Internal auditors by definition cannot be external to the organisation they are monitoring, audit boss Odysseas Michaelides argued on Thursday before the House interior committee, after Internal Audit Commissioner Anna Christoforou said her department could be assigned the task of auditing local-government clusters.
During Thursday’s session, the committee resumed discussion of an executive bill on local-government reform, which calls for the creation of clusters of local communities for administrative purposes.
Michaelides explained that engaging the internal audit service, a central-government body, in the process of auditing municipalities and local communities would contravene international standards and best practices, by which internal auditors cannot be foreign to the organisation they audit.
On the contrary, he said, the service is a part of the public sector and answerable to the body that appoints it – the cabinet.
Additionally, Michaelides argued, this would create a jurisdictional conflict with the audit service, which is “the only” external-audit service.
He also claimed that creating an internal-audit unit that will be answerable to someone other than the audited organisation would be misguided.
“A civil servant can’t have two bosses,” he said. “A civil servant has one boss.”
Keeping the bill’s clauses, by which the internal audit service is assigned the task of auditing local-community clusters, Michaelides said, will create additional cost burdens, as the service will require additional staff to cope with local-government audits.
In response, Christoforou argued that internal auditors must be independent of the organization they are auditing.
She cited the example of former Paphos mayor Savvas Vergas, who “admitted that he stole because there was no oversight”.
If an internal auditor is appointed by a mayor, his independence is compromised, she added.
Nonetheless, Christoforou did not rule out the creation of an additional body for internal auditing, comprising members of local government, but added that her service will present its final views in writing.
On another clause of the bill calling for the stripping of certain powers from elected officials, Michaelides said political and technocratic functions need to be distinguished.
“What is being done today, with mayors and municipal councils approving building permits, is wrong,” he said.
“This is a technocratic issue. Politicians should do their job, and technocrats should do theirs.”
He clarified that he was in favour of town-planning to remain the remit of municipal officials, as it reflects their vision for the area’s development, but said using building permits as a policy tool is a mistake.