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Annual Report 2011
38
The first layer of the EIF’s control mechanism is based on
the processes implemented by management and the ef-
fectiveness of the internal controls defined in the mitigation
of risks. The second layer includes both internal and exter-
nal auditors, the activities of which are coordinated by the
Audit Board.
The Audit Board is an independent body appointed by,
and directly answerable to the EIF General Meeting. It
consists of three members, each nominated by one of the
EIF shareholding groups: the EIB, the European Commission
and the financial institutions.
Appointments to the Audit Board last for three consecutive
financial years and are renewable, with the term of one
member expiring each year. In 2011, the Audit Board held
nine meetings.
The Audit Board is required to confirm annually that, to the
best of its knowledge and judgement, the operations of
the Fund have been carried out in compliance with the
formalities and procedures laid down in the Statutes and
the Rules of Procedure, and that the financial statements
give a true and fair view of the financial position of the
Fund as regards its assets and liabilities, and of the results
of its operations for the financial year under review. This
confirmation is included in the Annual Report submitted by
the Board of Directors to the General Meeting.
In order to discharge its duty in relation to the financial
statements, the Audit Board may have recourse to external
auditors, as provided for in the Rules of Procedure (Article
19). The audit of the financial statements of the Fund for the
year ending 31 December 2011 was carried out by the ex-
ternal auditor, KPMG, appointed following the conclusion
of the EIB Group joint invitation to tender exercise in 2008.
The Audit Board meets regularly with KPMG, reviews the
annual audit plan and considers reports from KPMG on the
progress of the audit and the audit findings. The Audit Board
considers the points raised in the annual management letter
and monitors EIF Management’s responses to these.
Internal Audit (which is outsourced to EIB Internal Audit)
examines and evaluates the design and effectiveness of the
internal control systems. The Audit Board meets regularly
with the internal auditor, approves the internal audit plan,
reviews reports from the internal auditor and monitors the
implementation of agreed actions points that are contained
in internal audit reports.
The Audit Board relies on a number of sources of assur-
ance in giving its annual confirmation that the operations
of the Fund have been carried out in compliance with the
formalities and procedures laid down in the Statutes and
the Rules of Procedure. These are the management assur-
ance statement on the adequacy of the internal control
system, the work carried out by the various EIF functions
such as Internal Audit, Risk Management & Monitoring
and Compliance & Operational Risk and the work of the
external auditor.
The Audit Board conducts its activity in accordance with
the standards of the audit profession. An Annual Report
from the Audit Board to the General Meeting provides a
summary of the Audit Board’s activities during the past year
and of its opinion on the financial statements. This report is
published on the EIF’s website www.eif.org. The General
Meeting takes note of the conclusions of the Audit Board
before approving the EIF Annual Report.
In addition, as both a European Union body and a fi -
nancial institution, EIF cooperates with other independent
control bodies such as the Internal Audit of the European
Commission and the European Court of Auditors, which
are entrusted with such tasks under the Treaty or other
regulations.
The European Court of Auditors is responsible for examining
the accounts of all revenue and expenditure of the European
Union and the results of its audits are published. Whilst EIF
has its own independent external audit structure, the deploy-
ment of European funds under mandates, such as the Com-
petitiveness and Innovation Framework Programme, is also
subject to control by the European Court of Auditors.
In relation to the European Commission’s shareholder par-
ticipation in EIF, the Court of Auditors operates within a
specific tripartite agreement providing a framework for the
audit of the participation’s value.
Audit and controls