EUROPEAN COMMISSION: INSIDER ACCUSATIONS THAT ACCOUNTING SYSTEM IS UNRELIABLE.

The backdrop to the scandal is the ongoing re-casting of the Commission's Financial Regulation, which will herald a shift from cash accounting to a more commercial-style "accrual" system (see European Report 2704). The accrual system is supposed to be more watertight and has recently been adopted by the national governments of the United Kingdom, Sweden and the Netherlands. Ms Andreasen was brought in to the Commission in January 2002 as an "Accounting Officer" to draft a Communication outlining the precise measures needed to implement the new regime. However, following major disputes between herself and other senior Commission officials, she was recently removed from her post and transferred to the Directorate-General for Personnel.According to the Commission, Ms Andreasen "rapidly generated extreme ill feeling in essential relationships" with Ms Schreyer and her staff. It has since emerged that before her Commission job, Ms Andreasen was suspended from a post in the Organisation for Economic Development for what a Commission spokesman described as "trouble-making". What has irritated the Commission further is that instead of complaining to the EU Anti-Fraud Office OLAF, she went to the Court of Auditors, the European Parliament and the media. A Commission spokesman stressed that the document leaked by the Court of Auditors was only a preliminary finding of two auditors and not a definitive report on the matter.The Commission is clearly taking the allegations made by Ms Andreasen very seriously as it has published a lengthy response to each one of them. It should be noted that it was a similar financial scandal that ultimately brought about the fall of the previous Commission of Jacques Santer in 1999. Ms Schreyer said that she had long recognised the weakness of the current computer system, SINCOM2...