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Cyprus

DIKO seeks to cut ministerial link to SGO audits

DIKO MP Nicolas Papadopoulos said that audits of SGO's should be transferred to the Internal Audit Service

By Elias Hazou

THE DIKO party plans to table legislation bringing the internal auditing of semi-governmental organisations under the Internal Audit Service (IAS).

Under the current law, the internal audit units of state-owned and semi-public enterprises are answerable to their respective boards, which are appointed by the cabinet.

This discourages transparency and government accountability, DIKO MP Nicolas Papadopoulos said. Instead, the audit should be transferred over to the IAS.

“In this way we would be able to keep in check mismanagement in government and the civil service, otherwise we will have some units that will be afraid of controlling their political supervisors,” he said.

The change proposed by DIKO would require amending the Fiscal Responsibility and Budget System Law (FRBSL) enacted last year.

The FRBSL gives the IAS jurisdiction over the public sector, but not over semi-governmental organisations (SGOs).

DIKO’s views are shared by Internal Audit Commissioner Andreas Lambrianou.

He told MPs that, as the current system stands, the internal audit units of SGOs are not autonomous as they are directly accountable to the board of directors and ultimately to the ministries’ permanent secretaries.

“This is unheard of,” he told a joint session of the House finance and legal affairs committees.

The committees were continuing their article-by-article dissection of the government bill on state-owned and semi-public enterprises, which seeks to standardise the drafting of annual budgets and their timely submission.

The opposition suspects the legislation is a stepping stone to the intended privatisation of these entities.

Opposition parties say the item grants the government of the day “draconian powers” as it would allow it to abolish, merge or sell off departments of these organisations, without parliamentary approval.

However, the administration counters that such fears are unfounded, as any move to corporatize, sell off assets or shutter these entities requires an act of law, and hence the involvement of parliament.

Deputies claim also the bill grants the finance minister ‘superpowers’, in that the minister can directly meddle in the day-to-day running of SGOs.

Under the legislation, the budgets, policy decisions and economic performance of semi-public organisations would come under the ultimate review of the finance minister.

Currently, the competent ministers have the final say over SGOs. For example, the communications minister has jurisdiction over state telecoms company CyTA.
Under the new bill, he or she would remain responsible for CyTA, but would need to submit all reports to the finance minister for final approval.

This centralisation is one of the conditions of Cyprus’ bailout deal.

The new legislation must be passed by July, and parliament aims to bring it to the plenum before the summer recess.

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