Internal Audit Service (European Commission)

The Internal Audit Service or IAS is a Directorate-General (DG) of the European Commission that was established in 2001 to provide an increased accountability of the Commission.

The Commissioner responsible for the IAS is Frans Timmermans First Vice-President of the European Commission, in charge of Better Regulation, Inter-Institutional Relations, the Rule of Law and the Charter of Fundamental Rights.

The IAS is headed by the Internal Auditor of the Commission, Manfred Kraff, formerly the Chief Accountant of the Commission. The IAS has approx. 150 permanent staff.

The mission of the IAS is to:

The IAS is organized into three Directorates:

The European Commission adopted its first Financial Regulation in 1962, in which internal control was implemented by separating the roles of authorising officer, financial controller and accounting officer. However, as the Commission grew and became more complex, the European Court of Auditors (the EU's external auditor) began to call for the audit of systems and controls, and advocated an independent audit service within the Commission. The ECA published an opinion in 1989 promoting the concept of internal auditing, and in 1997 recommended that a real internal audit function to be created.

5.12. On the express condition that the authorising officer's role is strengthened..., the financial controller's duties could develop into those of a real internal auditor.

A Commission decision from 1990 requested the Financial Controller to set up such a function, which was further developed under the programme of reform of financial management proposed in 1995 (the SEM2000). This audit function seems to have been re-focused on controls relating to structural funds, as Phase III progress reports of SEM2000 don't mention it - this modest audit function was little known and had little impact on the services of the Commission.

After a serving Commission official made public allegations of fraud and financial mismanagement by members of the Santer Commission, in December 1998 the European Parliament refused to grant discharde on the 1996 accounts to the Commission. In addition, a motion of no confidence was introduced. In early 1999 Commission President Jacques Santer admitted that there had been irregularities, but threatened to resign if Parliament exerted further pressure. In response, Parliament called for a committee of independent experts to look into ways of improving financial management and control. After receiving the first report of the so-called Wise Men in March 1999, the Santer Commission decided to collectively resign. In their Second Report, the Wise Men suggested in clear terms that the underlying problem is that the internal audit service is not perceived as a central department at the service of the entire Commission... Based on international best practices and the definition of internal audit as proposed by the Institute of Internal Auditors (IIA), the Wise Men recommended setting up a specialised Internal Audit Service outside the regular structure of directorates-general, reporting directly to the President of the Commission.

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