EVOLUTION OF INTERNAL AUDIT IN THE PUBLIC SECTOR: FROM CONTROL TO ADVISORY ROLE IN PUBLIC FINANCIAL MANAGEMENT
Abstract
The transformation of public sector governance and the increasing demand for transparency and accountability have significantly elevated the role of internal audit. Despite the development of international standards and frameworks, internal audit in many countries, including Ukraine, remains insufficiently effective due to institutional, methodological, and organizational challenges. This creates a need for a deeper understanding of its evolution and current role. The purpose of the paper is to examine the evolution of the internal audit function in the public sector, analyze international standards and organizational models, and assess the current state and development prospects of internal audit in Ukraine within the context of European integration. The study employs a combination of general scientific and specialized methods, including historical analysis to trace the evolution of internal audit, comparative analysis to evaluate international models, a systematic approach to examine internal audit as a governance component, and institutional analysis to assess regulatory influences.The research identifies key stages in the development of internal audit, highlighting its transformation from a financial control mechanism into a strategic, risk-oriented function. It demonstrates the impact of international frameworks such as IIA, COSO, INTOSAI, and PIFC on shaping modern practices. The study also reveals differences between centralized and decentralized audit models and evaluates their applicability. In the Ukrainian context, the findings indicate progress in institutional development alongside persistent challenges, including limited independence, insufficient professional capacity, and low levels of digitalization. The study concludes that enhancing the effectiveness of internal audit requires the implementation of risk-based approaches, strengthening institutional independence, improving professional competencies, and integrating digital technologies. These measures will contribute to better governance, increased efficiency in public resource management, and stronger public accountability.
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