Chapter 32: Financial Control

Chapter 32 covers four main policy areas: 1) public internal financial control (PIFC), 2) External Audit (EA), 3) protection of the EU’s financial interests and 4) protection of the Euro against counterfeiting.

There is no EU legislation requiring transposition into national law in the first two policy areas. Rather, the screening deals with the commitment of the candidate country to adopt international standards for internal control and internal audit as well as EU best practice. The international standards for internal control are embodied in the INTOSAI Guidelines for Internal Control Standards for the Public Sector (2004), based on the second version of the COSO model of the Institute of Internal Audit (IIA). For this purpose, the candidate country should discuss with the Commission and adopt a PIFC Policy Paper with a short and long term action plan having realistic deadlines. 

In the area of external audit, the candidate country is expected to apply the standards defined by the International Organisation of Supreme Audit Institutions – INTOSAI - in particular Lima Declaration and Mexico Declaration, which foresee supreme audit institutions that are functionally, institutionally and financially independent and report to Parliament only.

In the areas 3 and 4, there is a body of EU law to be transposed. Where it is directly applicable upon accession there is a particular focus on administrative structures and capacity.

CEP’s work is currently mainly focused on the area of external audit and until recently on PIFC with regard to Chapter 32.

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