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Our View: Audit service needs to be financially independent, and soon

Auditor-general Odysseas Michaelides

THE REPUBLIC’S Audit Service should have become financially independent when Cyprus entered the EU, but this did not happen. When Cyprus signed the memorandum of understanding with its lenders, one of the provisions was the financial independence of the Audit Service, but it has yet to be implemented, the finance ministry saying that it was still exploring how this would be done. Would a ceiling be set to the budget and what would be the status of civil servants once they move to a totally independent service, were questions in need of an answer, said a finance ministry official.

Financial independence would mean that the Audit Service would submit its annual budget for approval directly to the legislature instead of to the finance ministry which has been the practice. This change makes sense, because the finance ministry could use the approval of the budget as a way of applying pressure on the auditor-general, thus undermining the independence of the institution. The ministry could, for instance, refuse to approve the opening of new positions or block expenditure on support services that the auditor-general deemed necessary.

Ministers of the Anastasiades administration have fallen out with auditor-general Odysseas Michaelides so it would not be beyond the realms of possibility, although it has not been done, to cut the service’s budget as a way of punishing him. Nevertheless, allowing the audit service to have its own budget would cut the last link it had with the government and make it truly independent. During discussions of the matter at the House watchdog committee, it was correctly pointed out that the attorney-general’s office should also be able to submit its own budget directly to the legislature for approval as its independence also needed to be safeguarded.

For these changes to be made the constitution would have to be amended, but this would require a special majority. This may also be an opportunity to change the terms under which independent state officials are employed. At present, a person appointed as auditor-general or attorney-general will stay in the post until retirement or until he or she decided to quit.

This is aimed at protecting the official’s independence – no government could end the service – but it also has disadvantages. For instance, young people are excluded from such a position because they may end up being in it for 25 or 30 years. Someone holding the same post for so long could be become complacent and de-motivated, with the result that the service does not operate efficiently or effectively; in some case it could also lead to abuses of power by the official who is literally untouchable.

So if the constitution is to be amended, to cut the financial dependence from the government, lawmakers should also consider limiting the term of independent state officials to a maximum of six or seven years. This would ensure renewal and prevent state officials from becoming too comfortable in their job, because it is for life.

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