implementation of the budgets and the extra-budgetary accounts and funds of the entities referred to in paragraph (1) shall be submitted to the National Audit Office for on-going control, risk assessment and preliminary studies in connection with audits.
(5) The deadline for the submission to the National Audit Office of the statements referred to in paragraph (1) shall be determined by the Minister of Finance in co ordination with the National Audit Office.
(6) In the event of failure to submit or submission after the deadline referred to in paragraph (5), or in the event of disclaimer of certification of the statements set out in paragraph (1), the President of the National Audit Office shall inform the Minister of Finance so that the latter can undertake specific actions in accordance with his/her legal powers.
(7) Financial audits referred to in paragraph (1) shall be assigned by orders of a Vice-President.
(8) The audit team leader shall draft an audit report and an opinion based on the completed audit including a conclusion for certifying or disclaimer of certification of the corresponding financial statement. Audit opinions for certification of financial statements can be:
1. audit opinion for unqualified certification;
2. audit opinion for unqualified certification with emphasis of matter;
3. audit opinion for qualified certification;
4. audit opinion for disclaimer of certification.
(9) The grounds for forming audit opinions in financial audits are regulated in the internationally accepted auditing standards.
(10) The report and opinion referred to in paragraph (8) shall be reviewed and approved by the corresponding director of directorate.
(11) The responsible Vice-President shall approve the audit reports and opinions.
(12) The report and the audit opinion shall be presented to the head of the corresponding organisation.
(13) In the event of disclaimer of certification the National Audit Office President shall inform the Minister of Finance, so that he/she can undertake measures in accordance with Article 38 of the State Budget Procedure At. Where the audit concerns a second-level spender of budget appropriations, the audit opinion shall be also sent to the corresponding first-level spender of budget appropriations.
Evaluation Reports on Budget Implementation Reports
Article 54. (1) The Council of Ministers, the National Social Security Institute, the National Health Insurance Fund and the BNB shall submit to the National Audit Office, within 7 days of their approval, reports on the implementation of the state budget, the budget of the public social security scheme, the budget of the National Health Insurance Fund and the budgetary expenditure of the BNB.
(2) The National Audit Office shall prepare evaluation reports on the reports referred to in paragraph (1) not later than three months of their receipt.
Notifications to Competent Authorities for Undertaking of Measures
Article 55. (1) In the existence of data indicating damages and irregularities in the execution of budgets and extra-budgetary accounts and funds or in the management of property, which do not constitute a criminal offence, the President shall send the audit report to the respective competent authority for the purposes of claiming pecuniary liability or administrative penal liability. The relevant authority must, within 14 days of receiving the audit materials or the audit report, assign the undertaking of appropriate actions to hold the relevant parties liable.
(2) The authority referred to in paragraph (1) shall inform the President, within two months following the receipt of such materials from the audit or the audit report, about the measures undertaken in connection to them.
(3) The President shall make public the notifications received, as well as any failure to fulfil the obligation for notification.
Notifications in the Event of Data Indicating Criminal Offences
Article 56. (1) In the existence of data indicating a criminal offence the President shall send the audit report and the materials included in it to the prosecutor's office.
(2) The prosecution authorities shall keep the National Audit Office informed about the actions undertaken in connection with the materials referred to in paragraph (1).
(3) The National Audit Office may not disclose any data in the cases referred to in paragraph (1) until criminal proceedings have been completed.
(4) In the existence of data indicating a criminal offence in the management of resources from European Union funds and programmes, under a decision of the National Audit Office, materials from the audit or the audit report shall also be referred to the specialised European Union authorities for prevention and combating fraud and corruption.
Making Audit Reports Public
Article 57. The National Audit Office shall make public the audit reports that do not constitute any secret protected by law, including for audits on resources from European Union funds and programmes, as well as the opinions referred to in Article 54.
(2) These shall be made public on the website of the National Audit Office or in another appropriate manner, defined by the President.
(3) Completed audits shall not be made public before the final report referred to in Article 46.
(4) Reports and opinions referred to in Article 54, paragraph (1) shall be made public following their submission to the National Assembly.
Making Other Circumstances Public
Article 58. The President shall make public any failure to fulfil the obligations referred to in Article 38, any failure to implement the recommendations made, any refusal to dismiss officials in accordance with Article 50, as well as other circumstances, determined by him/her.
Audit Reports Concerning Resources from European Union Funds and Programmes and Concerning the Execution of International Instruments
Article 59. Reports on completed audits, including the audit evidence, concerning resources from European Union funds and programmes and concerning the execution of international instruments referred to in Article 6, paragraph (2), sub-paragraph 9 shall be submitted to the European Court of Auditors and the European Commission.
Chapter Six
REPORTING OF AND CONTROL OVER THE NATIONAL AUDIT OFFICE OPERATIONS
Submission of Reports to the National Assembly
Article 60. (1) The National Audit Office President shall present to the National Assembly:
1. evaluation reports on the reports on the implementation of the state budget, the budget of the public social security scheme, the budget of the National Health Insurance Fund, and on the budgetary expenditure of the Bulgarian National Bank for the preceding year;
2. evaluation reports based on audits performed on budgetary systems or with significant results for the respective budgets and other public resources and activities;
3. audit reports of audits performed under a decision of the National Assembly.
(2) Upon request by the National Assembly or one of its Committees the National Audit Office shall submit specific audit reports.
Proposals to Examine Audit Reports
Article 61. The Consultative Council of the National Audit Office and the President may make proposals to the National Assembly and its specialised committees to examine audit reports of particular significance for the improvement of budgetary discipline and the management of budgetary and/or other public funds and activities.
Activity Report of the National Audit Office
Article 62. (1) By 30 September of the current year the National Audit Office President shall submit to the National Assembly the activity report of the National Audit Office for the preceding year.
(2) The report shall be published on the website of the National Audit Office.
Audit of the Annual Financial Statements of the National Audit Office
Article 63. (1) The annual financial statement of the National Audit Office shall be audited by an independent committee to include not less than two registered auditors.
(2) The number of members and the composition of the committee referred to in paragraph (1) shall be determined by the National Assembly.
(3) The report of the committee on the statement referred to in paragraph (1) shall be submitted to the National Assembly together with the activity report of the National Audit Office for the corresponding year.
(4) The National Audit Office President can express a written opinion on the report referred to in paragraph (3), which opinion shall be attached to the report and submitted to the National Assembly.
(5) The report referred to in paragraph (3) shall be made public after being adopted by the National Assembly together with the opinion referred to in paragraph (4).
(6) The cost of carrying out the audit referred to in paragraph (1) shall be covered from the budget of the National Audit Office.
Chapter Seven
ADMINISTRATIVE PENAL PROVISIONS
Article 64. (1) In the event of an offence as referred to in Article 38, paragraphs (1) and (2) and Article 55, paragraph (2) the individuals at fault shall be penalised by a fine ranging from 1,000 to 5,000 levs.
(2) In the event of a repeated offence as referred to in paragraph (1) the fine shall range from 2,000 to 10,000 levs.
(3) In the event of obstructing the check referred to in paragraph 38, paragraph (4) the individual at fault shall be imposed a pecuniary penalty in an amount ranging from 2,000 to 10,000 levs.
(4) The fines and pecuniary penalties referred to in paragraphs (1), (2) and (3) shall be paid as revenue into the republican budget.
Article 65. (1) Statements establishing violations shall be drawn up by auditors, whereas penalty judgments shall be imposed by the President or by an official authorised by him/her.
(2) The drawing up of such statements and the issuance, appeal and execution of penalty warrants shall be done in accordance with the procedure specified in the Administrative Violations and Penalties Act.
ADDITIONAL PROVISION
§ 1. For the purposes of this Act:
1. "Audit" shall refer to an examination that involves actions to collect and analyse financial and non-financial information for the purposes of evaluating the management of budgetary and other public resources and activities and the reporting at the audited entity to ensure their improvement.
2. "Financial audit” shall mean the expressing of an independent opinion as to the degree to which the annual financial statement of the organisation gives a true and fair view of its financial condition and property in accordance with the identified general financial reporting framework.
3. "Compliance audit of financial management" shall refer to an examination of the financial management and control systems, including internal audit, and the management decisions in connection with the organisation, planning, management, reporting and control of budgetary and other public resources and activities at the audited organisation with respect to their compliance with the requirements of statutory instruments, internal instruments and agreements.
4. "Performance audit" shall refer to an examination of activities involved in the planning, implementation and control at all management levels at the audited entity with regard to their efficiency, effectiveness and economy:
a) “effectiveness” is the extent to which the audited entity achieves its objectives when comparing actual with anticipated results of its activities;
b) “efficiency” is the attainment by the audited entity of maximum results in performing its activity with the available resources;
c) "economy" is the acquiring, at a minimum cost, of the resources necessary for the performance of the activity of the audited entity while observing the requirements for resource quality.
5. “Audited organisation” shall mean each organisation which is subject to audit in accordance with the requirements of this Act.
6. “Specific audits" shall mean the audits carried out under the conditions and in accordance with the procedure of special laws.
7. "Audited entity" shall refer to a programme, activity or function within an individual audited organisation or in the public sector as a whole, which is subject to an audit.
8. “Public resources” shall mean the resources as set out in § 1, Item 1 of the Supplementary Provision of the Financial Management and Control in the Public Sector Act.
9. “Public assets” shall mean the public resources, as well as all other property owned by the state or municipalities or subject of rights held by budget-funded organisations.
10. “Budget-funded organisation” shall mean each organisation in the meaning of § 1, Item 1 of the Accountancy Act.
11. “Financial control” shall mean each form of control related to the management of public resources and activities, exercised through specialised powers and procedures, including budgetary control, financial inspection control, tax control, customs control and other similar.
12. "Repeated" shall refer to any violation made within one year of the coming into effect of a penalty judgment whereby the offender has been penalised for a violation of the same type.
13. “Internationally accepted auditing standards” shall mean:
a) the Auditing Standards issued by the Professional Standards Committee of the International Organisation of Supreme Audit Institutions – INTOSAI (ISSAI);
b) the International Standards on Auditing issued by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC), appropriate for financial audits in the case of assignments including additional matters, specific to the public sector organisations.
TRANSITIONAL AND FINAL PROVISIONS
§ 2. This Act shall repeal the National Audit Office Act (promulgated, SG, No. 109 of 2001; amended, No. 45 of 2002, No. 31 of 2003, No. 38 of 2004, Nos. 34 and 105 of 2005, Nos. 24, 27, 33 and 37 of 2006, Nos. 64 and 109 of 2007, No. 67 of 2008, and No. 42 of 2009).
§ 3. (1) Within one month of this Act becoming effective the National Assembly shall elect a President and Vice-Presidents of the National Audit Office.
(2) Until a President and Vice-Presidents are elected in accordance with paragraph (1), the President and the members of the National Audit Office, elected in accordance with the procedure of the repealed National Audit Office Act, shall continue performing their functions.
§ 4. Within one month of the election of the President the National Assembly shall elect the Consultative Council of the National Audit Office.
§ 5. Within one month of the election of the President the functional and territorial organisation of the National Audit Office shall be brought in conformity with the requirements of this Act by adopting the Rules on the structure and organisation of the operations of the National Audit Office and the Rules on the selection, appointment, training, performance appraisal and professional development of auditors and staff.
§ 6. Within one month of the adopting of the Rules on the structure and organisation of the operations of the National Audit Office a competition shall be held for appointing the directors of directorates.
§ 7. Within three months of its election the National Audit Office shall approve and make public the instruments referred to in Article 19, sub-paragraph 2.
§ 8. Within one month of its election the Consultative Council shall adopt the rules on the conditions and procedure for holding examinations for appointing auditors to the National Audit Office.
§ 9. (1) The requirement set out in Article 25, paragraph (1), sub-paragraph 2 for auditors who have been appointed at the National Audit Office before this Act becomes effective, shall be met within 6 months of the adopting of the rules on the conditions and procedure for holding examinations for appointing auditors to the National Audit Office. After the expiry of this deadline the auditors who have not passed the examination for auditors shall be re-appointed in the position of “trainee auditors”.
(2) The individuals re-appointed in accordance with paragraph (1) in the position of “trainee auditors” shall be obliged to meet the requirement set out in Article 25, paragraph (1), sub-paragraph 2 within one year of the conducting of the first examination for auditors in the National Audit Office. If, following a second sitting of the examination for auditors in the National Audit Office the individuals, reappointed in the position of “trainee auditors”, do not pass the examination successfully, they shall be dismissed from the position occupied.
§ 10. The audits which have not been completed and the audits the reports of which have not been presented before this Act becomes effective, shall be finalised in accordance with the procedures stipulated in this Act.
§ 11. The existing instruments of the National Audit Office shall remain effective, to the extent that they are not in contradiction with the requirements of this Act.
§ 12. Article 127c shall be created in the Public Procurement Act (promulgated, SG, No. 28 of 2004; amended, No. 53 of 2004, Nos. 31, 34 and 105 of 2005, Nos. 18, 33, 37 and 79 of 2006, No. 59 of 2007, Nos. 94, 98 and 102 of 2008, Nos. 24 and 82 of 2009, and Nos. 52 and 54 of 2010) :
“Article 127c. (1) Statements establishing violations under this Act, established by National Audit Office bodies, shall be drawn up by authorised auditors within 6 months of the day on which the offender has been detected, but not later than three years of the perpetration of the violation.
(2) Penalty judgments shall be issued by the President of the National Audit Office or by an official authorised by him/her.
(3) The establishing of the violations, the issuance, appeal and execution of penalty judgments shall be done in accordance with the procedure specified in the Administrative Violations and Penalties Act.”
§ 13. In Article 108, paragraph 6 of the Social Insurance Code (promulgated, SG, No. 110 of 1999; Ruling No. 5 of the Constitutional Court of 2000 – No. 55 of 2000; amended, No. 64 of 2000, Nos. 1, 35 and 41 of 2001, Nos. 1, 10, 45, 74, 112, 119 and 120 of 2002, Nos. 8, 42, 67, 95, 112 and 114 of 2003, Nos. 12, 21, 38, 52, 53, 69, 70, 112 and 115 of 2004, Nos. 38, 39, 76, 102, 103, 104 and 105 of 2005, Nos. 17, 30, 34, 56, 57, 59 and 68 of 2006; corrected, No. 76 of 2006; amended, Nos. 80, 82, 95, 102 and 105 of 2006, Nos. 41, 52, 53, 64, 77, 97, 100, 109 and 113 of 2007, Nos. 33, 43, 67, 69, 89, 102 and 109 of 2008, Nos. 23, 25, 35, 41, 42, 93, 95, 99 and 103 of 2009, and Nos. 16, 19, 43, 49, 58, 59 and 88 of 2010) the words “the decision of the National Audit Office for requiring responsibility, with attached to it materials from the audit or the audit report under Article 51, paragraph (1) of the National Audit Office Act” shall be replaced by “the audit report by the President of the National Audit Office under Article 55, paragraph 1 of the National Audit Office Act for the purposes of claiming pecuniary liability or administrative penal liability”.
§ 14. In Article 72, paragraph 1 of the Health Insurance Act (promulgated, SG, No. 70 of 1998; amended, Nos. 93 and 153 of 1998, No. 62, 65, 67, 69, 110 and 113 of 1999, Nos. 1 and 64 of 2000, No. 41 of 2001, Nos. 1, 54, 74, 107, 112, 119 and 120 of 2002, Nos. 8, 50, 107 and 114 of 2003, Nos. 28, 38, 49, 70, 85 and 111 of 2004, Nos. 39, 45, 76, 99, 102, 103 and 105 of 2005, Nos. 17, 18, 30, 33, 34, 59, 80, 95 and 105 of 2006, No. 11 of 2007; Ruling No. 3 of the Constitutional Court of 2007 – No. 26 of 2007; amended, Nos. 31, 46, 53, 59, 97, 100 and 113 of 2007, Nos. 37, 71 and 110 of 2008, Nos. 35, 41, 42, 93, 99 and 101 of 2009, and Nos. 19, 26, 43, 49, 58, 59 and 62 of 2010) the words “the decision of the National Audit Office for requiring responsibility, with attached to it materials from the audit or the audit report under Article 51, paragraph (1) of the National Audit Office Act” shall be replaced by “the audit report by the President of the National Audit Office under Article 55, paragraph 1 of the National Audit Office Act for the purposes of claiming pecuniary liability or administrative penal liability”.
§ 15. In Article 30 of the Municipal Budgets Act (promulgated, SG, No. 33 of 1998; amended, No. 69 of 1999; Ruling No. 2 of the Constitutional Court of 2001 – No. 9 of 2001; amended, Nos. 56 and 93 of 2002, No. 107 of 2003, Nos. 34 and 105 of 2005, No. 98 of 2006, and No. 108 of 2007), paragraph (3) shall be repealed.
This Act was adopted by the 41st National Assembly on 24 November 2010 and on 8 December 2010, and the official seal of the National Assembly was affixed hereto.
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14.03.2011 National Audit Office Act
- (Promulgated, State Gazette No. 98 of 14.12.2010, аmended, SG No. 1/4.01.2011, effective 4.01.2011)
