Auditing EU funds

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Auditing EU funds National SAI experiences

• Jan van den Bos Netherlands Court of Audit

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Contents

• Background and present situation
• The Dutch experience
• General overview
• Conclusion

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• Background
• and
• Present Situation

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Developments in EU financial management since 2000

• Unchanged negative opinion of ECA on EU financial
  management
• Reform of the Commission
• Single Audit opinion of ECA
• Critical Discharge resolutions of EP
• Commission Roadmap
• Action Plan

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General framework (1)

• European Court of Auditors (ECA)
• external auditor of the EU accounts
• audits the European Commission
• also audits in the Member States
• National SAIs (25)
• audit how their Member States carry out their
  responsibilities
• also how they implement their EU obligations
  (including spend and collect EU funds)

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General Framework (2)

• Co-operation among EU SAIs
• National SAIs assist the ECA with their audit
  missions in the Member States
• Discuss matters of common interest in the Contact
  Committee of the Heads of EU SAIs / at the
  meetings of Liaison Officers
• Carrying out common activities in the CC Working
  Groups

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National SAIs and EU audit work

• National SAIs can differ greatly in the
  activities they undertake
• Much depends on- the constitutional position of
  the SAI- the mandate of the SAI- size of the
  institution
• Reflected in work carried out (financial,
  compliance, performance audits and certification
  work)
• Capability/willingness to carry out overall
  national SAI reports

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EU audits published in 2005
Country Number of public reports by EU policy sector in 2005 Number of public reports by EU policy sector in 2005 Number of public reports by EU policy sector in 2005 Number of public reports by EU policy sector in 2005 Number of public reports by EU policy sector in 2005 Number of public reports by EU policy sector in 2005
Agricul-ture Structural measures Internal policy Other (incl.pre-accession) Overarching/ multiple sectors Total 2005 Total 2004
Austria 4 - 1 - - 5 7
Belgium 1 - 1 1 1 4 1
Cyprus - - 6 - - 6 0
Czech Republic - 1 2 1 1 5 3
Denmark - - - - 2 2 5
Germany - - - 1 - 1 5
Estonia - - - - 2 2 3
Finland 1 - - - - 1 6
France - - - - - 0 2
Greece - 3 - - - 3 3
Hungary 1 - 1 1 3 6 2
Ireland - - - - - 0 0
Italy - - - - 2 2 1
Latvia - 1 - - - 1 4
Lithuania 1 2 1 - 4 8 3
Luxembourg - - - - - 0 0
Malta 1 - 1 - - 2 0
Netherlands - 1 1 - 1 3 3
Poland 1 1 1 3 - 6 4
Portugal - 5 - - 1 6 9
Slovak Republic 2 2 - - 3 7 3
Slovenia - - - - - 0 1
Spain - - - - - 0 0
Sweden - - 1 - 2 3 2
United Kingdom - - - - 2 2 4
TOTAL 12 16 16 7 24 75 71
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Some general remarks

• Almost all national SAIs publish results of EU
  audits annually
• All sectors of EU policy are covered in the audit
  work of national SAIs
• Some SAIs focus more on particular sectors than
  others- Austria on agriculture- Portugal and
  Greece on structural measures (among others the
  Cohesion Fund)- Cyprus on internal policy

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Type of EU audits published on

• Financial audits (26) - mostly in new Member
  States (especially Cyprus, Lithuania, Slovak
  Republic and Hungary - due to certification/windin
  g-up audit activities)
• Compliance audits (19) - usually focus on the set
  up/functioning of management and control systems
  - carried out by 12 national SAIs
• Performance audits (22) - focus on the
  execution/results of EU policy (especially
  Poland, Hungary, Czech Republic and Sweden)
• Hybrid audits (8) - not easily categorized -
  often more descriptive overall national SAI
  reports (6 cases)

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• The Dutch experience

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1970s/1980s

• Financial/compliance auditing of EC agricultural
  spending in the Netherlands
• Part of our annual regularity audit (for those
  funds included in the national accounts)

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1990s

• EU became and integral part of the audit strategy
  of the NCA
• NCA started carrying out specific performance
  audits in the EU field (with increasing focus on
  the structural funds)

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1995 - The Watershed

• Increased interest in Dutch Parliament for EU
  affairs
• Request by Public Accounts Committee to make an
  inventory of management and control systems of EU
  funds
• Increased auditing of individual EU funds
  (compliance/performance type)
• Inventory updated three years later

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Since 1999

• The NCA has further developed its EU strategy
• It aims at assisting in- Getting the
  Netherlands household up to standards, with
  respect to collecting and spending EU-money-
  Upgrading EU financial management in EU as a
  whole
• Key project to achieve both strategic goals the
  EU Trend Report

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EU Trend Report (1)

• Three Parts
• EU Institutions
• Member State comparisons
• The Netherlands
• Part 1 and 2 based only on publicly available
  information Part 3 includes own audit results
  as well.
• Use of Indicators to assess regularity and
  system quality

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EU Trend Report (2)

• Present state of affairs
• Development of indicators
• Information coming from DG Budget on EU
  expenditure in individual Member States
• More information from EU SAIs is becoming
  available/collected

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Member State assurance statement (1)

• Dutch government has decided to show that it is
  possible to give the EC better accountability
  reporting on the management of EU funds (will be
  sent to both Dutch Parliament and the EC)
• Regularity up to the level of the final
  beneficiaries will be included
• If the EC/ECA are satisfied with the assurance
  given by the MS the audit intensity by them is
  expected to drop

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Member State assurance statement (2)

• NCA has been asked to give an opinion on the
  statement for Dutch Parliament
• Could fit into annual regularity audit that the
  NCA does on the State accounts

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• General Overview

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EU activities of national SAIs (1)

• More and more SAIs are publishing overall
  national SAI reports- 4 (Denmark, Italy,
  Netherlands and UK) in 2004 and - 8/9 (the
  above, Belgium, Estonia, Hungary, Slovenia and
  possibly Austria) in 2007

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EU activities of national SAIs (2)

• 7 other SAIs have separate EU sections in their
  annual (audit) reports (Finland, France, Latvia,
  Lithuania, Malta, Portugal and the Slovak
  Republic)
• 3 SAIs are working together with their national
  authorities to develop MS declarations (Denmark,
  Netherlands and UK)

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• Conclusion

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Development

• The role of national SAIs in the audit of EU
  funds has become broadly accepted- by the Member
  States- by the EU institutions
• In the future a more structural role of the
  national SAI in assisting its Member State to
  give the EU and its citizens better assurance
  seems probable