Internal Audit Service (European Commission)

Last updated

The Internal Audit Service or IAS is a Directorate-General (DG) of the European Commission that was established in 2001 to provide an increased accountability of the Commission.

Contents

The Commissioner responsible for the IAS is Frans Timmermans First Vice-President of the European Commission, in charge of Better Regulation, Inter-Institutional Relations, the Rule of Law and the Charter of Fundamental Rights.

The IAS is headed by the Internal Auditor of the Commission, Manfred Kraff, formerly the Chief Accountant of the Commission. The IAS has approx. 150 permanent staff.

Mission

The mission of the IAS is to:

The IAS is organized into three Directorates:

History

Background

The European Commission adopted its first Financial Regulation in 1962, in which internal control was implemented by separating the roles of authorising officer, financial controller and accounting officer. However, as the Commission grew and became more complex, the European Court of Auditors (the EU's external auditor) began to call for the audit of systems and controls, and advocated an independent audit service within the Commission. The ECA published an opinion in 1989 [1] promoting the concept of internal auditing, and in 1997 recommended [2] that a real internal audit function to be created.

5.12. On the express condition that the authorising officer's role is strengthened..., the financial controller's duties could develop into those of a real internal auditor.

— Opinion 4/97 of the Court of Auditors [2]

A Commission decision from 1990 requested the Financial Controller to set up such a function, which was further developed under the programme of reform of financial management proposed in 1995 (the SEM2000). This audit function seems to have been re-focused on controls relating to structural funds, as Phase III progress reports of SEM2000 don't mention it - this modest audit function was little known and had little impact on the services of the Commission.

The Santer Commission

After a serving Commission official made public allegations of fraud and financial mismanagement by members of the Santer Commission, in December 1998 the European Parliament refused to grant discharge on the 1996 accounts to the Commission. In addition, a motion of no confidence was introduced. In early 1999 Commission President Jacques Santer admitted that there had been irregularities, but threatened to resign if Parliament exerted further pressure. [3] In response, Parliament called for a committee of independent experts to look into ways of improving financial management and control. After receiving the first report of the so-called Wise Men in March 1999, the Santer Commission decided to collectively resign. In their Second Report, the Wise Men suggested in clear terms that the underlying problem is that the internal audit service is not perceived as a central department at the service of the entire Commission... [4] Based on international best practices and the definition of internal audit as proposed by the Institute of Internal Auditors (IIA), the Wise Men recommended setting up a specialised Internal Audit Service outside the regular structure of directorates-general, reporting directly to the President of the Commission.

The task of setting up the new service was allocated to the Commissioner responsible for institutional reform, Neil Kinnock

Reforming the Commission

In response to the Wise Men's report, an Administrative Reform Task Force was set up to draft the Reform White papers. The task force looked at financial controls, strategic planning and programming and the modernisation of personnel policy. The basis for establishing the IAS was recommendation 35 of the Wise Men's report [5] proposing A professional and independent Internal Audit Service. Recommendation 37 also mentioned a specialised internal control function in each DG that would help establishing effective financial management. The Commission task force worked with the European Court of Auditors, the Wise Men committee, the World Bank and the EIB in developing the new control framework. Before this could be implemented, the Financial Regulation of the Commission needed to be changed (requiring a vote by all member states) to abolish the centralized ex-ante controls performed by DG Financial Control.

10 years of the IAS

The IAS became an independent service in July 2001, with Jules Muis as the first Director-General. The establishment of the new service was part of the reforms enacted at the Commission following the adoption of the Reform White Paper of 2000. [6] As part of these reforms, Internal Audit Capabilities (IACs) were created in each DG, together with the Audit Progress Committee (APC), which oversees the work of both the IAS and IACs.

An independent and professional Internal Audit Service will be set up under the direct responsibility of the Vice-President for Reform...

— Action 68 of the Reform White Paper [6]

The IAS set out a programme of in-depth audits of all DGs and Agencies that came under the new Financial Regulation. Apart from auditing, it also aimed to provide methodological support for audit activities to the IACs in each DG. After setting up the IAS and guiding it through its first three years, Jules Muis resigned from his post as of March 2004 and was replaced by Walter Deffaa in August 2004.

In 2006 IAS carried out the first quality review of the Internal Audit Capabilities. In 2007 its Mission Charter [7] was updated, along with introducing a model charter for IACs.

In 2009 Deffaa left IAS and was replaced by Brian Gray. In 2011 IAS completed the first overall opinion into the state of internal control in the Commission and, also in this year, it became the internal auditor of the newly established European External Action Service. In 2012 Brian Gray resigned, to be replaced by Philippe Taverne. [7] Since March 2017 Manfred Kraff is at the helm of the IAS. His appointment is subject of a complaint with the European Ombudsman. [8]

See also

Related Research Articles

<span class="mw-page-title-main">European Commission</span> Executive branch of the European Union

The European Commission (EC) is part of the executive of the European Union (EU), together with the European Council. It operates as a cabinet government, with 27 members of the Commission headed by a President. It includes an administrative body of about 32,000 European civil servants. The Commission is divided into departments known as Directorates-General (DGs) that can be likened to departments or ministries each headed by a Director-General who is responsible to a Commissioner.

<span class="mw-page-title-main">Audit</span> Systematic and independent examination of books, accounts, documents and vouchers of an organization

An audit is an "independent examination of financial information of any entity, whether profit oriented or not, irrespective of its size or legal form when such an examination is conducted with a view to express an opinion thereon." Auditing also attempts to ensure that the books of accounts are properly maintained by the concern as required by law. Auditors consider the propositions before them, obtain evidence, and evaluate the propositions in their auditing report.

<span class="mw-page-title-main">Paul van Buitenen</span>

Paul van Buitenen is a retired Dutch politician of the Europe Transparent Party who served as a Member of the European Parliament from 2004 to 2009.

<span class="mw-page-title-main">European Court of Auditors</span> Institution of the European Union

The European Court of Auditors is the supreme audit institution of the European Union (EU). It was established in 1975 in Luxembourg and is one of the seven EU institutions. The Court comprises one member from each EU member state supported by approximately 800 civil servants.

<span class="mw-page-title-main">European Anti-Fraud Office</span> European Union agency

The European Anti-Fraud Office is a body mandated by the European Union (EU) with protecting the Union's financial interests. It was founded on 28 April 1999, under the European Commission Decision 1999/352. Its tasks are threefold:

<span class="mw-page-title-main">Europol</span> European Union law enforcement agency

Europol, officially the European Union Agency for Law Enforcement Cooperation, is the law enforcement agency of the European Union (EU). Established in 1998, it is based in The Hague, Netherlands, and serves as the central hub for coordinating criminal intelligence and supporting the EU's member states in their efforts to combat various forms of serious and organized crime, as well as terrorism.

<span class="mw-page-title-main">Comitology</span> Process by which European Union law is modified or adjusted

Comitology in the European Union refers to a process by which EU law is implemented, modified or adjusted and takes place within "comitology committees" chaired by the European Commission. The official term for the process is committee procedure. Comitology committees are part of the EU's broader system of committees that assist in the making, adoption, and implementation of EU laws.

An audit committee is a committee of an organisation's board of directors which is responsible for oversight of the financial reporting process, selection of the independent auditor, and receipt of audit results both internal and external.

<span class="mw-page-title-main">External auditor</span> Person who audits an entitys financial statements and is independent of that entity

An external auditor performs an audit, in accordance with specific laws or rules, of the financial statements of a company, government entity, other legal entity, or organization, and is independent of the entity being audited. Users of these entities' financial information, such as investors, government agencies, and the general public, rely on the external auditor to present an unbiased and independent audit report.

<span class="mw-page-title-main">Directorate-General for Employment, Social Affairs and Inclusion</span>

The Directorate-General for Employment, Social Affairs and Inclusion is a Directorate-General of the European Commission. It was formerly known as the Directorate-General for Employment, Social Affairs and Equal Opportunities.

<span class="mw-page-title-main">Directorate-General for Financial Stability, Financial Services and Capital Markets Union</span>

The Directorate-General for Financial Stability, Financial Services and Capital Markets Union is a Directorate-General (DG) of the European Commission. It is one of the thirty three DG's that are created and named to reflect their functions.

<span class="mw-page-title-main">Executive Vice President of the European Commission for An Economy that Works for People</span> Member of the EU Commission

The Executive Vice President of the European Commission for An Economy that Works for People is the member of the European Commission responsible for economic and financial affairs. The position was previously titled Commissioner for Economic and Monetary Affairs and the Euro and European Vice President for the Euro and Social Dialogue from 2014 to 2019. The current executive vice president is Valdis Dombrovskis (EPP).

<span class="mw-page-title-main">Body of European Regulators for Electronic Communications</span>

The Body of European Regulators for Electronic Communications (BEREC) is the body in which the regulators of the telecommunications markets in the European Union work together. Other participants are the representatives of the European Commission, as well as telecommunication regulators from the member states of the EEA and of states that are in the process of joining the EU.

The chief audit executive (CAE), director of audit, director of internal audit, auditor general, or controller general is a high-level independent corporate executive with overall responsibility for internal audit.

<span class="mw-page-title-main">Directorate-General for Migration and Home Affairs</span> Directorate-General of the European Commission

The Directorate-General for Migration and Home Affairs is a Directorate-General of the European Commission. The role of the body is to ensure the EU's security, to build a common EU migration and asylum policy, and to promote dialogue and cooperation with non-EU countries. Thereby, it contributes to the area of freedom, security and justice (AFSJ).

The Liikanen Report or "Report of the European Commission’s High-level Expert Group on Bank Structural Reform" is a set of recommendations published in October 2012 by a group of experts led by Erkki Liikanen, governor of the Bank of Finland and ECB council member. On 3 July 2013, by large majority the European Parliament adopted an own initiative report called "Reforming the structure of the EU banking sector" that welcomes structural reform measures at Union level to tackle concerns on Too big to fail banks, that led to the publication of a proposal of Regulation on structural measures improving the resilience of EU credit institutions in January 2014. This proposal was withdrawn in July 2018.

<span class="mw-page-title-main">European Commissioner for Financial Stability, Financial Services and the Capital Markets Union</span> Member of the EU Commission

The European Commissioner for Financial Stability, Financial Services and the Capital Markets Union is the member of the European Commission responsible for banking and finance. The current officeholder is Mairead McGuinness.

<span class="mw-page-title-main">Media freedom in the European Union</span>

Media freedom in the European Union is a fundamental right that applies to all member states of the European Union and its citizens, as defined in the EU Charter of Fundamental Rights as well as the European Convention on Human Rights. Within the EU enlargement process, guaranteeing media freedom is named a "key indicator of a country's readiness to become part of the EU".

References

  1. ↑ Opinion No 1/89 of the Court of Auditors of the European Communities on a proposal for a general revision of the Council Regulation (ECSC, EEC, Euratom) amending the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities
  2. 1 2 "EUR-Lex - 51997AA0004 - EN". Official Journal C 057. 23 February 1998. p. 0001.
  3. ↑ "European Union Crisis: MEPs retreat in battle with Santer". independent.co.uk. 1999-01-14. Retrieved 2013-01-29.
  4. ↑ Section 4.11.4 of the Second report on Reform of the Commission (Analysis of current practice and proposals for tackling mismanagement, irregularities and fraud), 10 September 1999.
  5. ↑ In Chapter 4 of the Second Report
  6. 1 2 "EUR-Lex - 52000DC0200(02) - EN". eur-lex.europa.eu.
  7. 1 2 "Internal Audit Service". European Commission.
  8. ↑ Ombudsmann, Europäischer. "The European Commission's appointment of the Director-General for its Internal Audit Service". ombudsman.europa.eu (in German). Retrieved 2018-03-27.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.