WRITTEN QUESTION E-1161/02

by Christopher Heaton-Harris (PPE-DE) to the Commission

(23 April 2002)

Subject: DG statements of assurance

The Commission has announced that they are planning on having each Director-General issue a statement of assurance for his or her department.

Exactly what information will be conveyed in each of these statements of assurance?

How does the Commission know that each individual has the necessary and proper background and ability to carry out an unbiased assessment?

What checks are in place to ensure that the statement is fair, just and unbiased?

How can the Commission guarantee the reliability of each statement of assurance?

Answer given by Mr Prodi on behalf of the Commission

(17 June 2002)

The Charter of tasks and responsibilities of Authorising Officers by delegation for Director-Generals and Heads of Service contains an obligation to report on the activities of Directorate-Generals and services and on the management of allocated resources. This takes the form of an annual report and a declaration. The introduction of this annual report and declaration supports one of the major tenets of Reform, which is to ensure a clear definition of responsibility in management of financial and human resources, with more accountability being the necessary corollary to increased decentralisation.

For the Commission, the introduction of this key element of the new management and control framework is essential. The consolidation, oversight and review work of its central services will bring together the different sources of assurance so that the Commission can take collective responsibility effectively and/or take corrective measures.

This reporting and accountability framework must also be seen as a management tool and a mechanism for Authorising Officers by delegation to review the activities of their Directorate-Generals or services and to identify areas for improvement and further development. As an accompanying measure technical guidance has been provided concerning the structure and contents of the annual activity reports and on the declaration and reservations of the Authorising Officers by delegation.

The declaration covers a narrower area than the annual report as it does not cover the assessments contained in the report on the results achieved in terms of implementing specific policies. It will express the responsibility of the Authorising Officers by delegation for the sound management of their resources and for undertaking management improvements.

Content of the declaration

According to the adopted model for the declaration to be included in the annual report, the Authorising Officers by delegation will, on the basis of all the information in their possession:

- declare that the information contained in the report gives a true view;

- state, on the basis of their own judgement, their reasonable assurance that the resources assigned to the activities described in the report have been used for the intended purpose and in accordance with the principles of sound financial management, and that the control procedures put in place give the necessary guarantees concerning the legality and regularity of the underlying transactions;

- enter all reservations designed to highlight risks associated with the operations and actions managed that can have a substantial negative effect in the above mentioned statements. Reservations point

to malfunctioning in the design or application of management and internal control systems and are accompanied by action plans explaining the remedial measures taken or planned;

- confirm that they are not aware of anything not reported in their reports which could harm the interests of the Institution.

Process

To comply with the obligations referred to, the Authorising Officers by delegation must set up an adequate and documented process defining the organisation and the assignment of responsibilities to the correspondents that will support them. They will also implement reporting systems in order to obtain adequate information from their Authorising Officers by sub-delegation as stated in their charter. This process is completed with internal reporting and feedback from their subordinates in order to ensure them that they have an adequate basis at their disposal for drafting the annual report and the related declaration. The Memorandum(1) of December 2001 fixing the minimum required level of implementation of the Internal Control Standards provides the Authorising Officers by delegation with a reference framework for their management and control systems.

They receive assistance through:

- a methodology group, chaired by the Secretariat General, which elaborated guidelines on the process leading up to the declaration as well as on the scope of the reservations and responsibilities of the Authorising Officer by delegation;

- the Budget Directorate General (DG), which provides the budgetary accounting information, following the present budgetary structure, on transactions entered and validated by the services in the budgetary accounting application;

- their financial and operational units, as far as their responsibilities are concerned, which help in establishing the annual accounts and report on the implementation and functioning of the internal control systems;

- the Authorising Officers by sub-delegation, which report on the implementation of programmes, operations or actions according to their sub-delegation;

- their Internal Audit Capabilities on the level of quality of management and internal control systems and on the identification of major fields of risk for malfunctioning, illegality or irregularity or on any other relevant information, according to the work plan set out in agreement with the Director General;

- the Commission's Internal Audit Service on providing assistance in connection with the preparatory work;

- information at their disposal from the Court of Auditors, Financial Control and all other relevant sources.

Reliability

The declaration is an opportunity for Authorising Officers to qualify the extent to which they really control and may therefore be held accountable for operations. This implies an incentive to overstate any problems, which should be set against the more commonly accepted risk that managers are inclined to understate the shortcomings of their departments.

For this first year of implementation of the new reporting framework, the Commission's Internal Audit Service will perform a limited review in the months of May 2002 and June 2002 of the process leading up to the annual reports and declarations in the DGs and Services. IAS will examine, at a consolidated level and for the needs of the Commission, the adequacy and the compliance of the process with the existing requirements leading up to the annual reports and declarations.

Based on this review, the Commission's Internal Audit Service will issue a consolidated report of its findings.

Summary report

On the basis of the annual activity reports and the Internal Audit Service consolidated report on the adequacy of the whole process of annual activity reports and declarations of Authorising Officers by delegation, the Commission will adopt a summary report,

prepared by the Secretariat General and DG Budget. The Commission will also, at a consolidated level, take note of reservations entered and will comment on the proposed solutions and timeframes and adopt a list of measures to resolve the problems identified, including on the findings of the Internal Audit Service. It will make choices in the event of incoherence or conflict between proposed corrective action by the Authorising Officers by delegation.

(1) SEC(2001) 2037-4.