No. 20




Internal Audits in Estonia and Elsewhere in Europe

17 December 2009


RiTo No. 20, 2009

  • Raivo Linnas

    Ph.D. student in public administration, Tallinn University of Technology

The article treats the status and development of internal audits in Estonia on the basis of assessments by practitioners and compares the process to that of other European countries, above all the Nordic countries of Sweden, Norway and Finland. The article relies on research conducted in autumn 2006 by an international working group of researchers and funded by the Institute of Internal Auditors Research Foundation, entitled The Common Body of Knowledge (CBOK 2006), as well as on the data from the CBOK Europe study. A selection was made from the significant aspects of internal audits.

It is not possible to distinguish a uniform or divergent pattern in internal audits in Estonia and the Nordics, as there were too many similar and different features in audits in these countries. For example, a characteristic of Estonia is that none of the respondents had less than a bachelor’s degree and none had a doctorate. In this regard Estonia was similar to Bulgaria and Turkey. Estonia is distinct from Norway, Sweden and Finland in terms of the low number of internal auditors with a background in the field of accounting; Estonia is more similar to the average indicator for Europe. Estonian internal auditors are notable for their longstanding experience working in accounting, external audits, finance and management. It is good that Estonian internal auditors have extensive training in their field and longstanding work experience in different posts, as internal auditors who want to be equal partners for the head of an organization and ready for challenges must have a master’s degree in at least one primary speciality and additional education in internal audit, law, business administration or some other field. They must also certainly have management experience. Estonian internal auditors deal with a relatively large amount of ethics issues, information risk management, risk management and control framework assessment and monitoring. Estonian internal auditors projected in 2006 a significant decrease in compliance audits and operational audits and an increase in the amount of consultation activity, information technology audits and management audits. These data support the writer’s convictions that, as the share of new types of audits increase, traditional financial audits and compliance audits will decrease.

In summary, the following can be asserted:

1) a very clear generalized conclusion about the similarity or difference of internal audits in Estonia with respect to internal audits in the comparison countries could not be drawn; however, internal audits in Estonia are more similar to the European average with regard to IIA membership history, education, professional training and academic specialities;
2) internal audits are a fairly new trend in Estonia;
3) the professional, vocational and educational background of internal auditors is good and their work experience is diverse;
4) the necessary groundwork exists for responding to challenges facing the internal audits.

It is to be hoped, after the entry into force of the new version of the Authorized Public Accountants Act, that the groundwork will not be scrapped, but that the state, the Institute of Internal Auditors and internal auditors will jointly implement measures to develop and strengthen the profession.

Full article in Estonian