The Council Regulation (EC) No 1085/2006 was a basis for establishing the Instrument for Pre-Accession Assistance (IPA) for candidate and potential candidate countries for EU membership.

To that effect with Decision of the Government of the Republic of Macedonia of 31 July 2007 the Audit Authority for pre-accession funds of the European Union in the Republic of North Macedonia (RNM) was established within the State Audit Office.

In November 2007 with amendment of the Law on the State Audit (“Official Gazette of the RM” No. 133/2007) the competences and mandate of the Audit Authority were regulated and harmonized with the Framework Agreement between the Republic of Macedonia and the Commission of the European Communities on the rules for co-operation concerning EC-financial assistance to the Republic of Macedonia in the framework of the implementation of the assistance under the instrument for pre-accession assistance (Framework Agreement) and the Sectoral Agreement between the Government of the Republic of Macedonia and the Commission of the European communities on the rules for co-operation concerning EC-financial assistance to the Republic of Macedonia and the implementation of the assistance under component V (IPARD) of the instrument for pre-accession assistance (Sectoral Agreement).

The Audit Authority within the State Audit Office (SAO) functioned independently from SAO’s organizational parts in the period from 2007 until 2011, and the cooperation with the State Audit Office was realized according to the Memorandum of Understanding signed in August 2007.

In March 2008 the European Commission approved the Project “Technical Assistance for Capacity Building to the Audit Authority”. Project was implemented in the period April 2008 - March 2009 by the Company Crown Agents – United Kingdom. Global objective of the project was to provide technical assistance to the Audit Authority in establishing and strengthening its capacities in accordance with the requirements of the IPA regulations.

The Republic of Macedonia was conferred the right to manage the pre-accession assistance funds in a decentralized manner in 2009 and 2010.

In the period 2007-2010 the Audit Authority has strengthened its capacities by employment of 18 persons and 5 persons assigned from the State Audit Office.

Following the recommendations of the European Commission to ensure functional independence of the Audit Authority, a separate Law on audit of instrument for pre-accession assistance (IPA) was adopted in May 2010, (“Official Gazette” of RM No. 66/2010) which regulates the subject matter of audit, organization and competences of the Audit Authority and manner of conducting the audit of the instrument for pre-accession assistance in the RM.

In June 2011 the Audit Authority for audit of instrument for pre-accession assistance in the Republic of Macedonia was registered at the Central Register of the Republic of Macedonia as an independent legal entity.

After establishing of the Audit Authority as an individual legal entity, all the 28 employees were taken over from the State Audit Office to the new legal entity - Audit Authority for audit of instrument for pre-accession assistance thus ensuring continuity of IPA audit.

In the period June 2013 - July 2014 the project for technical assistance to the Audit Authority has been implemented by experts engaged by DFC, Spain. Project was financed by the EU

In the period May 2016 - September 2017 the Twinning contract for further development and strengthening of the organizational, administrative and technical capacities of the Audit Authority was realized with partners from member states - the Central Audit Service of the Ministry of Finance of the Netherlands and the Audit Authority of the Republic of Croatia, financed by the EU under programme IPA 2012.

Mandate and competences of the Audit Authority consist of performing an audit of EU-financed programmes under indirect management by the IPA administrative structure established in the national institutions.

The purpose of the audits is to issue reports and opinions per programmes on the reliability of the annual financial reports or statements/annual accounts and on the legality and regularity of expenditure and the functioning of the management and control system regarding the implementation of the pre-accession assistance of the European Union in the Republic of North Macedonia under indirect management with and without ex-ante control by the European Commission.

Annual audit activity reports and annual opinions per programmes are submitted by the Audit Authority to the relevant EC Directorates General and the Government of the RNM.

Audit Authority performs audit of IPA in accordance with internationally accepted auditing standards of INTOSAI (ISSAI) and Guidelines from relevant EC- Directorates General.

According to the Law, the audit of Audit Authority’s operations is performed by an audit company, the European Commission and the European Court of Auditors. The report of the performed audit by the audit company is submitted to the Government of RNM by 30 June at latest in the current year.