Clash of ‘audit cultures’ fear for expanded EU

Link: EC embroiled in audit qualification row

OECD officials told a meeting of the European parliament budgetary control committee that ‘shortcomings were currently not at legislative or administrative level but rather in the implementation of the rules’.

They said: ‘What is needed is a long-term approach to ensure proper financial control by developing a genuine internal audit culture, which would certainly be of far more value than a mere financial watchdog.’

The hearing follows the release of warnings from the European Commission to aspirant member states, (Hungary, the Czech Republic, Poland, Slovenia, Slovakia, Estonia, Latvia, Lithuania, Cyprus and Malta), that they need to speed up changes in their laws and administrative practices to fully accede to the EU next year.

If they fail, Brussels has negotiated special safeguard clauses that allow it to block aspiring new members from enjoying access to all parts of the EU market. Poland – soon to face a national referendum on membership – is facing particular demands. Eneko Landaburu, the Commission’s enlargement director general, told a Polish parliament committee recently that Poland must accelerate its accession preparations, notably regarding financial control, freedom of movement of services, European internal market trade rules, competition policy and customs union.

Ironically, the European Parliament committee also heard from Polish official Miroslaw Sekula about the creation of a national supreme audit institution in applicant countries.

He argued they would only work effectively by having a ‘symbiotic relationship’ with parliaments, with whom cooperation was ‘rather inadequate’. Another Polish speaker told the hearing that his country’s reforms ‘lacked momentum,’ because Poland’s civil service ‘lacks a tradition of independence, which meant all problems tended to become politicised’.

Brussels has been embroiled in many arguments over auditors in recent weeks. Frits Bolkestein, the internal markets commissioner, objected to calls in the UK for a cap on auditor liability, calling it anti-competitive. Then Jules Muis, head of the EU internal audit, claimed auditors should make public more qualifications of company accounts.

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