The Public Financial Inspection Agency (PFIA) is an administration under the minister of finance created in 2006 after the implementation of a significant reform in the sphere of Public Internal Financial control (PIFC). The main objectives of the Public Financial Inspection Agency are to protect the public financial interest by carrying out ex post financial inspections, in order to ensure adherence to state regulations which are related to the budget and the financial-economic or accounting activities of the organizations or individuals under its jurisdiction.PFIA is an institution which upon an ascertainment of a violation has the legal authority to impose administrative and financial sanctions against the liable person. Moreover, upon discovering any damages caused to the property of the organizations and entities under Article 4; where the relevant legal grounds are present, PFIA holds the perpetrators administratively, penally and property liable. In addition, the Agency is authorized to impose administrative or financial sanctions in the sphere of the public procurements. An essential function of the PFIA is to uncover frauds and violations against the common financial interest of the European communities. The fundamental guiding principles of the agency are lawfulness, objectivity, ex officio and confidentiality.
About the PIFC reform
Prior to the reform, the functions of internal audit and financial inspection were centralized and performed by the Public Internal Financial Control Agency (PIFCA). According to European practices, the internal audit has to be performed by auditing units affiliated with the relevant administrator of budget funds. The Bulgarian government adopted the European model of financial control, and accordance with the PIFC development strategy, ratified in June 2005, performed a reform, separating the functions of internal audit and financial inspection. Three newly passed laws created the legal framework of the new model for financial control, while abrogating The Public Internal Financial Control Act. Those are Law of The Internal Audit in the Public Sector, The Public Financial Inspection Law and Law of the Financial Management and Control in the public sector.
The decentralization of the internal audit is fundamental for the PIFC reform-560 internal PIFC auditors were transferred, to municipalities and spenders of funds from the Republic budget, as employees of the respective administrations.
The second fundamental reform stage was the creation of the Public Financial Inspection Agency, on 25th of April 2006, as a legal successor of the PIFCA, following the enactment of The Public Financial Inspection Law. The Law was developed in accordance with the commitments made (within the legal framework of) during the negotiation process, under Chapter 28 - "Financial control" with the assistance of SIGMA experts. The main guidelines of The Public Financial Inspection Law were set in the Document of the PIFC Policy, approved by the Council of Ministers in 2002 and renewed in 2005. The Law was agreed upon with the Directorate-General for Budget of the European Commission. The Public Financial Inspection Law governs the goals, tasks and jurisdiction of the state financial inspection, as well as the standing and duties of the Public Financial Inspection Agency.