Select Committee on European Union Fortieth Report


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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