ECONOMIC ESSENCE OF INTERNAL AUDIT IN PUBLIC ADMINISTRATION BODIES

Abstract

Introduction. The increasing complexity of public administration, coupled with the growing demand for transparency, accountability, and efficient management of public resources, has emphasized the critical role of internal audit in government institutions. Inefficient, unlawful, or ineffective use of budgetary funds poses significant risks to organizational performance, financial stability, and public trust, making the implementation of robust internal audit mechanisms essential for ensuring sustainable governance and operational excellence. Purpose. This study aims to examine the economic essence and functional significance of internal audit in public administration, focusing on its role in improving management processes, preventing mismanagement and fraud, enhancing transparency, and fostering a culture of responsibility within governmental organizations. Methods. The research methodology combines a comprehensive analysis of relevant literature, international standards, and legislative frameworks governing internal audit, including IPPF, ISSAI, and PSIAS, with comparative analysis and synthesis to evaluate best practices, identify functional tasks, and assess preventive and control effectiveness in managing financial and material resources. The results demonstrate that internal audit functions as a proactive mechanism, enabling timely identification of risks, errors, and inefficiencies, contributing to stronger internal control systems, optimized resource allocation, and compliance with legal and regulatory requirements. The influence of European integration on the development of internal audit is also highlighted, particularly through the adoption of international standards and the promotion of professional development for auditors. The findings indicate that a well-organized internal audit system is vital for achieving strategic and operational goals, enhancing accountability and transparency, and cultivating an organizational culture of responsibility. Conclusion. It is recommended to continuously align internal audit practices with international standards, strengthen legislative support, and invest in professional training and development of auditors to ensure the sustainable improvement of governance processes and long-term public sector effectiveness.