INTERNAL AUDITS: ANNUAL REPORT TO DISCHARGE
AUTHORITY (10480/06)
Letter from the Chairman to Ed Balls MP,
Economic Secretary, HM Treasury
Thank you very much for your Explanatory Memorandum
10480/06 on the Commission's report on the activities undertaken
by its Internal Audit Service in 2005. This was considered by
Sub-Committee A at its meeting on 25 July. The Committee welcome
the publication of these reports from the Commission, however
we have decided to hold the document under scrutiny as part of
our wider inquiry into European financial management.
The Committee noted your broad approval for
the Commission's activities in taking on board the comments made
by the Internal Audit Service. However, we would appreciate a
fuller exposition of your view on each of the recommendations
made by the Internal Audit Service, together with details of whether
you consider the Commission's response to each recommendation
is both appropriate and sufficient to remedy the problems identified.
25 July 2006
Letter from Ed Balls MP to the Chairman
Thank you for your letter of 25 July 2006.
I am responding to the European Select Committee's
comments at its meeting on 25 July 2006.
In general, as we are not aware of the precise
evidence that forms the basis for the IAS' conclusions, we can
only comment on how they appear to us based on our own knowledge
of the Commission's work.
On conclusion 1, we welcome the proposal to
move from formal compliance to a more efficient approach. We consider
the Commission's response to be appropriate. We are aware of the
work the Commission has undertaken already to assess the gaps
between the internal control framework in the Commission Services
and the control principles set out in the Court of Auditors' "proposal
for a Community internal control framework" in the "single
audit" opinion no. 2/2004.
On conclusion 2, we support the proposal, and
the Commission's response, to ensure that assurances accompanying
annual reports are underpinned by appropriate internal control
systems. We also welcome the Commission's commitment to an integrated
internal control framework.
We are not able to comment on conclusions, 3
and 4 which concern internal processes within the Commission on
which we have no direct knowledge.
4 September 2006
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