Public Financial Management (PFM) reforms are essential for ensuring transparency, accountability, and efficiency in the management of public resources. The Government of Bangladesh has been implementing a range of reform initiatives aimed at strengthening financial governance and enhancing fiscal discipline across ministries, divisions, and government entities. As part of this effort, the Finance Division has undertaken comprehensive reforms under the Strengthening Public Financial Management Program to Enable Service Delivery (SPFMS), which comprises fourteen key components. Among these, the Internal Audit and Audit Follow-Up Scheme has been identified as a priority initiative to strengthen internal control systems, improve transparency, and ensure fiscal discipline in public expenditure. Internal audit plays a critical role in promoting sound financial management practices within government institutions.

In line with the provisions of the Public Money and Budget Management (PMBM) Act, 2009 and the constitutional mandate for public financial oversight, mechanisms such as Public Accounts and Public Audit play vital roles in ensuring transparency and reliability in government financial management. Section 19 of the PMBM Act emphasizes the importance of internal control systems within Ministries, Divisions, and Agencies (MDAs), and clearly outlines the responsibilities of Principal Accounting Officers (PAOs) in maintaining effective internal control frameworks. Within this framework, internal audit has emerged as a globally recognized function in both public and private sectors, contributing to improved governance, risk management, and operational efficiency.

Under the SPFMS program, significant progress has been made in institutionalizing internal audit functions. The Finance Division has developed and issued the Internal Audit Charter and the Risk-Based Internal Audit (RBIA) Manual, which provide structured guidance for conducting internal audit activities across ministries, divisions, and departments. As part of the implementation, piloted internal audit functions in five high spending departments - Ministry of Primary and Mass Education (MOP&ME), Local Government Engineering Department (LGED), Roads and Highways Department (RHD), Directorate General of Health Services (DGHS) and Public Works Department (PWD) and established Internal Audit Units staffed with qualified personnel. Internal Audit Committees have also been formed in these ministries and divisions in accordance with the RBIA Manual to oversee audit activities and ensure proper follow-up of audit findings.

A systematic risk-based approach has been adopted, whereby departments identify and categorize risks as high, moderate, or low. These risks are documented in comprehensive Risk Registers, which serve as the basis for audit planning and prioritization. Internal audit activities have been expanded from headquarters to field-level offices, ensuring wider coverage and strengthened oversight. Internal auditors evaluate the effectiveness of existing internal control systems and provide practical recommendations to mitigate risks and enhance operational efficiency.

More recently, an Internal Audit Wing (IAW) has been established within the Finance Division as part of the ongoing reform agenda to further strengthen financial accountability and transparency in public administration. This Wing is expected to provide strategic guidance, technical support and oversight to internal audit units across departments, thereby reinforcing the overall internal control framework of the Government.