Internal and External Fiscal Control in Venezuela: Regulations and Procedures
Internal Control Functions
The following are the functions of internal control:
- Dictate the rules for qualifying, selecting, and hiring auditors, consultants, or independent professionals in the field of control, and rules for the implementation and presentation of its results;
- Evaluate the exercise and the results of internal and external control;
- Evaluate the accounting systems of the entities and bodies referred to in paragraphs 1 to 11 of Article 9 of this Act;
- Establish the terms and conditions for the highest authority of the agencies and entities subject to control, dictate, in accordance with the provisions of the Comptroller General of the Republic, standards, manuals of procedures, methods, and other instruments to form their internal control system and for other levels of management and administration of each organizational chart of the agencies and entities subject to control, and implement the system of internal control;
- Evaluate the regulations on internal control systems dictated by the highest authorities of the entities subject to control, to determine if they meet basic standards issued by the Comptroller General of the Republic;
- Evaluate internal control systems to verify their effectiveness, efficiency, and economy;
- Provide technical advice to agencies and entities under their control in the implementation of internal control systems and in implementing the recommendations contained in audit reports or any control activity and implementation of corrective actions undertaken;
- Draft legislation and other normative instruments concerning fiscal control;
- Provide opinions on any bill or regulation on the treasury;
- Dictate policies and guidelines for designing training programs and expertise of civil servants in management control systems covered by this Act.
Article 34 – The Comptroller General of the Republic will regularly evaluate the fiscal control bodies to determine their effectiveness, efficiency, and operating economy and will take appropriate action. If the evaluations reveal serious irregularities in the exercise of their functions, the Comptroller General of the Republic may intervene in the fiscal control bodies of the entities or bodies referred to in paragraphs 1 to 11 of Article 9 of this Act.
National Fiscal Control System
Internal Control
Article 35 – Internal Control is a system that includes the plan of organization, policies, standards, methods, and procedures adopted within an entity or body subject to this Act, to safeguard its resources, verify the accuracy and truthfulness of its financial and administrative information, promote efficiency, economy, and quality in their operations, encourage compliance with prescribed policies, and ensure compliance with its mission, objectives, and goals.
Article 36 – The highest authority of each party is responsible for organizing, establishing, maintaining, and evaluating the internal control system, which should be appropriate to its nature, structure, and purpose.
Article 37 – Each public sector entity shall, within the framework of basic rules issued by the Comptroller General of the Republic, establish rules, procedure manuals, performance indicators, and other instruments or specific methods to operate the internal control system.
Article 38 – The internal control system used by the authorities and bodies referred to in paragraphs 1 to 11 of Article 9 of this Act shall ensure that prior to the acquisition of goods or services, or the development of other contracts involving financial commitments, the following requirements are met:
- That expenditure is correctly attributed to the corresponding item of the budget or, if necessary, supplementary appropriations;
- That there is available budget;
- That the necessary and sufficient guarantees have been provided to account for the obligations to be assumed by the contractor;
- That prices are fair and reasonable, except as otherwise provided in other laws;
- That the terms of the Bidding Law and other applicable laws have been complied with.
It should also ensure that prior to making payments, the following requirements are met:
- That applicable laws and regulations have been complied with;
- That payments are properly charged to the budget appropriations or additional appropriations legally agreed to;
- That there is available budget;
- That payments are made to fulfill certain commitments and are properly checked, unless they are advance payments to contractors or officials ordered progress under the laws;
- That payments correspond to actual credit holders.
Article 39 – The managers, directors, or administrative authorities of each department, section, or specific organizational chart shall exercise supervision over compliance with constitutional and legal norms, plans, policies, and internal control instruments referred to in Article 35 of this Act, on the operations and activities of administrative units and servers under their direct supervision.
Article 40 – Without prejudice to the functions of the Comptroller General of the Republic and to the provisions of Article 36, the internal audit units of the entities referred to in paragraphs 1 to 11 of Article 9 of this Act shall evaluate the internal control system, including the degree of operability and effectiveness of management systems and management information and the examination of records and financial statements to determine their relevance and reliability, and assess efficiency, effectiveness, and economy within the framework of operations.
Article 41 – The internal audit units, within their competence, may conduct audits, inspections, surveys, studies, analyses, and research of all kinds and of any nature in the entity under their control, to verify the legality, accuracy, truthfulness, and correctness of its operations, and to assess compliance and the results of the plans and administrative actions, effectiveness, efficiency, economy, quality, and the impact of their management.
External Control
Article 42 – External control involves monitoring, inspection, and oversight exercised by external fiscal control bodies on the operations of the entities referred to in paragraphs 1 to 11 of Article 9 of this Act, in order to:
- Determine compliance with constitutional provisions, laws, regulations, or other regulations governing their operations;
- Determine the degree of compliance with prescribed policies in relation to heritage and safeguarding the resources of those entities;
- Establish the extent to which their goals and objectives have been achieved;
- Verify the accuracy and sincerity of their financial, administrative, and managerial information;
- Evaluate the efficiency, effectiveness, economy, and quality of their operations, based on management indexes, income, and other applicable techniques;
- Evaluate the system of internal control and make the necessary recommendations for improvement.