Malawi’s Financial Compliance Audit Procedures Under Scrutiny

Introduction

The financial compliance audit procedures for European Union (EU) military operations in Mali have been put under scrutiny, revealing a host of challenges and complexities. A recent workshop on auditing EU security and defence policies highlighted the main problems in auditing Athena common costs.

Challenges in Auditing Common Costs

• Procurement: Frequent recourse to non-competitive procedures, derogations based on highly technical evaluation, and a legal framework that is very different from the countries in which operations take place.
• Assets Management: Difficulties in performing physical checks on assets, decisions concerning assets, and consolidation procedures that can be complex when missions are jointly operated with different accounting standards and software.

What are Common Costs?

The Athena Mechanism defines common costs as incremental costs required for an operation. These can include:

• Preparatory phase costs: transport, accommodation, medical services
• Active phase costs: OHQ and FHQ expenses
• Winding-up phase costs: finding the final destination for equipment and infrastructure

Auditing Challenges

Auditors have identified several challenges in auditing these common costs, including difficulties in performing physical checks on assets, decisions concerning assets, and consolidation procedures that can be complex when missions are jointly operated with different accounting standards and software.

The College of Auditors

The College of Auditors is an independent external audit body reporting to the Special Committee. Their main outputs include:

• An audit opinion on consolidated financial accounts
• A long-form audit report

Conclusion

In light of these challenges, it remains to be seen whether Malawi will be able to effectively implement its financial compliance audit procedures for EU military operations in Mali.