Independence of audit service stymied by executive – report

The current legislative framework does not ensure the financial independence of the audit service, which is being stymied by the executive branch, it said yesterday in its annual report.

The service was audited by EY and it concluded that the executive branch “exercises full control over the budget of the audit service and therefore can directly influence the resources available to it for the fulfillment of its work”, even though the audit service monitors the executive.

“On this matter, a relevant provision was included in the Memorandum of Understanding between Cyprus and the Troika, according to which the audit service should not only be adequately staffed so that it can satisfactorily cope with its obligations, but most importantly, it should have its financial independence secured,” the report said.

This independence, according to EY, was also set pre-accession by the EU before 2004.

In the report, the audit service said that after a long period of time, without any solution from the finance ministry, it requested the assistance of the parliamentary committee for monitoring development plans and control of public expenditures, which examined the matter in 2016.

The issue was also examined by the House legal committee in 2019. “Since then, the issue remains pending,” it added.

According to EY, even though the current legal framework ensures the auditor-general’s “unhindered access to any data and information he deems necessary to carry out his work, there were nevertheless serious obstacles to the provision of such information again within 2022”.

“Problems arose again, in all cases, when audited entities sought advice from the attorney-general regarding their obligation to provide our service with information requested as part of our audits,” the report added.

The report said that the two previous attorneys-general, with their opinions, had clearly explained the current legal framework.

“It is obvious from both opinions that the judgement of the auditor-general, in terms of what he considers to be necessary information to exercise his competences and powers, are outside the control of the legal service,” it said.

According to EY, it is the obligation of every official and every civil servant to provide information and data to the auditor-general and this is regulated both by the Constitution and the law governing the audit office.

The report said it was a paradox when an audited entity was being looked at by the audit office and then cites the attorney-general’s advice not to cooperate. It means that if the audit office finds potential criminality, the attorney-general will be same person called on to decide whether to launch a criminal investigation into the potential wrongdoing.

“It is obvious that, since the audited body acted on the advice of the attorney-general, then he will not take any action to criminally investigate the case, making, in essence, the provisions of the legislation that criminalise the refusal to submit evidence to the auditor-general null and void,” it concludes.