The auditor-general has called on the cabinet to investigate the commissioner of Internal Audit for possible dereliction of duty, in that she did not properly handle allegations of conflict of interest in her department, according to a report released Monday.

The Audit Office released its special report on the Internal Audit Service – an independent body headed by a commissioner. In it, the auditor-general alleges that the commissioner of Internal Audit “downgraded” a complaint filed against a functionary at the service, failing to act on the complaint and therefore discharge her duties under the law.

The case relates to a functionary at the Internal Audit Service, alleged to have used his wife as a ‘front’. The man is further said to have engaged in a conflict of interest – which his boss should have acted on but didn’t.

Essentially the male employee at the Internal Audit Service is said to hold a 67 per cent stake in a company, but his wife is instead registered as the shareholder.

The auditor-general is confident the spouse is being used as a ‘front’ because she is a kindergarten teacher whereas the company deals with cyber tech, sources told the Cyprus Mail. Her husband, who works at the Internal Audit Service, is a cyber security specialist.

The issue is that the same man sits on a quality assurance board for a public project. The project/contract is understood to have been awarded by the Deputy Ministry of Research, Innovation and Digital Policy – and has to do with cyber security.

As such, the functionary has a say on the deliverables of the company which landed the contract. In short, he monitors the execution of the contract. Since his wife’s company is a direct competitor in that industry, the auditor-general calls this a conflict of interest.

The matter had been brought to the attention of the auditor-general, but also the Internal Audit Service itself, by a law firm representing the interests of the company which got the public contract.

After the issue was stirred up, the functionary in question did not deny his participation in his wife’s company. But he told his boss – the Commissioner of Internal Audit – that his role on the quality assurance board was merely advisory.

The relevant deputy minister meanwhile had contacted the Commissioner of Internal Audit, seeking an explanation. In her response, the commissioner said she did not detect any untoward conduct by the functionary and sang his praises as an excellent professional. She also informed the deputy minister that she was not in a position to know what her subordinate does in his free time.

The commissioner also informed the law firm which had filed the complaint that the functionary acted only as an observer on the public project, and that he had no executive capacity or voting rights.

Having been apprised of all this, the auditor-general wrote to the finance ministry, expressing his surprise at the way in which the Commissioner of Internal Audit had handled the matter. The auditor-general said that at the very least the commissioner should have been subject to disciplinary proceedings on the grounds of dereliction of duty.

In the meantime, in late October 2023, the Deputy Minister of Research, Innovation and Digital Policy informed the commissioner in writing that he no longer desired the functionary to provide advisory services. The commissioner then barred the man from engaging in such activity.

The finance ministry meanwhile told the auditor-general that it did not share his view about the conduct of the commissioner.

But the Audit Office insists the matter is not closed.

In the dossier, it calls on the cabinet – which appointed the commissioner – to investigate possible ‘conduct unbecoming’ or dereliction of duty.

Established by law in 2003, the Internal Audit Service is an independent agency tasked with checking the adequacy of internal audit systems across the civil service.