WRITTEN QUESTION E-2393/00

by Richard Howitt (PSE) to the Commission

(13 July 2000)

Subject: SCR Audit Unit

Could the Commission please provide the Terms of Reference and Operational Procedures of the SCR (Service Commun Relex) Audit Unit and clarify in particular:

1. What is the Commission's view on the value of a clear separation of functions between audit, policy and executive functions within the services?

2. Is the Unit seen as an independent audit unit and if so, what measures are taken to ensure that this is in practice the case?

3. What procedures exist to monitor the work of the Audit Unit and ensure it carries out its functions adequately and with strict observance of its Terms of Reference and the Operational Procedures?

4. What measures are taken to safeguard the rights of beneficiaries of Commission grants during an audit exercise conducted by the SCR Audit Unit?

5. Is it Commission policy to provide auditees with a written set of Terms of Reference for the audit exercise, a clear explanation of their rights with regard to the audit process at the start of the audit exercise and a copy of the audit report once completed and if not, for what reasons? What right of appeal do auditees have with regard to the findings of an audit and the view taken by the Commission of its results?

6. What steps are taken to ensure that auditees are given adequate information and time to enable them to respond to the findings of any such audit, discuss these findings with the Commission and agree with them on any remedial steps to be taken?

7. With regard to the follow-up of an audit exercise, does the Commission distinguish between cases, on the one hand, where it would pursue a policy of unilateral and immediate action with regard to an auditee, and, on the other hand, cases where it would expect to agree first a plan for remedial action with the auditee before the findings were allowed to affect the Commission's administration of grants for the auditee? If so, what criteria are used to make this distinction and what steps are taken to ensure they are strictly adhered to?

Answer given by Mr Patten on behalf of the Commission

(28 September 2000)

As the Honourable Member may be aware, the Commission is in the process of undertaking a root and branch reform of its administrative and financial management. Two key elements of this reform are to increase the autonomy of the delegated authorising officers in the directorates general and services, while requiring them to operate proper internal controls, and to create an internal audit service to review and report on the effectiveness of these internal controls.

The reform also foresees the establishment of an audit function in each of the directorates general and services. In addition to advising the director general or the head of the service on improvements to the system of internal control, the audit service would also carry out the audit of projects and financial activities funded by the Commission. In some services such as the Common service for external relations, established audit units already carry out part of this activity.

The audits of the grants awarded and of the projects funded are carried out in accordance with the conditions established by the contracts governing the grants of Community funds. A letter informing the beneficiary that an audit is to be carried out is always sent.

Should the Commission auditors find that Community funds have been granted on the basis of incorrect information supplied by the beneficiary or that the funds have not been used in accordance with the contractual conditions and regulations, this would be reported to the delegated authorising officers, who would decide on any action to be taken.

The audit report is an internal and confidential document that is followed up by the Commission services concerned. In some cases and where appropriate, the relevant managing service may release the audit report, in whole or in part, to the beneficiary contractor for reaction and explanation.