Chapter 32- Financial Control

Content of the Chapter

This chapter contains of four main policy areas. These are public internal financial control (PIFC), external audit (EA), the protection of the EU's financial interests and the protection of the Euro against counterfeiting.

Public Internal Financial Control (PIFC) is defined as having three pillars: managerial accountability (financial management and control systems), functionally independent internal audit and central harmonisation unit (CHU) for developing methodologies and standards relating to the first two pillars. PIFC aims to give reasonable assurance that transactions comply with the principles of sound financial management, transparency, efficiency, effectiveness and economy, as well as with relevant legislation and budget descriptions. The candidate country should adopt a PIFC Policy Paper with a short and long term action plan having realistic deadlines.

With regard to external audit, the candidate country is expected to apply the norms defined by the International Organisation of Supreme Audit Institutions – INTOSAI, in particular its Lima Declaration.According to these international norms supreme audit institutions should be functionally, institutionally and financially independent.

Under the policy area of protection of EU financial interests, administrative cooperation between member states is required. In this context, member states should have the capacity to cooperate effectively with the European Commission and to communicate all suspected cases of irregularities and fraud. This policy area also includes the Directive (EU) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud to the Union's financial interests by means of criminal law and the harmonisation of penal law and the reinforcement of cooperation.

Finally, the chapter deals with the non-penal aspects of the protection of the Euro against counterfeiting (first pillar aspects), such as the prohibition of metals or tokens similar to Euro coins, the obligation for financial institutions to withdraw counterfeit notes and coins and effective anti-counterfeiting bodies and procedures.

Current Stage of the Negotiations on the Chapter

The explanatory screening meeting for this chapter was held on 18 May 2006 and the detailed screening meeting was conducted on 30 June 2006. Negotiating Position of the Republic of Türkiye was submitted to the Commission on 13 April 2007 and the decision for the opening of the chapter was taken by the European Council on 26 June 2007, with no opening benchmarks.

Closing Benchmarks

For the provisional closure of the negotiations on the chapter, there are 6 closing benchmarks to be met in addition to obligation of full non-discriminatory implementation of the Additional Protocol to the Association Agreement. These are:

1-Adoption and implementation of PIFC legislation and of the relevant policies in accordance with the comprehensive PIFC policy paper to be adopted, supported by adequate implementation capacities;

2-Adoption and implementation of policies and legislation to guarantee the functioning of the Turkish Court of Accounts in line with the INTOSAI standards and guidelines

3-Alignment of the Turkish Criminal Code with the protection of the EU’s financial interests (PIF) Convention and its protocols (fulfilled, however alignment of this criteria with Directive (EU) 2017/1371, which became effective on 6 July 2017, will be reconsidered)

4-Setting up an effective and efficient coordination service to guarantee the fulfillment of obligations arising from Article 280 (3) of the Treaty establishing the European Community (now Article 325 of the Treaty on the Functioning of the European Union) and application of the provisions of Regulation (EC) No. 2185/96 concerning the on-the-spot checks and inspections carried out by the Commission, in particular the obligations of assistance to Commission inspectors from the day of accession at the latest (fulfilled)

5-Legislative and administrative alignment with Council Regulation 1338/2001 laying down measures necessary for the protection of the Euro against counterfeiting, applicable from the day of accession at the latest  (fulfilled)

6-Legislative and administrative alignment with Council Regulation (EC) No. 2182/2004 concerning medals and tokens similar to euro coins, applicable from the day of accession at the latest;

Relevant Subcommittee Meetings

Subcommittee N° 8 on Customs, Tax, Drugs and Money Laundering

Links

Public Financial Management and Control Law No.5018

Law No.6085 on Turkish Court of Accounts

European Anti-Fraud Office:

https://ec.europa.eu/anti-fraud/home_en

European Court of Accounts:

https://www.eca.europa.eu/en/Pages/ecadefault.aspx

European Commission Directorate General for Budget:

https://ec.europa.eu/info/departments/budget_en

Screening Process

Presentations - Explanatory Screening Meeting (18 May 2006) 

Presentations - Bilateral Screening Meeting (30 June 2006)

Screening Report