WRITTEN QUESTION E-0450/02 by Christopher Heaton-Harris (PPE-DE) to the Commission. Andersen.
Date: 2002-02-21
Institutions: European Parliament, Provisional data
Subjects: European Commission, European Court of Auditors, application of EU law, audit, auditing, award of contract, contract, private sector, provision of services, public contract

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(2002/C 229 E/091)

WRITTEN QUESTION P-0443/02

by Gianfranco Dell’Alba (NI) to the Commission

(12 February 2002)

Subject: Andersen

The Andersen audit firm is heavily implicated in the Enron affair. Not long ago, reports appeared in the
European press to the effect that Andersen might also be implicated in affairs brought to light in the
United Kingdom.

Does Andersen provide services to the Commission, or has it done so in the past?

If so, exactly what contracts for what types of project did the Commission conclude with the firm in the
2000 and 2001 financial years?

Has the Commission taken steps to ensure that work carried out by Andersen is up to standard?

(2002/C 229 E/092)

WRITTEN QUESTION E-0450/02

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

(21 February 2002)

Subject: Andersen

Following recent revelations and allegations in the USA and UK regarding the accountants and auditors
Andersen, would the Commission please clarify:

0 What is the total number and value of Commission contracts awarded to this company?

0 Was all work produced by this company for the Commission made publicly available and if not, why

not?

0 How does the total number and value of Commission contracts awarded to Andersen compare with
contracts awarded to comparable firms, specifically Accenture, PriceWaterhouseCoopers, Ernst and
Young and Deloitte and Touche?

0 Which members of

the college of Commissioners, or their Cabinets, have held meetings with
representatives of Andersen or its advocates in the past five years, when did each of these meetings
occur, and was a record kept of the discussion?

Joint answer
to Written Questions E-0372/02, P-0443/02 and E-0450/02
given by Mrs Schreyer on behalf of the Commission

(8 April 2002)

Under Article 248 of the EC Treaty, the Court of Auditors is the sole external auditor of the Commission.
To this effect, it gives a statement of assurance as to the reliability of the accounts and the legality and
regularity of the underlying transactions. Thus the Commission, as opposed to private companies, does not
rely on private accounting firms to produce or audit its accounts.

But like many international and national public institutions, the Commission occasionally avails itself of
the services of private accountancy and consultancy firms to get their advice.

These contracts do not relate in general to accounting tasks; these are carried out by officials. The private
firms’ expertise constitutes technical input. The risk to the Community budget is limited as these advisory
services cover only some of the fields of activity carried out by the Commission. Where such companies

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have been called in to audit particular projects or programmes, such as in research, this does not intend to
replace the external audit work of the Court, but complements it.

In the past, the Commission’s departments have awarded expertise and consultancy contracts to Arthur
Andersen or Andersen (1) and similar firms operating in the same economic sector. Following the
bankruptcy of Enron, a number of Members of the European Parliament have tabled written questions to
the Commission on its relations with Arthur Andersen or Andersen and with rival firms.

The Commission selects firms to provide accounting and consultancy services in strict compliance
1.
with the legal provisions applicable and with the procedures it has introduced to guarantee the
effectiveness of preventive controls; these are summarised below.

Under Article 56 of the Financial Regulation, the Commission is obliged to comply with Council Directive
92/50/EEC of 18 June 1992 on the coordination of procedures for the award of public service contracts (2),
as for the services provided by Arthur Andersen or Andersen.

The Commission strictly observes these rules, especially those relating to the criteria for selecting service
providers.

Under Article 139 of the Financial Regulation, it has also introduced a system of control based on the prior
approval of the Advisory Committee on Procurement and Contracts (ACPC) and the Financial Controller.
The ACPC gives its opinion on the regularity of the procedure for selecting the service provider and the
conditions proposed for awarding the contract, while the Financial Controller ensures that commitment,
the authorisation of expenditure and payment are consistent with the rules and are regular.

In its annual report on the 2000 financial year, the Court of Auditors set out the results of its audit of the
design and operation of the controls over public procurement procedures (3). It did not express any major
criticism of the operation of the abovementioned preventive control mechanisms where the Commission is
concerned. It also gave a very favourable assessment of the procedures governing public procurement
within the institutions.

It will thus be seen that the selection of firms to provide advice on accounting and audit issues is not
discretionary and, moreover, is governed by a rigorous procedure.

The nature of the services required and the ex post control mechanisms which already exist rule out

2.
any abuse.

As regards internal control and as an essential part of its Reform, the Commission has established an
Internal Audit Service and a decentralised structure of financial control and Internal Audit Capabilities.

Moreover, these activities themselves are likely to be examined by the various internal audit bodies in the
Commission and by the European Court of Auditors, which, under Article 248 of the EC Treaty, is the
external auditor for the management of the Community’s public funds.

3.
In the years 1999 to 2001, the Commission concluded thirteen contracts for which the amounts
involved were equal or greater than 48 200 Euro, which were submitted to ACPC’s opinion and where
Andersen or Arthur Andersen (4) were concerned. Among these contracts, eight were awarded after an
open procedure and the five remaining ones after a restricted procedure. In one single case, accountancy
services were concerned (implementation of cost accounting and separate accounts methods for companies
operating in the field of telecommunications).

In these thirteen contracts the portion allotted to Arthur Andersen or Andersen totalled 3,7 million Euro.
This represented about 4,8 % of the proportion allotted in the same period to the ‘Big Five’ (KPMG, Group
Andersen, Deloitte & Touche, Ernst & Young and PriceWaterhouseCoopers) in similar contracts.

The Commission will review the output of such contracts in the light of current events.

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As for the meetings of Members of the Commission and members of their private offices in the exercise of
their duties and at the initiative of representatives from Arthur Andersen or their lawyers, the Commission
is able to provide the following information to the Honourable Members:

0 in June 2000 a member of the private office of the Member of the Commission responsible for
enterprise and the information society was given a presentation by representatives from Arthur
Andersen on a benchmarking report prepared by the company for a European entrepreneurs’
association;

0 in February 2001 a member of the private office of the Member of the Commission responsible for
education and culture attended a presentation by representatives from Arthur Andersen of e-learning
projects which the company had developed for French companies;

0 in November 2001 and again in January 2002 a member of the private office of the Vice-President of
the Commission responsible for personnel and administration took part in information meetings with
representatives from Andersen on the methods used by the firm to conduct a study on a cost-benefit
analysis of the possible outsourcing of certain services.

(1) Andersen Consulting LLP (which recently changed its trading name to Accenture LLP) and Arthur Andersen LLP
have been separate legal entities and have operated independently since 1989. In 1990, the United States Securities
and Exchange Commission formally recognised Andersen Consulting LLP as an entity separate and distinct from
Arthur Andersen LLP.
(2) OJ L 209, 24.7.1992.
(3) OJ C 359, 15.12.2001, points 7.19 to 7.32.
(4)

In some cases associated with other similar firms.

(2002/C 229 E/093)

WRITTEN QUESTION E-0382/02

by Concepció Ferrer (PPE-DE) to the Council

(22 February 2002)

Subject: Ban on diamond imports from Sierra Leone

On 11 January the Council of Ministers adopted a common position extending the ban on imports of
uncut diamonds from Sierra Leone until 5 December 2002.

Can the Council assess the degree of compliance with this ban to date?

Reply

(26 June 2002)

On 18 February 2002 the Council adopted Regulation (EC) No 303/2002 concerning the importation into
the Community of rough diamonds from Sierra Leone. By this Regulation, Common Position 2002/22/
CFSP concerning a prohibition on imports of rough diamonds from Sierra Leone is implemented within
the Community.

The Commission is responsible for assessing the degree to which the ban introduced by Council
Regulation (EC) No 303/2002 has been complied with to date. The Commission makes its assessment on
the basis of inter alia information communicated by the Member States concerning breach and other
enforcement problems or judgments handed down by national courts. The Commission and the Member
States are required to supply each other with such information under Article 6 of the Regulation.

The Council suggests that the Honourable Member should address his question to the relevant institution.