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Accountability and transparency are the basic principles of the efficient functioning of public finances at local level, and especially of a modern welfare state. The development of external and internal audit commitments is necessary to ensure an economical and cost-effective use of local government financial resources. This study has focused on how to organize internal and external audit activities at secondary level of government in Albania, in other words the local government. But which are the units responsible for the functioning of audit process in local self-government entities? This study's findings show that, although the legal framework for internal and external audit has been developed, the quality of internal audit units is not at the expected levels. Particularly in the organization of the audit activity, in the context of Albania's specific conditions, the government must take into account the creation of a favorable and motivating environment for the employment of auditors. The City Council and the Mayor should increase and strengthen the importance of the audit profession and audit capacities at local level.

In the case of entities with a significant inventory/stocks turnover, the implementation of internal audit function must be a concern of both management and shareholders, in order to prevent and detect the risk of embezzlement of these assets. This procedure must provide assurance that the inventoried stocks are correct and in a proper condition to be used according to their nature in the entity's activity. It is necessary for the entity to implement its own appropriate policies and procedures regarding these categories of assets' management and administration due to the fact that these assets present a very high risk of fraud and, in most cases, this can be provoked even by entity's employees

To successfully deliver public goods and services in order to meet the needs of a society in a continuous growth, it was necessary to establish public resources available to the public sector. The formation of financial resources at the disposal of the state and their distribution to different institutions to cover the public needs is presented through the procedures used for the allocation of resources, with a strong emphasis on the relationship between the budgetary revenues and expenses. The traditional view of public finances emphasizes public spending, which means obtaining resources in advance to cover the needs, without considering their impact on the life quality of citizens. The modern view on public finances is focused especially on the effects that public expenses generate on the society as a whole.

The activity of stock management plays an important role in the management of economic entities due to the implications it has on the financial results recorded by them. The financial difficulties that economic entities are faced with may be caused by lack of inventory control, the low rate of return on invested capital being just a negative example of a result recorded on account of bad management. The optimization of stock management is a double-role action, the results of this action being reflected by the recording of an upward trend of both profitability and liquidity from one period to another. The most important objectives of stock management are: increasing the stocks speed of rotation, reducing the storage period and achieving a balance between the stocks level and the customers demand. Inventory management manages supply, financial and sales policies that sometimes generate conflicts between the financial compartment, whose main purpose is to minimize the total level of stocks, and the supply, sales and/ or marketing compartments, which aim to avoid as much as possible the stockouts.

In order to carry out its activity in optimum conditions and achieve its goal, either to develop a product, to do a job or perform a service, any entity must maintain a balanced level of stocks of raw materials and materials. However, very careful attention should be paid to the stocks’ level, since this level should not record values too high, or too low. These values lead to overstocking or stockouts situations, which should be avoided. The blockage of liquidity and the deterioration of raw materials and materials stored over a long period of time are the main consequences of overstocking, and, among the consequences of the stockout we can list: discontinuation of business, which may mean diminishing profits but also loss of customers’ confidence through termination of contracts. In order to achieve the optimal stock level, we recommend an efficient administration of this activity, which implies the implementation of a well-designed information system that provides information at all times to the management and the supply department and, at the same time, effective management, since it has consequences on the company’s profitability and requires good communication with both the internal and external environment. We aim to focus in this study on the factors influencing the achievement and preservation of an optimal stock level, the importance of safety stock, the role of stock administration and inventory management within an entity.

The audit function is an essential element in managing public finances and improving public performance in general. In the field of internal and external audit, standards have been developed to guide this activity and are used by auditors and relevant structures as reference points to carry out audit work. By its nature, the audit covers a variety of activities and themes that act as a mechanism by providing guarantees to governments, ministries (internal audit) and Parliament (external audit) that public funds are spent in accordance with the legislative framework and that the use of public to the government correctly represents its financial position, as well as the promotion of public resources with efficiency and effectiveness for the benefit of taxpayers. Even though external and internal audits have different roles and responsibilities, their common purpose is to promote good governance by contributing to transparency and accountability.