journal - European Court of Auditors

Transcription

ISSN 1831-449X
European Court of Auditors
July/Juillet
August/Août
No 07
Cour des comptes européenne
2011
JOURNAL
journal
The contents of the interviews AND THE ARTICLES are the sole responsibility of the
interviewees and authors
and do not necessarily reflect the opinion of the European Court of Auditors
PRODUCTION
Rédacteur en chef / Editor in Chief : Rosmarie Carotti
Tél. / tel.: 00352 4398 - 45506 - e-mail : rosmarie.carotti@eca.europa.eu
Mise en page, diffusion / Layout, distribution : Direction de la Présidence - Directorate of the Presidency
Photos : Reproduction interdite / Reproduction prohibited
Tous les numéros de notre Journal se trouvent sur les sites / The Journal can be found on :
internet : http://eca.europa.eu/portal/page/portal/publications/Journal
intranet : http://ecanet.eca.eu
EU bookshop : http://bookshop.europa.eu/
1
SOMMAIRE
CONTENTS
Pages
02
Viii eUrOSai COnGreSS – LiSBOa 2011
THe rOLe OF SaiS in THe aCCOUnTaBiLiTY anD reSPOnSiBiLiTieS OF PUBLiC ManaGerS
Presentation by Mr Vítor Caldeira, President of the european Court of auditors - 31 May 2011
09
«aUFGrUnD Der WirTSCHaFTS- UnD FinanZKriSe MÜSSen Wir MÖGLiCHST raSCH Die
enTSCHeiDenDen PrÜFKOMPeTenZen FÜr Die MaSSnaHMen GeGen Die WirTSCHaFTS
UnD FinanZKriSe (Z.B. HaFTUnGen UnD DireKTHiLFen eTC…) erHaLTen»
interview mit Harald Wögerbauer, Mitglied des europäischen rechnungshofes aus Österreich
Von rosmarie Carotti
«in THe LiGHT OF THe eCOnOMiC anD FinanCiaL CriSiS We MUST Be GiVen aS SOOn aS
POSSiBLe THe POWerS We neeD TO aUDiT THe MeaSUreS TaKen aGainST THe eCOnOMiC
anD FinanCiaL CriSiS (e.g. GUaranTeeS anD DireCT aiD, etc...)»
interview with Harald Wögerbauer, Member of the european Court of auditors from austria
By rosmarie Carotti
p.04
p.09
-
15
THe GreeK FinanCiaL CriSiS FrOM an aUDiTOr’S POinT OF VieW
World Class Performance Symposium 2011: Trust and accountability in public financial
management, 17 March 2011 Queen elizabeth ii Conference Centre, Westminster, London
By ioannis Sarmas, Member of the european Court of auditors
19
“HOLDinG reSearCH PrOGraMMeS TO aCCOUnT”
Speech by assoc. Prof. Dr. Ladislav Balko, PhD. Member of the european Court of auditors.
Framework and the innovation Union, Brussels, 1 June 2011
By Prof. Dr. Ladislav Balko, Member of the european Court of auditors
p.15
p.19
eUROPeAN COURT Of AUDITORs AwARD fOR ReseARCh INTO
PUbLIC seCTOR AUDITING -JesÚs LÁZARO CUeNCA
p.24
24
- THe COnTrOL OF PUBLiC aDMiniSTraTiOnS anD THe FiGHT aGainST COrrUPTiOn:
SPeCiaL reFerenCe TO THe COUrT OF aUDiT anD THe GeneraL STaTe COMPTrOLLer
By José antonio Fernández ajenjo
30
- COnTriBUTiOn À Une SOCiOLOGie DeS PraTiQUeS ManaGÉriaLeS DanS LeS POLiTiQUeS
eUrOPÉenneS L’eXeMPLe DeS aUDiTS DeS OnG HUManiTaireS : enTre iMPOrTaTiOn eT
aPPrOPriaTiOn
Par Sara Belleil
37
eSTiMaTinG THe COSTS anD BeneFiTS OF COnTrOLS CarrieD OUT WiTHin THe
FraMeWOrK OF THe ManaGeMenT anD COnTrOL SYSTeM OF THe eU STrUCTUraL
FUnDS
By Beata Błasiak-nowak, economic advisor in the Polish Supreme audit Office’s Public
administration Department, Polish national expert at the european Court of auditors and
By Marzena rajczewska, Technical advisor in the Polish Supreme audit Office’s Public
administration
p.30
p.37
Couverture/Cover:
- Viii eUrOSai COnGreSS – LiSBOa 2011
- HaraLD WÖGerBaUer, MeMBer OF THe eUrOPean COUrT OF aUDiTOrS
- iOanniS SarMaS, MeMBer OF THe eUrOPean COUrT OF aUDiTOrS
- eUrOPean COUrT OF aUDiTOrS aWarD FOr reSearCH inTO PUBLiC SeCTOr aUDiTinG -JeSÚS LÁZarO CUenCa
2
SOMMAIRE
CONTENTS
Pages
p.45
45
48
p.48
49
aDVOCaTe GeneraL UPHOLDS eCa aUDiT POWerS
By Lauren MULLen, stagiaire and Birgit SCHÄFer, Legal Service of the Court
52
aDDeD VaLUe OF aUDiT in THe PrOTeCTiOn OF THe eU FinanCiaL inTereST
By John Sweeny, Head of unit CeaD-Methodology
57
ViSiT OF a DeLeGaTiOn FrOM THe aFGHan naTiOnaL aSSeMBLY anD THe aFGHan COnTrOL
anD aUDiT OFFiCe (CaO)
58
«aS COnTrOL anD aUDiT OFFiCe (CaO) OF aFGHaniSTan, We neeD TO KnOW THaT THe
MOneY WHiCH COMeS FrOM THe inTernaTiOnaL COMMUniTY iS SPenT in a CLear,
PrOPer anD TranSParenT WaY»
interview with Mr S. MOHaMMaD MaHDi HUSSaini, Deputy auditor General of afghanistan
and Mr SaDeQiZaDa neLi, Member of the national assembly of afghanistan
By rosmarie Carotti
60
8th iSLaMiC FinanCiaL SerViCeS BOarD SUMMiT
«enHanCinG GLOBaL FinanCiaL STaBiLiTY : CHaLLenGeS anD OPPOrTUniTieS FOr
iSLaMiC FinanCe»
By rosmarie Carotti
64
64
fOCUs
- a DeLeGaTiOn OF THe reGiOnaL COUrT OF aUDiTOrS OF THe LanD BerLin ViSiT THe eCa
anD are reCeiVeD BY Dr HaraLD nOaCK, MeMBer OF THe COUrT
By Dagmar Freudenstein attaché, Dr noack’s Private Office
- ÉLÈVeS De L’UniVerSiTÉ JUan CarLOS en ViSTe À La COUr
By alexandra ramunni, assistante au cabinet de M. ramallo
- HeLLO TO
- GOOD BYe TO
- eCa SaiLinG TeaM ParTiCiPaTeS in SiGGY’S CUP reGaTTa 2011
- SPeCiaL rePOrT n°4
- SPeCiaL rePOrT n°4
p.52
p.57
p.58
p.60
p.64
65
p.65
65
p.66
enVirOnMenTaL aUDiTinG SeMinar european Court of auditors, 23 May 2011
By rosmarie Carotti
«YOU CannOT SUrViVe iF YOU CannOT BreaTHe»
interview with Mr JØrGen KOSMO auditor General of norway and Chair of the european
Working Group on environmental auditing (eUrOSai WGea)
By rosmarie Carotti
66
67
p.67
3
VIII EUROSAI CONGRESS – LISBOA 2011
THE ROLE OF SAIS IN THE ACCOUNTABILITY AND RESPONSIBILITIES OF PUBLIC
MANAGERS
Presentation by Mr vítor Caldeira, President of the european Court of Auditors
31 May 2011
Mr. President,
Distinguished colleagues and friends,
Permit me, first of all, to compliment the Portuguese Court of auditors in the person of its distinguished
President on the excellent organisation of this congress and the extraordinary hospitality we have
received. Congratulations!
i am sure that the Lisbon congress will mark the beginning of a new stage in the process of the
consolidation of eUrOSai, the twentieth anniversary of which we celebrated in 2010.
i would like now to share with you, in the light of the eCa’s experience, some reflections on the concept
of accountability in the context of the governance of the european Union. With the indulgence of those
of you who, like me, speak the language of Camões, i shall speak in english.
President,
Colleagues,
The theme “The role of SAIs in the accountability and responsibilities of public managers” is particularly
relevant in the context of european Union (eU) governance. eU governance involves not just the eU
institutions and bodies audited by the european Court of auditors (eCa), but also authorities in the
Member States responsible for implementing eU policies that are also audited by their respective
national Supreme audit institutions (Sais).
in the complex context of eU governance arrangements, it is also important to be clear what we mean.
So, i would like to start with a definition.
“accountability” is a word that can mean many things to many people. it is also one that is not even easy
to translate from the english.
a helpful distinction is made by Marc Bovens, Professor of public administration at Utrecht University.
Professor Bovens distinguishes between two related concepts of accountability.
4
First, there is “accountability-as-a-virtue”. Something that the public managers and the public bodies
they represent should strive towards. as public bodies, Sais also apply this concept; for example,
iSSai 20 sets out principles that “are intended to lead SAIs towards a common goal of transparency and
accountability”. The concept of “accountability-as-a-virtue”, therefore, provides a link with the ethics of
public management – an aspect that the questions in the principal paper explored.
But forgive me if i leave “virtue” to one side - on this occasion - and concentrate on the second concept
of accountability defined by Professor Bovens, namely “accountability-as-a-mechanism”, because i think
it provides a useful framework for exploring the role of the eU public sector auditor.
according to this definition, “accountability” is a mechanism which involves a number of familiar
“building blocks”:
•
First, there is a relationship between an actor and a forum;
•
Second, the actor is obliged to explain or justify their conduct to that forum;
•
Third, the forum can pose questions and pass judgement in some way; and
•
Lastly, the actor may face consequences.
This definition provides, i think, the minimum conditions for “accountability”.
You will notice that it leaves out the “auditor”. and i think that is right because it is possible to have
“accountability” without the auditor. However, i believe the mechanism is more likely to operate
smoothly if there is one. So, i think the first point to note is that the auditor plays a facilitating role in an
existing mechanism, assisting the “forum” to scrutinise the conduct of “actors”.
There are a number of generic ways the auditor might do this:
•
first, by testing the reliability of the actor’s account of their conduct;
•
second, by providing an independent assessment of the actor’s conduct;
5
•
third, by providing new information not already available to the actor or the forum.
•
lastly, the auditor can also provide advice to both the actor and the forum on how to improve.
i think the traditional role of Sais in the financial accountability in democratic states conforms quite
closely to this model. The principal financial accountability mechanism for the eU also conforms to this
model, although in practice the eU’s governance arrangements present significant challenges to its
effective operation.
The Treaty on the Functioning of the european Union sets out a mechanism for eU financial
accountability known as the discharge procedure. The european Commission is the principal actor
ultimately responsible for the implementation of the eU budget. The Commission is accountable to a
“forum” composed of the european Parliament and Council – the Discharge authority. The eCa assists
the Discharge authority by providing audit reports.
in practice, specialised committees of the european Parliament and Council scrutinise the implementation
of the eU budget using the eCa’s reports and question the eU Commissioners and senior officials.
The procedure ends with the european Parliament and Council “passing judgement” on the financial
management of the eU budget by the Commission by granting discharge.
However, it does not hold individual public managers to account or sanction them. There are other
arrangements in place within institutions to deal with such matters, as well as the possibility of
investigation by the european anti-Fraud Office (OLaF), and prosecution under national law in cases of
fraud and corruption.
nevertheless, the discharge procedure does have significant consequences because the Commission
is called upon to take actions and is required to report back on their implementation. This provision
provides a feedback loop for ensuring improvement over time – if i may say so, thereby completing the
cycle of “accountability”.
Many of the actions the Commission is called upon to take are based on recommendations in the
eCa’s audit reports. The eCa, therefore, must also report on the results of the implementation of its
recommendations. This information in turn provides a key indicator of the impact of the eCa’s work
and it is an important part of its efforts to be accountable and to improve over time. The discharge
procedure, therefore, does have significant consequences – even leading, in 1999, to the collective
resignation of the Santer Commission.
But the eU’s complex governance arrangements have a number of features which present challenges
to the effective operation of this mechanism. First, the Commission is a large organisation with wideranging activities in which many internal actors are involved in financial management. Second, for most
areas of eU expenditure the Commission is not the only actor; it is simply the last in a long line of bodies
at eU, national, regional and local levels, all responsible for managing eU funds. Third, these latter actors
often have other responsibilities – including managing national funds - and are, therefore, also part of
national mechanisms for holding public managers to account.
in addition, the remit of the discharge procedure for the eU budget is also very broad. it is set up to
cover questions relating to the reliability of the eU accounts, the regularity of expenditure, and the
soundness of financial management.
i think we can see a number of the major developments in the management of eU funds, in recent years,
as a response to the challenge of answering these three questions in the context of eU’s governance
arrangements. in each case, the eCa – in cooperation with the eU Sais – has played a significant
supporting role.
6
in this context, three major developments are to be underlined: the administrative reform package; the
integrated internal control framework; and the review of the eU budget.
First, following the fall of the Santer Commission in 1999, the Commission introduced an administrative
reform package. The reform was inspired by aspects of the philosophy of new public management and
the COSO internal controls framework.
The package contained proposals aimed at rationalising and modernising the accountability
mechanisms within the Commission, including defining activities funded by the eU budget in terms of
policy areas, setting related objectives, and defining responsibilities for internal control and reporting
on achievements. One positive early outcome of the reform was the successful introduction of reliable
accruals based accounts for the eU.
Second, the Commission has been developing an integrated internal control framework covering the
use of eU funds by the Commission, Member States authorities, third countries and international bodies.
a key element of the framework is the introduction of reporting and audit requirements on national
authorities with responsibility for managing eU funds, including the requirement for the provision of
assurance on the effectiveness of internal controls.
The eCa provided an important stimulus at the start of the process by producing an opinion in
2004 setting out a number of principles which should be used in designing such a framework. The
eCa has since reported on the implementation of the framework in its annual reports and provided
recommendations. The framework is still a work in progress and important new elements are included
in legislative proposals currently being considered by the european Parliament and Council.
The third initiative launched by the Commission was a review of the eU budget, to which the eCa made
a contribution based on its audit experience. The results of the review were published in October
2010. in this initiative, there is a strong emphasis on improving performance, in particular on achieving
eU added value, using the budget to deliver on key policy priorities in the europe 2020 strategy, and
developing a results-driven budget. The outcome of the review is expected to be translated, later this
year, into further legislative proposals.
improving accountability for eU performance is becoming increasingly important but it is currently
relatively underdeveloped compared to the other components related to the reliability of the accounts
and the regularity of expenditure. The eCa and the eU Sais therefore have an opportunity to promote
these developments through their performance audit work.
in particular, under the Lisbon Treaty, the Commission is required not only to report on the implementation
of recommendations included in the discharge resolution, but also to present an evaluation report on
its achievements. in future, this new evaluation report may provide a basis for eU auditors to provide
more assurance on the performance of the eU’s public managers.
in response to the crisis, the eU has taken measures to support the sustainability of the financial industry,
to promote economic recovery and growth, to provide financial assistance the Member States, and to
strengthen fiscal and economic policy coordination by Member States. These measures have changed
the conduct of economic and monetary policy, created new bodies and instruments, and established
new policy structures and processes. They also have important implications for the use of public funds
in the eU. These changes raise new challenges for accountability, transparency and public audit.
The Court considers that these new measures should respect the principle that where public funds are at
stake there should be adequate arrangements for transparency, public accountability and public audit.
7
President,
Colleagues,
it is time to conclude.
Based on the experience of the eCa, i believe that the Sais have an important role to play in facilitating
the effective operation of the existing mechanisms for holding the public bodies and their managers
to account. We can play that role by presenting the results of our audit work in public, by making
recommendations on how to improve the internal control frameworks, and by reporting on the
implementation of those recommendations.
Furthermore, as Supreme audit institutions, i believe we can provide important advice on how to ensure
that adequate provision is made for ensuring effective accountability, transparency and audit when
new governance arrangements are being devised. This role is becoming increasingly important for the
european Union in particular, as it seeks new ways to use its limited funds effectively and as it addresses
the consequences of the economic and financial crisis and develops its economic governance model.
Citizens also increasingly expect public managers not only to follow rules but also to deliver results.
Sai can use their mandates and powers to provide independent assessments of public managers’
performance for the purposes of public accountability.
Thank you for your kind attention.
8
«AUFGRUND DER WIRTSCHAFTS- UND FINANZKRISE MÜSSEN WIR
MÖGLICHST RASCH DIE ENTSCHEIDENDEN PRÜFKOMPETENZEN FÜR
DIE MASSNAHMEN GEGEN DIE WIRTSCHAFTS UND FINANZKRISE (Z.B.
HAFTUNGEN UND DIREKTHILFEN ETC…) ERHALTEN»
INTeRvIew MIT hARALD wÖGeRbAUeR, MITGLIeD Des eUROPÄIsCheN
ReChNUNGshOfes AUs ÖsTeRReICh
by Rosmarie Carotti
Harald Wögerbauer, Mitglied des europäischen rechnungshofes
aus Österreich
R. C. : sie kommen aus Österreich und sind ein neues Mitglied des europäischen
Rechnungshofes. sie kommen aus dem Österreichischen Rechnungshof und sind Jurist
und volkswirt. Im europäischen Rechnungshof wurden sie der ersten Kammer zugeteilt.
entspricht das Ihren wünschen und Kompetenzen? welche sind, Ihrer Meinung nach, die
größten schwachstellen in der heutigen eU-Landwirtschaftspolitik, die in Österreich
bemängelt werden?
harald wögerbauer: Die Landwirtschaft ist ein Sektor, der mich interessiert. Meine Vorfahren
kommen aus dem bäuerlichen Bereich, sie hießen nicht nur Wögerbauer, sie waren auch
Bauern. ich bewirtschafte außerdem selbst Wald und bin sehr bodenverbunden. Österreich
ist natürlich ein agrarisch klein-strukturiertes Land und es ist das Ziel des österreichischen
Landwirtschaftsministeriums und des Ministers, die kleinen Strukturen aufrecht zu erhalten.
aber das ist Politik und stellt keine Kompetenz des erH dar.
R. C. : Der Zweck unseres Gesprächs, ist nicht Politik zu machen, sondern sie als neues
Mitglied des hofes kennenzulernen. Um bei der Landwirtschaft zu bleiben, wie sieht es in
Österreich mit der Transparenzdatenbank aus? Das Thema ist aktuell, weil der europäische
Gerichtshof vor kurzem in einem von Deutschland vorgebrachten fall ein Urteil dazu
gesprochen hat.
harald wögerbauer: ich war jahrelang Datenschutzratsvorsitzender in Österreich. 1997 wurde
in einem Verfassungsgesetz in Österreich festgehalten, dass alle empfänger von öffentlichen
Geldern mit einem monatlichen einkommen von über 80.000 Schilling vom rechnungshof
aufgelistet und publik gemacht werden müssten. Das war lange vor dem jetzt besprochenen Fall
von Deutschland.
Daraufhin zogen einzelne Personengruppen, die Wirtschaftskammer und der Österreichische
rundfunk vor den europäischen Gerichtshof (euGH), der urteilte, dass die Verfassungsbestimmung
aus Datenschutzgründen menschenrechtswidrig war und sie aufhob. Die Bestimmung wurde
somit kein einziges Mal vollzogen, obwohl sie noch immer als Verfassungsbestimmung ein
rechtsbestand in Österreich ist.
9
inTerVieW MiT HaraLD WÖGerBaUer, MiTGLieD DeS eUrOPÄiSCHen reCHnUnGSHOFeS
aUS ÖSTerreiCH
als Datenschutzratsvorsitzender war ich natürlich gegen eine Veröffentlichung dieser Daten. Vor
kurzem habe ich Gelegenheit gehabt, mit dem Kommissar für Landwirtschaft darüber zu sprechen
und gehört, dass eine arbeitsgruppe jetzt prüfen soll, wie man die Transparenzbestimmungen
verfassungs-, menschenrechts- und datenschutzkonform wieder einführen kann.
R. C.: In Ihrem Lebenslauf steht, dass sie lange im österreichischen Parlament waren.
harald wögerbauer: ich habe fünf Jahre geprüft und wurde dann dem Parlament von 1979 bis
jetzt als rechnungshofbeamter dienstzugeteilt.
Das Parlament hat mich der Fraktion zugeteilt. ich war politischer Direktor, der ein
Verwaltungsposten ist und kein politisches Mandat. Meine aufgabe war die politische
Koordination zwischen regierung, Parlament, Partei und Ländern.
R. C. : Das heißt also, dass sie als beamter des österreichischen Rechnungshofes noch nie
mit uns direkt in Kontakt waren.
harald wögerbauer: Doch, ich habe mich 2001 als Generalsekretär des europäischen
rechnungshofes beworben und war in der endauswahl. aber ich habe nie mit dem europäischen
rechnungshof zusammengearbeitet.
R. C. : Trotzdem wäre es interessant zu erfahren, welche vorstellung sie von einer optimalen
Zusammenarbeit zwischen den beiden Institutionen haben.
harald wögerbauer: ich möchte mich gerne zu „joint audits“, gemeinsamen Prüfungen, äußern,
weil das Thema aufgrund der Pilotprojekte in Holland und Tschechien von großer aktualität ist.
Hinsichtlich der Zuverlässigkeitserklärung im rahmen von „joint audits “ bin ich sehr skeptisch,
weil nationale interessen stark betont werden könnten. ich würde jedoch verstärkte, gemeinsame
Wirtschaftlichkeitsprüfungen und Zweckmäßigkeitsprüfungen begrüßen, bei denen beide
gemeinsam agieren und die jeweilige Unabhängigkeit sichergestellt ist.
Der österreichische rechnungshof hat sich zum Thema „joint audits“ im rahmen der ZVe skeptisch
geäußert. Obwohl die rechnungshöfe unabhängig sind, haben die ergebnisse der Prüfungen
durchaus innenpolitische auswirkungen. Man könnte dem österreichischen rechnungshof zum
Beispiel vorwerfen, dem eigenen Land zu schaden, wenn gewisse aufgezeigte Fehlentwicklungen
zu rückforderungen von Seiten der Kommission führen.
R. C. : was halten sie von der wirtschaftlichkeitsprüfung und Zweckmäßigkeitsprüfung am
europäischen Rechnungshof?
harald wögerbauer: Die Wirtschaftlichkeitsprüfung findet nicht in dem Umfang statt, wie es
wünschenswert wäre, weil sehr viele ressourcen bei der Zuverlässigkeitsprüfung gebunden sind.
Der europäische rechnungshof hat sich daher das Ziel gesetzt, die Zuverlässigkeitserklärung, die ja
ziemlich viele ressourcen bindet, etwas zurückzufahren und dafür die Wirtschaftlichkeitsprüfung
und die Zweckmäßigkeitsprüfung mehr voranzutreiben. Zweckmäßigkeitsprüfung heißt, nicht
nur, wie bei der Zuverlässigkeitserklärung zu schauen, ob den Gesetzen und Vorschriften
entsprochen wird, sondern auch zu analysieren, ob die Gesamtprojekte beziehungsweise die
Mitteleinsätze überhaupt sinnvoll sind.
R. C. : haben sie konkrete verbesserungsvorschläge?
harald wögerbauer: ich wünsche mir eine etwas größere Transparenz der
Zuverlässigkeitserklärung, das heißt, dass die Politikfelder genau darstellt und die Mitgliedsländer
aufgezeigt werden, bei denen die Hauptprobleme liegen, ohne dass mehr Belastungen für den
10
inTerVieW MiT HaraLD WÖGerBaUer, MiTGLieD DeS eUrOPÄiSCHen reCHnUnGSHOFeS
aUS ÖSTerreiCH
erH entstehen. Das macht das Ganze nicht nur lesbarer, sondern auch sinnvoller verwendbar für
das Parlament.
Transparenz bei der Zuverlässigkeitserklärung ist auch für die akzeptanz der eU in der Bevölkerung
wichtig. Wir müssen dafür sorgen, dass der europäische rechnungshof bekannter wird. Das
ist auch eine Frage der Berichte, die der Öffentlichkeit beweisen müssen, dass der erH genau
hinschaut. Dazu gehört auch das „Follow up“, das Weiterverfolgen, ob den empfehlungen auch
entsprochen wurde. im Jahresbericht des österreichischen rechnungshofs gibt es z. B. Boxen mit
nichterledigten empfehlungen.
R. C.: was halten sie von „Naming and shaming“? Lässt es sich auf die eU übertragen, bei
der die Gelder von der Kommission vergeben werden?
harald wögerbauer: Bei uns in Österreich wird ein Bericht über die Unternehmen, die zu
mehr als 50% im eigentum der öffentlichen Hand sind, erstellt. Bei der Kommission wird
die Mittelvergabe geprüft. es bedarf bei großen Fällen in Verfolgung des Gerichtsurteils des
Jahres 1999 zur erzielung der Transparenz nicht unbedingt die explizite namensnennung der
involvierten Geprüften.
R. C .: haben sie noch ein Anliegen, das sie persönlich vorbringen möchten?
harald wögerbauer: Das, worauf ich jetzt dränge, ist, dass wir aufgrund der Wirtschaftsund Finanzkrise möglichst rasch die entscheidenden Prüfkompetenzen für die ergriffenen
Maßnahmen zur Bekämpfung dieser Krise erhalten. es kann nicht sein, dass private Prüfer diese
aufgabe erhalten. Man weiß nicht, welche interessen dabei möglicherweise vernetzt sind, denn
diese prüfen vielleicht auch die involvierten Banken. es geht um mindestens 600 Milliarden
euro, die von uns als alleinigem Verantwortlichen für den europäischen Steuerzahler, geprüft
werden müssen. in diesem Zusammenhang bin ich ganz der auffassung des österreichischen
rechnungshofes, der in einem von Präsidenten Moser unterzeichneten Brief an Präsident
Caldeira vom 3. Mai 2011folgendes sagt: „angesichts der aktuellen in der Öffentlichkeit
diskutierten Fragestellungen in der Wirtschafts- und Budgetkrise, die auch zunehmend die
aufgabenwahrnehmung der externen öffentlichen Finanzkontrolle thematisiert, rege ich
darüber hinaus an, im rahmen des Kontaktausschusses auch das Thema „Die rolle der OrKB
im Lichte der Finanz-,Wirtschafts- und Budgetkrise“ zu erörtern.
11
«IN THE LIGHT OF THE ECONOMIC AND FINANCIAL CRISIS WE MUST
BE GIVEN AS SOON AS POSSIBLE THE POWERS WE NEED TO AUDIT THE
MEASURES TAKEN AGAINST THE ECONOMIC AND FINANCIAL CRISIS
(E.G. GUARANTEES AND DIRECT AID, ETC...)»
INTeRvIew wITh hARALD wÖGeRbAUeR,
MeMbeR Of The eUROPeAN COURT Of AUDITORs fROM AUsTRIA
by Rosmarie Carotti
Harald Wögerbauer, Member of the european Court of auditors
from austria
RC: you come from Austria and are a new Member of the european Court of Auditors. you
worked at the Austrian Court of Auditors and are a lawyer and economist. you have been
assigned to Chamber I of the Court. Is this in line with your expectations and skills? what,
in your opinion, are the weakest points in today's eU Agriculture Policy which are being
criticised in Austria?
harald wögerbauer: agriculture is a sector that interests me. My ancestors come from a
rural area, they were not only called ‘Wögerbauer’, they were also 'Bauer' (farmers). i farm
forest land myself and am very close to the soil. austria is of course a small agricultural
country, and it is the goal of the austrian Ministry of agriculture and its Minister to preserve
these small structures. But that is politics and therefore not a competence of the eCa.
RC: The purpose of our conversation is not to talk politics, but to get to know you as a
new Member of the Court. staying with the subject of agriculture, what is the situation in
Austria regarding the ‘transparency data bank’? The subject is topical, as the european
Court of Justice has recently delivered a verdict in a case on this brought by Germany.
harald wögerbauer: For years i was chairman of the Data Protection Council in austria. in
1997 a constitutional law in austria decreed that the names of all recipients of public money
with a monthly income of more than 80,000 austrian shillings had to be listed by the Court
and the list made public. That was long before the German case that is being discussed at the
moment.
Certain groups of people, the Chamber of Commerce and the austrian Broadcasting Corporation
then appealed to the european Court of Justice (eCJ), which ruled that this constitutional
provision was a violation of human rights for data protection/privacy reasons, and it was
quashed. The provision was therefore never implemented. However, as a constitutional
provision, it is still part of the legal apparatus in austria.
as chairman of the Data Protection Council, i was of course against publishing such data. i
recently had the chance to talk with the Commissioner for agriculture, and was informed that
12
inTerVieW WiTH HaraLD WÖGerBaUer,
MeMBer OF THe eUrOPean COUrT OF aUDiTOrS FrOM aUSTria
a Working Group will now examine how these transparency provisions can be reintroduced
in compliance with the Lisbon Treaty, human rights and data protection.
RC: your Cv mentions that you were for a long time a member of the Austrian
Parliament.
harald wögerbauer: i worked as an auditor for five years. From 1979 until now i
have been seconded to the Parliament as an official of the austrian Court of auditors.
i was assigned to my position by the Parliament. i worked as political director, which is an
administrative position and not a political mandate. My job was political coordination between
government, parliament, party and Länder.
RC: That means that as an official of the Austrian Court of Auditors you have never been
in direct contact with the eCA?
harald wögerbauer: actually i have been. in 2001 i applied for the post of Secretary-General
of the eCa and was in the final selection. But i've never worked with the european Court of
auditors.
RC: Nevertheless, it would be interesting to know how you imagine optimal cooperation
between the two institutions.
harald wögerbauer: i would like to say something concerning "joint audits”, because the
subject is of great topicality in the light of current pilot projects in the netherlands and
the Czech republic. i am very sceptical about the Statement of assurance in the context of
joint audits, as national interests could be strongly emphasised. However, i would welcome
strengthened joint performance and effectiveness audits, in which both parties act together
but the respective independence is assured.
The austrian Court of auditors has been sceptical on the subject of "joint audits" in the context
of the DaS. although the national Courts of auditors are independent, the results of the audits
nevertheless do have a domestic impact. One could, for example, blame the austrian Court of
auditors for damaging its own country if certain shortcomings uncovered during the audit led
to demands for repayment from the Commission.
RC: what is your impression of performance audits and effectiveness audits at the
european Court of Auditors?
harald wögerbauer: Performance audits do not take place on the scale that would be
desirable, because a lot of resources are needed for the DaS exercise. The european Court of
auditors has therefore set itself the objective of scaling back somewhat the DaS, which needs
a relatively large amount of resources, and instead placing more importance on performance
and effectiveness audits. Carrying out an effectiveness audit means not only checking
whether the laws and regulations are complied with, as for the Statement of assurance, but
also analysing whether the overall project and/or the resources used are in fact meaningful.
RC: Do you have specific suggestions for improvements?
harald wögerbauer: i would prefer a little more transparency in the DaS, i.e. presenting the
policy areas carefully, and mentioning by name the Member States with the main problems,
13
inTerVieW WiTH HaraLD WÖGerBaUer,
MeMBer OF THe eUrOPean COUrT OF aUDiTOrS FrOM aUSTria
without increasing the burden for the eCa. That would make the whole thing not only more
readable, but also more useful for Parliament.
Transparency in the DaS is also important for the acceptance of the eU by the public. We
must see that the european Court of auditors is better known. This is also a question of the
Court's reports, which must prove to the public that the eCa is auditing properly. it also
includes the "follow up", finding out whether the recommendations have been implemented.
The annual report of the austrian Court of auditors, for example, includes boxes that show
recommendations which have not been complied with.
RC: what do you think of "naming and shaming"? Can it be transferred to the eU, where
the funds are spent by the Commission?
harald wögerbauer: in austria, companies that have more than 50% of public ownership
are reported on. The Commission's spending of funds is audited. Following the 1999 Court
of Justice ruling on transparency, there is not necessarily any need in large cases to explicitly
mention the names of the audited parties involved.
R.C.: Do you have a personal request that you would like to mention?
harald wögerbauer: What i am pressing for is for the Court, in the light of the economic
and financial crisis, to be given as soon as possible the crucial auditing powers it needs
for the measures that have been taken to combat this crisis. it cannot be right that private
auditors are allocated this task. no-one knows whose interests could possibly be linked, as
they might also have been auditing the banks involved. This concerns at least 600 billion
euros, which must be audited by the eCa as the sole body answerable to the european
taxpayer. in this connection, i fully support the opinion of the austrian Court of auditors,
which said the following in a letter dated 3 May to President Caldeira, signed by President
Moser: "Given the issues that are being discussed by the public concerning the economic
and budget crisis, which are also increasingly focusing on how public sector financial
control is exercised, i also wish to encourage, within the Contact Committee, discussion
of the topic " The role of the Sais in the light of the financial, economic and budget crisis".
14
THE GREEK FINANCIAL CRISIS FROM AN AUDITOR’S POINT OF VIEW 1
by Ioannis sarmas, Member of the european Court of Auditors
world Class Performance symposium 2011: Trust and
accountability in public financial management, 17 March 2011
Queen elizabeth II Conference Centre, westminster, London
1
1. in a law adopted by the Greek Parliament in august 20102 three important reforms have been
introduced: First, the creation of an internal control system for public financial management3 ;
second, the initiation of a strategic planning for public expenditure4 and third, the introduction
of the principle of sound financial management as the basis for the management of public
money5. These three reforms were the remedies necessary to address the root causes of the
Greek financial crisis which had occurred the same year.
2. i will present here three claims in relation with the Greek financial crisis which i will try to
demonstrate. all of them touch the underlying reasons of the crisis, all of them are based
on what we (auditors and accountants) consider as fundamental principles of modern financial management, and all of
them invite the Greek authorities to take long term action for a sustainable recovery of the Greek public financial system.
The claims i will defend are the following. The Greek financial crisis, from an auditor’s point of view, is due to: (a) the lack of
an internal control system allowing the government to pilot the country out of turbulence zone; (b) the absence of a culture of
accountability requiring public fund managers to demonstrate the results achieved and finally; (c) the inadequate powers for the
auditing mechanisms preventing them from focusing on the waste of public money.
ii
3. i come now in detail to my first claim about the lack in Greece of an effective internal control system.
4. Let me make at the outset an introductory remark. Continental europeans do not always understand easily the differences
between control and audit and worse we use often one word instead of the other. in Greek, audit and control are covered
by the same word. in the modern management vocabulary they have, however, a different meaning which is important to
explain now. To take an illustrative example: a pilot of an airplane has the control of the aircraft in the sense that he is able
to fly it safely and reach his destination on time. The control is the management framework in place to ensure obtaining the
expected results. Giving this meaning to the word control, it is obvious that between control and audit there is a big difference
in meaning. The audit, on the other hand, is a process of review by a third person to assess compliance with rules, standards
or objectives set. Lack of control in the Greek case meant that the government did not have the appropriate information to
anticipate the financial crisis which was arriving, neither appropriate tools to prevent the damages it was about to cause.
5. The level for the Greek public deficit for 2009 is a striking example of this lack of control. i will give you four figures for
comparison. By april 2009, the expected public deficit in Greece for 2009 was calculated at 3.7 % of GDP. Just after the
parliamentary elections held in October of the same year the Greek government announced a revised public deficit at 12.5
% of GDP. By april 2010 the european Commission established the deficit for 2009 at 13.6 % of GDP. This figure was again
revised in november 2010 to 15.4 % of GDP.
1 Two reservations by the author (a) The first should be that, although i am a Member of the european Court of auditors and at the same
time a Member on leave of the Hellenic Court of audit, i do not take the floor as representative of these two institutions. i am here in my
own capacity and i will express ideas of my own. However, in doing so i will use the analytical background and the experience i have acquired
as Member of these institutions and mainly as Member of the european Court of auditors. (b) The second disclaimer is that nothing in my
speech should be interpreted as me making predictions on the current situation in Greece. it is out of an auditor’s scope - and i take the
floor here as an auditor – to make predictions for the short or long term future. We identify risks, we qualify them as serious or not, making
recommendations to improve the control system, but our role is not to speculate on when and how these risks might materialise.
2
Law number 3871, Public Financial Management and Accountability, Official Journal of the Greek republic 141/2010
3
articles 3 to 5, 20 to 24, 46 and 50.
4
article 9.
5
article 1.
15
6. a report on Greek government deficit and debt statistics published by the european Commission in January 20106
provided an in-depth analysis to explain the discrepancies which appeared in the calculations of the Greek Public deficit.
i quote from this report the most important information and remarks. (a) it appears that around 1 billion euro of hospital
liabilities, reported in the survey on hospitals, were ignored by the Greek authorities7. The real total amount of hospital
liabilities was still unknown8. (b) The working balance of the governmental budget revision was due almost in its entirety to
the inclusion of a previously neglected expenditure for an amount of 710 million euro, a figure equal to the transfer from the
State budget to the social security fund of a State-owned company9. (c) it is still not clear whether privatization procedures
have or have not been included in the working balances of the previous years and whether the transfer to a State-owned
company has been recorded as a governmental expenditure or not10. (d) in the event of a call of guarantee, if it was assumed
that the guarantee would be repaid by the beneficiary, nothing was ever recorded in the tables11. (e) Capital injections in
public corporations had been considered as financial transactions with no impact on the deficit12. The report concludes
with the following remarks: Unreliability of data has been found. The public accounting system is inappropriate for correct
reporting. There is a lack of accountability in the individual provision of figures combined with unclear responsibilities of the
national services providing source data and unclear empowerment of officials responsible for the data.
7. The picture drawn by the european Commission in its report indicates that the Greek government was not sufficiently able
either to get correct financial information or to measure the real impact of its decisions13. Thus, the government was not in full
position to identify at first and then to avoid or mitigate the risks related to the reporting of the deficit figures. an effective internal
control system requires exactly the opposite. The Ministers and the government as a whole are managers who should have
control of the situation as a pilot should have control of the plane. an appropriate public accounting system transparent,
relevant, complete and reliable is an elementary condition for a government to have control of its management. The mistrust
of the markets towards Greece’s public financial management started when the real deficit figures were revealed.
iii
8. The second claim i am raising to explain the Greek financial crisis relates to the lack in the public sector of a culture of
effectiveness allowing the government to be accountable for the results gotten from its policies.
9. Until recently, economy, efficiency and effectiveness were not even mentioned in the state Financial regulation14. Legality
and regularity of the transactions and consumption of the appropriations foreseen in the budget were the main criteria
used to gauge a successful public management. important reforms were introduced by acts voted by the Parliament, but
as they were not included in a strategic package built around the means for their effective implementation, they were not
implemented as they should15.
10. i will give an example to illustrate the above by presenting the conclusions of a non official report, prepared by private
researchers, Evolution of the Accounting Reform implementation in Greek Public Hospitals16. The initial efforts of introducing
accruals-based accounting in public hospitals in Greece started in 1997 and in 1999 a pilot implementation project was
launched in order to test the suitability of the new accounting system and its readiness for full implementation17. The
Presidential Decree 146 of 2003 introduced the mandatory move to accruals-based accounting and cost accounting in all
public hospitals18. The Decree pointed out that the deadline for implementation of accruals-based accounting in public
hospitals was the 1st of January 2004 while the deadline for the cost accounting introduction was the 1st of January 200519.
6
7
8
9
10
11
12
13
14
2010
15
16
17
18
19
Report on the Greek Government deficit and Debt Statistics, european Commission January 2010; 30 pages.
See ibid., page 20.
See ibid., page 27.
See ibid., page 20.
See ibid., page 21.
See ibid., page 23.
See ibid., page 23.
See the european Court of auditors’ 2009 annual report, paragraph 2.27. it has also regularly followed up on the observations
made in its 2006 annual report (see paragraphs 4.24 to 4.26 and 4.32) on the revision of the Gross national income.
See Rethinking Public Financial Management and Budgeting in Greece: time to reboot? – efi Vraniali, GreeSe Paper no 37 – July
See Monitoring, Evaluation, and Performance Indicators for the Greek State Audit & Control Mechanisms – Pavos Liverakos – 15 May
2008 and Performance Monitoring and Accountability through Technology: E-governance in Greece – Dimitra i. Petrakaki, niall Hay
es and Lucas D. introna
Munich Personal rePec archive, F. Stamatiadis, n. eriotis, 31st of January 2011.
See ibid., page 6.
See ibid., page 6.
See ibid., page 7.
16
14. The researchers who carried out the enquiry have reached the conclusion – on the basis of the replies received – that
by 2009 the level of implementation of the reform remained incomplete, the relevant statistics showing a very low rate of
implementation. The reasons given by the researchers to explain the inadequate implementation of the reform were the
following: (a) From the government accounting reform elaboration up till now, not much political debate has taken place
and no serious political interest was expressed to modernise public management accounting.20 (b) The accrual accounting
framework in question, centrally developed, has been imposed following a top-down procedure of policy formulation without
the contribution and co-operation of the parties directly concerned in the implementation process21. (c) Organizational
capability factors hindered significantly the accounting reform process22. They include the accounting Department
personnel’s lack of sufficient training and the absence of staff with the required financial and accounting background to
initiate, support and understand the merits of the reform process, the inefficiency of existing information Systems to provide
timely, reliable and valid data in an accessible format and the lack of support from professional consultants. (d) The hospitals’
own costs were reimbursed ex post without any link to unit costs and performance measures which provided no incentives
to public hospitals to stimulate efficiency and to save public money23. (e) Public hospitals are evaluated and controlled on
the basis of reports related to cash-based accounting and not to accruals-based accounting, as the control mechanisms have
been designed to meet the needs of the former24.
15. The unsatisfactory introduction by 2009 of the accruals-based accounting system in public hospitals cannot, of course,
be blamed as a material reason for the Greek financial crisis. it remains, however, a good illustration of the lack of a culture
of effectiveness which is undoubtedly one of the main reasons for increasing deficits. a useful reform had been initiated in
the public hospitals conceived to rationalise their costs. But, apart from adopting the legislation which has launched the
reform, no substantial measures had been taken to implement it. The report mentioned no training for the staff involved,
inappropriate Information Technology facilities, no support from external consultants, no incentives for the managers of the
hospitals, no penalties, no political perseverance. according to the report, the means which were normally required for the
successful implementation of the reform were lacking25 26.
iv
16. The third and the last claim i am raising concerns the lack of adequate powers given to the auditing mechanisms allowing
them to focus on the waste of money, presumably the most important weakness of the Greek public management system.
17. The main auditing mechanism in Greece is the Hellenic Court of audit, which is a supreme court modelled on the French
Court of auditors, and the General Direction for Financial Controls, which is a service of the Ministry of Finance. Both focus on
legality and regularity of the payment orders, carrying out ex ante reviews in their premises. The Hellenic Court of audit has
no power to audit the performance of the public policies, being limited by its legislative framework to legality and regularity
issues. Thus, economy and efficiency of the expenditure is out of its scope.
18. as no independent body was responsible in Greece for informing regularly the Parliament, the Government and the
public on occasional or systemic cases of waste of money it was impossible to evaluate the proportion of useless spending
included in the 36 150 billion euros public deficit of 2009 (15.4% GDP). However, the european Commission’s third review
of the Economic Adjustment Program for Greece27 published last February (2011) has identified areas where such spending
occurs.
19. The following contains the main features: (a) State-owned enterprises: The european Commission suggests restructuring,
making reductions in operational costs, reprioritisation of investments and adjustment in wages and employment28. (b)
20
21
22
23
24
25
26
27
28
See ibid., page 25.
See ibid., page 26.
See ibid., page 26.
See ibid., page 25.
See ibid., page 25.
The european Court of auditors found material deficiencies in the integrated administration and Control System for agriculture
in Greece, questioning the Commission’s decision to lift corresponding reservations (see 3.68 of the 2009 annual report).
Since three decades already, Greek public services implemented programs financed by Community funds. in this specific area
and only for the purposes of complying with community law the objectives setting culture is respected. But the normal
administrative work was only guided by the obligations to apply the law and to implement the budget whose appropriations were
presented by services.
Occasional Papers 77, February 2011, The Economic Adjustment Programme for Greece, Third review – Winter 2011
See ibid., page 24, regarding points (a) to (f ).
17
Extra-budgetary funds: it is suggesting that entities with overlapping mandates should be merged, restructured or integrated
into State budget, privatised or closed. (c) Public wages: The system of wages is qualified as complex and inequitable
providing remunerations above the private sector for similar tasks. (d) Public administrations: They could be rationalised by
eliminating overlapping responsibilities. (e) Social spending: a number of social programs may be eliminated or be better
targeted. a potential review will identify priorities and quantify potential savings. (f ) Public investment: the suggestion here is
to prioritise projects and identify savings. (g) Healthcare: improve cost efficiency focused on macro-level discipline and cost
control, contain spending by improving the governance of the system29.
20. as i said previously, the lack of studies and reports does not allow presenting a complete view on areas of wasteful
spending. nevertheless, by comparing the figures of intermediate consumption expenditure from 2009 to 2010 it is possible
to draw some conclusions. intermediate consumption in 2009 was 16.71 billions and it has been decreased to 12.08 billions
in 2010, almost 4 billions in one year. Further decreasing is expected in the two coming years to about 10.5 billions. The
economy made represents a substantial part of the deficit at around 2.5% of GDP30.
v
21. My presentation would not be complete if i did not provide information about the implementation of the reforms introduced
to remedy the problems i have already mentioned. after all, given recent track record, particular attention should be given to
the full implementation of these reforms.
22. The fiscal reforms i mentioned are part of the Adjustment Programme for Greece whose implementation is a condition
for the financial support to the Greek government provided by euro-area Member States and the international Monetary
Fund. reports of the european Commission assess compliance with the adjustment Programme. in the third review of this
Programme, already mentioned, the following findings are presented. (a) as far as accounting and control are concerned
the objectives set have been found as “observed” or “partially observed”. They were mainly about providing relevant data
(partially observed)31, developing a special information system interconnecting all public entities with the General accounting
Office (partially observed)32, ensuring a central registry for public enterprises and centralising their supervision (partially
observed and observed)33. (b) as far as strategic planning and effectiveness are concerned the objectives set have been found
as “observed” or “partially observed”. They were mainly about achieving performance criteria for 2010 (partially observed)
34
, improving the fiscal framework by introducing a medium-term fiscal framework based on rolling three-year expenditure
ceilings for central government (partially observed)35, meeting targets for payment claims in the absorption of structural
and cohesion funds (observed)36. (c) as far as fighting waste of money and relevant reviewing mechanisms are concerned the
objectives set have been found as “observed” or “partially observed”. They were mainly about reduction in intermediate
consumption (observed)37, reorganising local government with the aim of reducing costs (observed)38, creating a budget
office attached to Parliament providing independent scrutiny on fiscal issues (partially observed)39.
23. in democratic societies it is up to the elected officials to resolve the problems our societies are facing, not to the
accountants, the auditors or the judges. However, in our modern societies these problems are not limited to civil liberties
matters and external security. Governments should also promote collective prosperity by spending public money wisely and
getting results. To this end an effective internal control system combined with a culture of strategic planning and appropriate
audit mechanisms are essential. This is the reason why a sound and effective accounting and auditing system is required to
restore public confidence.
29
See ibid., page 28.
30
See page 19 of the Commission's document: “In order to offset revenue shortfalls, and unfavourable local government and social
security accounts, the Government under executed ordinary state primary spending and military procurement-related payments by around EUR
4.9 billion (more than 2 percent of GDP) compared to the plans of May 2010 Despite this effort, the incompleteness of the date on the areas and
accounts payable do not allow to assess to what extent this payment compression reflects durable expenditure savings or simply delays in payments.”
31
See ibid., page 65.
32
See Ibid., pages 65 to 68.
33
See Ibid., pages 49, 50.
34
See Ibid., page 42.
35
See ibid., page 50.
36
See ibid., page 63.
37
See ibid., page 44.
38
See ibid., page 44.
39
See ibid., page 50.
18
“HOLDING RESEARCH PROGRAMMES TO ACCOUNT”
speech by Assoc. Prof. Dr. Ladislav balko, PhD.
Member of the european Court of Auditors.
framework and the Innovation Union, brussels, 1 June 2011
By Prof. Dr. Ladislav Balko, Member of the european Court of auditors
INTRODUCTION
Mr Chairman, dear academic and scientific colleagues, dear fellow speakers, ladies and gentlemen,
it is a great honour and a pleasure for me to have the opportunity of addressing you today at this event organised by
research europe, whom i would like to thank very much for having invited me as the Member of the european Court of
auditors in charge of the financial auditing of the research policy area.
Topic 1
TRUsT Of The TAXPAyeR vs TRUsT IN ReseARCheRs
When preparing my address on the first topic – “Trust of the taxpayer versus trust in researchers”, i realised that it
actually very well reflects the mission of the european Court of auditors, which is the eU institution established to carry
out the audit of the eU’s finances, and thereby to ensure citizens’ and taxpayers’ trust in how their money is spent. This
trust is necessary if we want the european project to continue to be a success. Citizens must have trust that the eU funds
are correctly accounted for and spent in compliance with the relevant regulations, with due consideration to achieving
best value for money and effectively contributing to attaining the eU policy goals. Or, to put it even more simply, that
they are spent in a legal, regular, responsible and wise manner. The Court of auditors thus acts as a “financial conscience”
on behalf of the citizens of the Union.
how do we do that? how do we help to ensure taxpayers have trust in how their money is spent? above all, the
Court, as the eU’s external auditor, carries out audits through which it assesses the collection and spending of eU funds.
it examines whether the financial operations have been properly recorded and disclosed, legally and regularly executed
and managed so as to achieve economy, efficiency and effectiveness. it promotes accountability and transparency, and
assists the european Parliament and the Council in overseeing the implementation of the eU budget.
The results of the Court’s audits are set out in three types of report:
Firstly, Annual reports, which present the results of the financial audits in the form of Statements of assurance (DaS) on
the eU general budget and the european Development Funds.
Secondly, specific annual reports, which present the results of the financial audits of the eU agencies and decentralised
bodies.
19
Thirdly, special reports, which present the results of selected performance and compliance audits.
Furthermore, the Court of auditors is called upon to give its opinion on new or updated legislation with a financial impact.
Of the many opinions the Court has issued, i would just like to mention here Opinion 1/2006 on the FP7, Opinion 1/2010
on “Improving the financial framework of the EU budget: Risks and challenges”, and Opinion 6/2010 on the Commission’s
consolidated legislative proposal COM 815 of 2010 for a new Regulation on the financial rules applicable to the annual
budget of the Union, which will replace the current general Financial regulation. The Court will also certainly be invited to
give its opinion on the future fP8, for which the Commission envisages submitting a legislative proposal by the end of
this year.
Citizens’ trust that eU funds in all policy areas are being spent in a legal, regular and wise manner is even more important
at the current time of cuts and austerity measures at national level, and in the context of finding the right ways out of
the economic and financial crisis. However, in order to address the consequences of the same crisis, we equally need
researchers, their trust, and our trust in them.
The europe 2020 strategy for smart, sustainable and inclusive growth clearly shows that, in its efforts to address the
great challenges it faces, the eU is counting a lot on researchers. One of the five targets of the Strategy concerns “research
and innovation”, and the first of the seven flagship initiatives is the “innovation Union” to improve framework conditions
for research and innovation, which is enshrined in the Commission’s Communication COM 546 of 2010. allow me to add
a remark which is perhaps banal but which i consider very important here - if you count on someone, you also trust him
or her.
also, the conclusions of the european Council of 4 february of this year reaffirm that the investment in education,
research, technology and innovation is a key driver of growth, and these conclusions call for implementation of a strategic
and integrated approach to boosting innovation.
it therefore follows that the trust of the taxpayer and the trust in researchers are two equally necessary and complementary
elements, rather than two alternative options. it will be important to strike the right balance between the two.
Simplification of the research funding rules, which i shall address later in more detail, can be interpreted as an expression
of increased trust in researchers.
Thus, to conclude on the first topic – “Trust of the taxpayer versus trust in researchers”, i would suggest replacing the
word “versus” by the word “and” in our minds, and continuing any discussions and reflections on this basis, because, as i
hope i have demonstrated, we need both, complementing rather than conflicting with each other, in order to successfully
address the great challenges ahead of us.
Topic 2
The CAse fOR (OR AGAINsT) eX-POsT AUDITs
i would like to move on to the second topic – “The case for (or against) ex-post audits”. as a Member of the european
Court of auditors and a financial lawyer, i shall start addressing this topic by referring to the relevant eU legislation,
beginning with primary law. The Treaty on the functioning of the european Union states, in article 285, that the Court
of auditors shall carry out the Union’s audit. according to article 287(2), the Court shall examine whether all revenue has
been received and all expenditure incurred in a lawful and regular manner and whether the financial management has
been sound.
The financial Regulation No 1605/2002, which is, so to speak, the basic financial code of the eU, states in article 120(3)
that “[e]ach grant decision or agreement shall provide expressly for the Commission and the Court of Auditors to exercise their
powers of control, on documents and on the premises, over all contractors and subcontractors who have received Community
funds.” Paragraphs 4 and 5 of article 142 state respectively: “The task of establishing that the revenue has been received and
the expenditure incurred in a lawful and proper manner and that the financial management has been sound shall extend to the
utilisation, by bodies outside the institutions, of Community funds received by way of grants” and “Community financing paid
to beneficiaries outside the institutions shall be subject to the agreement in writing by the beneficiaries or, failing agreement
on their part, by the contractors or subcontractors, to an audit by the Court of Auditors into the use made of the financing
granted.”
20
and, finally, besides the Financial regulation as the basic financial code, there are other regulations containing provisions
on controls, such as the Regulations setting up the european Joint Undertakings which state that the Joint Undertakings
shall carry out on-the-spot checks and financial audits among the recipients of funding.
Therefore, based on the quoted provisions, as the eU law now stands, there is a clear case for ex-post audits of eU
research expenditure, not only those carried out by the Court of auditors, but also those conducted by the Commission
or on its behalf by external audit firms (which was actually the case for a majority of the audits performed in 2010 by DG
rTD and DG inFSO), and for those carried out by the Joint Undertakings.
how does the Court of Auditors perform its auditing of the eU research expenditure? The Court’s audit focuses on an
examination of the expenditure declared in the cost statements submitted by the beneficiaries. The audit work is based
on substantive testing of a sample of transactions and on scrutiny of the Commission’s supervisory and control systems
as principal sources of audit evidence.
For 2007, 2008 and 2009, the Court found material error (that is, a most likely error rate of between 2% and 5%) for the
research policy area. Most of the errors occurred because the Commission reimbursed ineligible personnel and indirect
(overheads) costs declared by beneficiaries. Other errors in transactions audited at final beneficiary level included: lack
of supporting evidence, in particular for working time charged, or double charging of costs; use of average rates for
personnel costs which deviated significantly from actual costs; and unjustified allocation of indirect costs to projects.
However, there has been a downwards trend in the error rate for the last three years.
Beyond that, i wish to point to the added value of the Court’s audits. First, our annual reports form the basis for the
budgetary authorities’ decision to grant discharge for the implementation of the budget. Second, the function of ex-post
audits is not only reactive (that is, to assess the legality and regularity of expenditure declared by beneficiaries). it is also
proactive - by pointing out the errors, the Court’s audits as well as the Commission’s improve beneficiaries’ awareness of the
rules and thus act preventively with regard to the future. Third, during our audits, we may find more general problematic
issues. The fact that the independent Court of auditors draws the budgetary authorities’ attention to such issues is often
considered useful not only by the latter authorities, but also by the auditees themselves.
as to the Commission’s ex-post audits, the Court has stated in its 2009 annual report that the Commission’s ex-ante
desk checks should permit the detection of basic deficiencies in cost statements, but acknowledged that many errors
may only be found by performing checks at the level of the beneficiary. Thus, the ex-ante checks on payments based on
cost statements are inherently limited, which is another argument in favour of ex-post audits. Moreover, the Commission’s
approach has been to simplify its ex-ante control procedures as far as possible in order to facilitate the processing of
payments and to place a lot of importance on its ex-post audits as a key element of the control environment. indeed, the
Commission increased the coverage of expenditure by ex-post audits significantly from 2009 to 2010.
Of course, coordination between the audits carried out by the Commission’s services and those carried out by the Court
of auditors is necessary. in this regard, the Commission’s FP7 ex-post audit Strategy states that the Commission’s services
will coordinate and cooperate as much as possible with the Court in their auditing efforts. Similarly, according to the Joint
Technology initiatives’ ex-post audit Strategy, the Joint Undertakings will coordinate and cooperate as much as possible
with the Court in their auditing efforts. and, finally, as regards the relationship between the Commission’s FP7 ex-post
audit Strategy and the Joint Technology initiatives’ ex-post audit Strategy, the General Financing agreement between the
Commission and the Joint Undertakings requests an appropriate level of harmonisation between the two strategies.
Thus, to conclude on the second topic – “The case for (or against) ex-post audits”, i am convinced that there is a
clear case for such audits. not because of a lack of trust in researchers, but in the interest of accountability for the use
of eU funds and because of the benefits which such audits bring, which i hope i have demonstrated in this part of my
presentation.
Topic 3
hOw MUCh Is TOO MUCh?
The NeCessITy Of bUReAUCRACy
This third and last topic – “how much is too much? The necessity of bureaucracy” - is closely related to the first two,
as it is linked with the issues of how much we trust the beneficiaries of eU research funding, of accountability for the
21
use of public funds, and of ex-post controls. i believe that all the stakeholders are in agreement that there is a need and
opportunity for less bureaucracy, which automatically leads me to address the issue of simplifying the rules for eU research
funding, with a view to achieving a transparent, robust and simple-to-administer funding system that will balance public
accountability standards and the administrative costs borne by all parties. in this regard, the european Court of auditors’
Opinion 1/2010 on “Improving the financial framework of the EU budget: Risks and challenges” stated that “Simplification
should remain a priority when reforming the rules and regulations of existing or new expenditure programmes and schemes
because rules and regulations that are clear to interpret and simple to apply not only decrease the risk of error but can also
reduce the control costs.” But the Court of auditors has also consistently recommended that simplification measures should
not be at the expense of accountability for public money.
in its Communication COM 187 of 2010 entitled “Simplifying the implementation of the Research Framework Programmes”,
the Commission acknowledged that the researchers still regard the administrative burden imposed by the FP7 rules
as too heavy. The Commission assessed the state of play, and outlined possible ways of how to proceed further with
simplification, structured in three main strands: (A) - simplifications under the current legal and regulatory framework,
which basically correspond to making grant management processes more efficient; (b) - changes to the rules, but still
under the current cost-based model, such as allowing a broader acceptance of usual accounting practices (including
average personnel costs), the reduction of the variety of rules and special conditions, and provision for owner-managers
of SMes carrying out major parts of projects without a salary registered in the accounts; and (C) - more profound changes
towards result-based funding using lump sums, that would entail a major shift of the control efforts from the financial to
the scientific side.
as regards the changes under (B) above, in its Decision C(2011) 174 final of 24 January of this year, the Commission
adopted three simplification measures immediately applicable to the FP7:
- First, the Decision provides for revised criteria for acceptance of average personnel costs as eligible costs, by allowing
beneficiaries to apply their usual accounting methods when requesting reimbursement for average personnel costs,
under certain specified criteria. Moreover, the submission of a certified methodology on average personnel costs will
remain an option but will no longer be an obligation.
- Second, the personal contribution of owners of small and medium-sized enterprises, whose salaries are not formally
registered in their accounts, to the work on research projects can now be reimbursed through flat-rate financing,
determined by multiplying the hours worked on the project by an hourly rate. The value of the personal work will be
considered as a direct eligible cost of the project.
- and third, the Decision sets up a research Clearing Committee, composed of Directors-General of the research
family Directorates-General, to ensure consistent application of the rules on research funding.
Shortly after the adoption of the Decision, the conclusions of the european Council of 4 february, which i have already
mentioned, stated the following in point 25: “It is crucial that EU instruments aimed at fostering R&D&I be simplified in order
to facilitate their take-up by the best scientists and the most innovative companies, in particular by agreeing between the
relevant institutions a new balance between trust and control and between risk taking and risk avoidance.”
With a view to submitting a legislative proposal for the future fP8, the Commission has launched a public consultation
on the future of the eU research framework programmes, which has just ended 10 days ago. The Commission has also
published a Green Paper in which it proposes to regroup, in a Common Strategic Framework, the instruments, programmes
and initiatives, including the future FP8, the CiP and the european institute of innovation and Technology. after the
legislative proposal for the future FP8 has been submitted, the european Court of auditors will, upon request, produce an
opinion on it, as it did for the FP7 rules.
also on 9 February, through its Communication COM(2011) 52 final, the Commission provided its “Response to the Report
of the Expert Group on the Interim Evaluation of the Seventh Framework Programme for Research, Technological Development
and Demonstration Activities and to the Report of the Expert Group on the Interim Evaluation of the Risk-Sharing Finance
Facility”. in response to the FP7 interim evaluation, the Commission also addressed the need for further simplification and
for a coherent and streamlined portfolio of instruments, a new balance between bottom-up and top-down approaches to
research, and enhanced international cooperation.
22
On 9 March 2011, the Competitiveness Council adopted its Conclusions on the Commission’s above response to the FP7
interim evaluation, in which inter alia it agreed with the need for a ‘quantum leap’ in simplification called for by the expert
Group, recalled the urgent need to reduce the time-to-grant period as well as the need to accept the beneficiaries’ usual
accounting practice, and emphasised the crucial importance of procedures and approaches being consistent throughout
the Commission services.
as to the latter aspect of the revision of the Financial regulation, in its consolidated legislative proposal COM(2010) 815 final
for a new Regulation on the financial rules applicable to the annual budget of the Union, the Commission proposes,
for example, removing the obligation on grant beneficiaries to establish interest-bearing bank accounts for pre-financing,
and points to the use of prizes to a larger extent. The Court of auditors has issued a very detailed Opinion 6/2010 on this
legislative proposal, in which it stated, inter alia, that “[i]mproving the financial management of the European Union and the
arrangements for holding the Commission to account for its management of funds is an important task. Regulation can play
a role in this — and the proposed amendments include changes that will assist managers to make sensible decisions: some
proposed changes involve significant simplification of procedures. But regulation alone is not enough: the key improvements
will be made through the actions of managers in the Commission, the other institutions, and the Member States….Taken as
a whole, the proposals contained in the recast of the Financial Regulation will provide opportunities for the Commission to
improve transparency and financial management. Simplification of sectoral legislation remains however an important route
to a significant improvement in performance.” Of course, i could mention many more details of this opinion, but i have to
end my presentation at this point.
Thus, to conclude on this third and last topic – “how much is too much? The necessity of bureaucracy”, i believe that,
as i have outlined above, there is an opportunity, and a need, for further simplification of the eU research funding rules.
as a Member of the european Court of auditors, i wish to add that any simplification measures will be a real success if
they also contribute to bringing down the levels of error reported by our institution, and they must not be at the expense
of accountability for public money. We at the european Court of auditors are following with great interest the ongoing
legislative process concerning the new regulation on the financial rules applicable to the annual budget of the Union and
are awaiting its outcome, just as we are awaiting the upcoming legislative proposal concerning the rules of the future FP8.
By having issued our Opinion 6/2010 on the former proposal, and by issuing our opinion on the latter proposal in future,
we hope to contribute to creating simpler rules and more effective eU research funding rules.
fINAL wORDs
Ladies and Gentlemen, thank you very much for your attention. i am now happy to listen to your remarks and answer your
questions.
23
European Court of Auditors Award for research into public sector auditing
JESÚS LÁZARO CUENCA
THE CONTROL OF PUBLIC ADMINISTRATIONS
AND THE FIGHT AGAINST CORRUPTION:
SPECIAL REFERENCE TO THE COURT OF AUDIT
AND THE GENERAL STATE COMPTROLLER
By José Antonio Fernández Ajenjo
José antonio Fernández ajenjo. Born in Madrid (Spain) on 13 June 1962. Holder of a
Bachelor’s Degree in Law from Madrid’s Complutense University, a Master’s Degree
in administration and Sports Management from the Olympic University institute of
Sports Sciences of Madrid’s Complutense University, and a Doctorate in administrative
Law from the University of Salamanca. a lawyer and public auditor, he has taught at
Spain’s national institute of Public administration and at the University of Salamanca,
and is currently working as a public auditor at the Spanish Ministry of economics and
Finance. His research interests include governance and accountability, auditing and
public control, and the prevention of corruption, areas in which he has authored various
publications.
Short summary of thesis of José antonio Fernández ajenjo
1. The role of public auditing in relation to accountability and corruption.
The duty of accountability for administrators of external resources is an inescapable element of governance, following the
principles of accountability and control of public accounts set out in articles 14 and 15 of the Declaration on the rights of Man
and the Citizen (1789). To this end, democratic societies have created specialised institutions to supervise the management
of public funds by the executive, via the independence vested in Supreme audit institutions or internal auditors.
although the mission of these institutions appears, at first sight, easy to define, i.e. the protection of collective financial
interests, the precise scope and functions that should be conferred on them are more complex, creating an important
political and academic debate.
Starting with the question of institutional status, in recent decades particular emphasis has been placed on ensuring that
public auditors can discharge their functions with independence and sufficient resources and powers to be able freely to
express their opinions on control. in this task, which has undoubtedly been helped by the efforts of all audit professionals,
the work of inTOSai and iFaC should be highlighted, as should the widespread support of political institutions.
With respect to the scope of control institutions, new issues such as the environment or urban planning have been presented
for discussion in recent times, but there is a topic whose controversy has remained in the spotlight since the debates of the
1977 Lima Declaration. This question is the role to be given to public auditors in the fight against corruption.
although fruitful agreements have been reached in recent years, the debate on this issue starts from two opposing viewpoints:
on the one hand, those who believe, following the majority position within inTOSai, that “auditors are not policemen”, and so
can only carry out preventive work against fraud; and, on the other hand, those who argue, as defended by GrUner (2000),
the former Director-General of iFaC, that the investigation of corruption was one of the main tasks of public auditors.
2. Approach to the subject of the thesis.
My doctoral research work has attempted to clarify this debate by analysing the capacities of public auditors to fight
corruption in order to establish a scientifically justified argument about what their role in this area should be. To this end,
a multidisciplinary study has been conducted of issues such as the scope and concept of corruption, the role and powers
of public control institutions, and the independence, legislative and technical regulations, and procedures and reports of
public-sector auditing.
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THe COnTrOL OF PUBLiC aDMiniSTraTiOnS anD THe FiGHT aGainST COrrUPTiOn: SPeCiaL
reFerenCe TO THe COUrT OF aUDiT anD THe GeneraL STaTe COMPTrOLLer
as subjects of this analysis, two well-established financial supervision institutions have been chosen: the Spanish Court of
audit (TCe) and the General State Comptroller (iGae), which guarantee the sound management of the public funds - both
domestic and Community - used by the Spanish Government.
My research has focused on analysing the current role of public audits of corruption. Therefore, apart from the historical
references needed to understand the roots of the different institutions, particular attention has been paid to comparative
experiences, for example the european Union and inTOSai.
Taking a step further, the study of this problem and its possible solutions has entered the current debate on the problems
of the public credibility of governments and the reform of administration needed to meet the demands of citizens of the
21st century. Therefore, issues such as the proposals of governance to bring the institutions closer to citizens, which are
among the policies of the european Union and the Spanish Government, as well as the development of guarantees of
good administration, latterly included in the Treaty establishing a Constitution for europe, or the achievements of projects
on Governance by the World Bank and the international Monetary Fund (iMF) have been taken into account as a potential
source of solutions.
3. Corruption in the public financial sphere.
in democratic societies, corruption is, legally speaking, a manifestation of ‘fraud’ against the rule of law; in democratic
terms, it is an example of ‘disloyalty’ to the will of the sovereign people; and, in social terms, it deprives citizens of their
right to a dignified life, thus confirming, as Montesquieu noted, that every man who has power tends to abuse it. appropriate
institutional balances are therefore required.
in principle, corruption is a concept that is easy for public opinion to understand because, as TanZi (2002) eloquently
stated, “just like an elephant, although it may be difficult to describe, corruption is generally difficult to recognise when
viewed”. Therefore, international organisations that combat this phenomenon, including the World Bank or the iMF, use
the definition of abuse of power for private gain to delimit its scope.
However, a more complex multidisciplinary agreement may be incorporated into conventions and other regulations, as is
demonstrated by the fact that the United nations Convention against Corruption opted not to define a unitary concept
but to establish a list of corrupt practices.
after analysing academic debate in various areas, ranging from the early work of nYe, LeYS and HUTTinGTOn in the 1960s,
to the valuable contribution by rOSe-aCKerMan in the 1970s and studies from nearly all related branches of study in
the last three decades, including contributions by MaUrO from an international perspective, and by GarZOn VaLDeS,
MaLen Sena and GarCia MeXia in Spain, we have decided to propose a concept of an analytical nature.
On this basis, we believe that a corrupt practice exists where there is involvement by a public official (a subjective element),
failure to observe the duty of service (a prescriptive element), and an attempt to secure illegitimate personal profit (a causal
element). in addition, consideration has been given to a number of contingent elements that characterise most illegal acts
of this nature, although these are not essential for an infringement to be deemed to have occurred: the subjective element
of a third party as a corrupting agent, the material element of the potential damage to the administration and the formal
element of failure to publicise cases of fraud.
in another approach to the investigation of the problem, some studies have assessed the social magnitude of the
phenomenon, among which the corruption indicators produced by Transparency international and the governance
indicators drawn up by the World Bank should be highlighted. if we apply these indicators to a particular country, e.g.
Spain, it can be concluded, as other internal surveys such as those conducted by the Centre for Sociological research have
confirmed, that there is a medium to high level of social satisfaction with the problem, although the boundary with the
most virtuous societies in governance terms is never quite crossed.
25
if the issue of transparency in relation to fraud and corruption is analysed from the perspective of Spanish financial control
institutions, there are clear shortcomings insofar as the reports that are published do not make explicit reference to the
individual cases of corruption uncovered.
4. The control of corruption in Public Administrations.
Constitutional democracies have built up a complex system of public control that, based on the principle of the separation
of powers, has been consolidated by the creation of ad hoc institutions and an increase in the role of social control.
although public control originally resided in a system of checks and balances among the different powers, the evolution
of liberal democracies has gradually established - on the basis of rOUSSeaU’S ideas about the priority of law and LOCKe’S
teleological linking of the executive function - a scheme of control which entails the executive controlling itself, the
Legislative and Judicial branches exercising their own political and judicial authority, and an inspecting administration
and Civil Society. in this context, as rUBiO LLOrenTe (1993) stated, control institutions in the history of the constitutional
State are “the very heart of the idea of constitution” as the supreme law is simply an instrument for the limitation of power
and a guarantee for citizens.
Consequently, as SanCHeZ MOrOn (1991) stated, the network of government controls has focused on the objective of
safeguarding legal and administrative efficiency and individual rights, although it seems to have ignored the primary role
of democratic regimes in putting a stop to the abuse of power.
in the case of the Spanish State administration, there are certain institutions such as the inspection Service, the Council of
State, the State attorney-General or the State Comptroller-General which throughout their long history have been at the
forefront of the struggle against administrative corruption. However, internal controls have not proved effective in these
areas because the consultancy authority only carries out formal audits and the inspection authority focuses its efforts on
evaluative and advisory functions to the detriment of research tasks.
Furthermore, the Legislative Branch has specialised instruments and institutions such as commissions of inquiry, the
Ombudsman or the Court of audit which not only contribute to political control but also denounce the scourge of
corruption. However, as GarCia De enTerria explained (2000), the prevailing party State prevents these institutions
from carry out such work effectively.
all this means that the fight against corruption currently resides mainly in the role of disclosure exercised by Civil Society,
especially the media; the issues identified in the course of investigations by the inspection authority, especially the tax
system; and the prosecution of criminal acts by the Courts, in collaboration with the Public Prosecutor’s Office.
5. The role of internal control by the state Comptroller-General in the fight against corruption.
The traditional institutional role of the iGae makes it the guardian of public-sector funds in the domestic sphere, its function
being to monitor, as PereZ rOYO (2008) stated, the correction of abuses that “inevitably occur in an activity as complex
as the implementation of the budget”. Similarly, inTOSai’s Guidelines for Internal Control Standards for the Public Sector of
2004 proposed that one of the objectives of government should be self-control of the ethical execution of operations and
the safeguarding of resources to avoid losses, misuse and damage.
nowadays, the iGae is an institution fully incorporated into the Spanish government which exercises financial control
of public funds, including the eU funds managed by Spain. From the functional point of view, in recent years secondgeneration internal-control models (Latin or continental) have evolved that mainly carry out prior controls of legality, and
a subsequent audit of legal and economic regularity.
The current regulations guarantee the iGae a high degree of functional autonomy and ensure the objective and impartial
performance of its control functions. The auditor-General is assigned an important self-organising and functional role, as
well as holding the senior rank of Under-Secretary within the State administration. The legal status of the iGae’s staff also
guarantees its objectivity and impartiality, and may require internal collaboration with public authorities and external
collaboration with those who have economic relations with the administration.
nevertheless, we should highlight two important limitations in legal powers that are vital to the investigation of corruption,
26
i.e. free access to public buildings and the attribution of authority, without which fully valid credible evidence of frauds
cannot be obtained.
The objective scope of the iGae’s work is to verify the proper management of public finances from the legal and economic
perspective, thus validating it in principle as an institution capable of detecting corrupt practices, albeit only partially.it can
therefore be argued that a corrupt act is always an illegal act and, generally, an economically inefficient one, but internal
controls of these aspects do not take account of other relevant factors relating to corruption such as the existence of an
improper advantage for officials or the possible involvement of third parties. it can thus be stated that the verification of
fraudulent operations and the integrity of officials is not a priority of internal financial control.
if the functional aspects are analysed, prior intervention was less effective in preventing the misuse of public funds
because the new legislation did not include appropriate powers of investigation, such as unexpected access to public
buildings, the lodging of appeals and claims, or the restriction of unfavourable reports to strict legality criteria in the socalled control of basic requirements. a similar path was followed by the control approach which subsequently emerged
in the 1980s with the aim of inspecting fraudulent activities in the management of public resources; this was later to
include the performance of audits associated with the verification of annual accounts and the compliance with the law. By
contrast, the monitoring of subsidies has fully assumed an inspection function designed to detect losses of public funds
and, where appropriate, to demand enforcement of the responsibilities arising from the fraudulent actions detected.
Despite such limitations, the iGae is expressly authorised to investigate fraudulent practices through its Special Reports
in which it draws attention to facts that appear to reveal the existence of criminal acts, whether of an administrative
or accounting nature. However, its effectiveness in the fight against corruption has the disadvantage of being purely
auxiliary and reactive, as it only begins when signs of fraud have been detected by internal controls.
Of more direct significance is the iGae’s forensic audit function where it collaborates closely with the Courts on economic
crime by virtue of its organic law, providing assistance with appraisal, intervention and judicial administration. in addition,
it assists the Public Prosecutor’s Office through the Support Unit established in the anti-Corruption Prosecutor’s Office
which participates in searches and other criminal investigations.
6. The external control of the spanish Court of Audit in the fight against corruption.
The guarantees offered by the Supreme audit institutions (Sais) in exercising their functions in the fight against corruption
is a widespread concern among professionals and researchers, as has been demonstrated by the repeated debates
within inTOSai. although there is general agreement in the field of public audit on the measures needed to guarantee
the institutional independence and functional capacities of the Sais, the issue of the anti-fraud role played by these
institutions is still a matter of considerable debate.
This disparity is also seen in the solutions adopted by various national and international Sais. For example, the european
Court of auditors has decided, in keeping with the majority view of the members of inTOSai, to declare that its role in
the fight against fraud is to warn of the risks of corruption, while the U.S. General accountability Office has fully assumed
an anti-corruption role, including it within its remit. at the Spanish Court of audit, the majority position restricts the
institution’s liability in this regard to the detection and reporting, in the words of former President nieTO De aLBa (2006),
of the ‘moral hazards’ that favour misconduct in the management of public funds.
To analyse what the TCe’s role in this area could be, it has to be taken into account, as JiMeneZ riUS (2007) noted, that
the institution’s current legal and technical powers meet all the standards that inTOSai requires to validate an Sai’s
independence, such as autonomy with respect to Government, its own functional and internal organisation, or guarantees
that its members cannot be removed. nevertheless, some researchers have pointed to certain shortcomings in the TCe’s
functioning, such as the predominance of political parties which seek to influence its decisions, or the institution’s staffing
arrangements, which display limitations in the selection, appointment and empowerment of public auditors.
Following its historical tradition of auditing public accounts and prosecuting those identified as liable, article 136 of
the Spanish Constitution of 1978 requires the Spanish Court of audit to report each year to Parliament any abuses and
irregularities which it has discovered in the course of its audit work. However, as subsequent legislation has not established
the fight against corruption as a priority, the annual programmes focus on controls aimed at legality and efficiency,
27
although in recent years, on its own initiative or at the instigation of Parliament, fraud-related audits have been included,
mainly in the field of urban development. in addition, control staff have broad authority to carry out audits, although some
important gaps remain, such as the power to demand information from third parties or the conferral of authority.
in any event, the Spanish Court of audit is assigned a dual function that endows it with the judicial authority to follow up the
financial responsibilities highlighted by its audit work, such as the need to recover losses to the administration resultulting
from corruption and the embezzlement of public funds.
However, most research has emphasised that this anti-fraud function has two important procedural limitations on its
effectiveness. The first is the existence of a preliminary forensic audit which, based on prior actions or separate pieces, is
difficult to overcome because the investigator does not have full investigative powers since he is closely linked to the results
of previous audits or contributions by individual complainants. The second concerns the restrictive legal conditions for civil
action which, although mitigated and made flexible by legislative changes, still require a complainant to provide detailed
references of the allegedly illegal acts, data that can only be obtained after painstaking research work.
Therefore, in our opinion, following the views of MenDiZaBaL aLLenDe (2001) as representative of the majority position,
if the institution’s purpose is to facilitate the general principle of parliamentary accountability, it must also be entrusted
with the task of safeguarding public interests, defending honest managers and raising public awareness of illegal actions,
inefficiency and corruption.
7. Proposals to reform the role of financial control institutions in the fight against corruption.
The search for a solution to reduce the gap between the expectations of citizens - who repeatedly ask why auditors have
been unable to prevent cases of corruption - and the powers of financial control institutions to prevent the fraudulent
use of public funds should take account not only of the deliberations and experiences of public-audit organisations such
as inTOSai, the eCa or the GaO, but also of the reform proposals relating to ethics and the proper management of public
resources that have been generated at institutions like the Un, the World Bank, the iMF or the eU under the influence of ideas
such as Governability, Good administration and Governance.
The approach to Governability, understood as the capacity of government to prevail over other social systems of power, arises
in the context of development aid promoted by the World Bank, the iMF and the Un, in recognition of the need to establish a
democratic system of government that holds sway over other external agents and whose premises should include the sound
organisation of institutions of control.
The translation of these ideas into an institutional role for specialised control institutions in the fight against corruption
refers back to the position of those, such as inTOSai or the eCa, who argue that the work of public auditors is merely to
draw attention to the regulatory and management weaknesses that facilitate fraudulent activities, as opposed to those,
such as the majority of academics or the GaO, who have chosen to give a preeminent role to auditors in the fight against the
defrauding of public interests.
The proposal advanced prefers the latter option in order to avoid what GarCia De enTerria (2000) calls the principle of
blind confidence, which, based on the premise of the good will of public managers, replaces the principle of investigative
control with relative and rational confidence based on accountability in order to obtain a sufficient understanding of actions
by public managers.
The proper performance of this new mission requires institutional independence to be strengthened so as to avoid interference
with the institutions’ technical activities. in this connection, a number of solutions have been successfully implemented by
other organisations, such as the establishment of a public appointment process, in line with the approach by the nolan
report, and the creation of an auditors’ statute, as demanded by professional associations.
Similarly, the proper technical investigation of public fraud requires the specialisation of public-sector audit in such matters,
although national and comparative examples offer two alternatives: the creation of an ad hoc agency, such as the european
anti-Fraud Office, which tries to mitigate the weaknesses identified by eCa Special report no 8/98, or the creation of a
specific unit within the organisation itself such as the Forensic audits and Special investigations department of the U.S.
GaO.
28
The existence of units partly designed for this purpose within the Spanish control institutions has led us to favour the second
option, i.e. the creation of an Anti-Fraud Unit at the Spanish Court of audit and the conversion of the First Section of the iGae’s
national audit Office into a Forensic Audit and Special Investigations unit.
in addition, the proposals relating to Good Governance and administration return to the issue of good administrative
management that was a priority for certain established experts, such as HaUriOU. Within this new framework, public leaders
are required, as noted by rODriGUeZ-arana (2006), to have the abilities and techniques needed to guarantee citizens’
welfare through efficient, legal and democratic governance, which should also be characterised by responsibility and quality.
This paradigm should apply to two groups, namely public managers and citizens as a pillar of the democratic system, being
viewed in the latter case as an authentic basic right, exactly as described in the European Constitution (art. ii 101 TeC), the
European Charter of Fundamental Rights of 2000 and the European Code of Good Administrative Behaviour of 2001.
in contrast to the archetype of good administration lies the concept of maladministration, including administrative
irregularities (legal or economic), governmental irregularities (corruption) or individuals irregularities (fraud). This new
concept, which has its origins in the institution of the Ombudsman, has been developed in the european Union in the
context of the protection of financial interests since the First Report of the Committee of Independent Experts on Allegations
regarding Fraud, Mismanagement and Nepotism in the European Commission of 15 March 1999.
This new conception of good administration requires a rethinking of financial control objectives so as to incorporate
parameters such as quality, transparency or accountability and, particularly in the latter case, the fight against fraud and
corruption. From this perspective, the audit institutions must assume and strengthen their investigative functions to ensure
more effective detection of fraudulent practices.
Thus, the inspection function requires a proactive approach to the discovery of public fraud that incorporates the investigation
of illegal and improper activities into financial control work, as in the case of the U.S. GaO and entails special monitoring of
high-risk areas until the defects that jeopardise public resources are corrected.
in a complementary capacity, institutions should be endowed with the investigative powers they need to uncover the truth
behind the dossiers, for which the powers of OLaF and the eCa can serve as a reference, allowing access to all types of
buildings, personnel and documentation, and the practice of on-the-spot checks and inspections.
The last bastion of current administrative reform is Governance, where, as PraTS (2006) notes, the aim is to establish quality
interaction among public bodies and with social actors. This approach includes the objective of respect for ethical values
since, as GarCia MeXia (2008) highlights, a governance agenda cannot be developed without dealing with the legitimate use
and related abuse of power. accordingly, the White Paper on European Governance (2001) proposed a renewal of european
procedures on the basis of the principles of openness, participation, accountability, effectiveness and coherence in order to
open up the process of the development of eU policies to a greater number of participants.
From the perspective of financial control, the first task is to address the establishment of a single audit model that ensures
the proper functioning and coordination of public-sector audits in order, as was pointed out by BLaSCO LanG (2004), to
prevent inefficiencies in the fragmented and uncoordinated implementation of control powers.
This model should follow the guidelines set by the pioneering Single Audit proposal of the U.S. GaO, and the principles and
rules recommended in Opinion No 2/2004 of the Court of Auditors of the European Communities on the ‘single audit’ model, for
which permanent committees should be established with a view tofostering inter-agency collaboration and mutual trust.
These organisations should operate within the framework of anticorruption policy, e.g. by coordinating research on highrisk areas, by permanently delegating the investigation of accounting responsibilities to regional institutions or by creating
a National Database of Financial Accountability.
Such interaction in the public sphere should also extend to social participation in the prevention and prosecution of
corruption since, as the White Paper on European Governance highlighted, greater involvement by civil society requires “a
structured channel for their feedback, criticism and protests” as a means for citizens to express their concerns and to support
those suffering from exclusion and discrimination.
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This approach leads us, from a financial control perspective, to propose the adoption of legislation to facilitate civil action
demanding financial responsibility, the establishment of a public denunciation procedure to highlight any accounting
or criminal responsibilities, and the right to petition for audits to be carried out. Moreover, from a technical perspective,
hotlines should be established to make it easier to lodge complaints in a confidential manner and by any means afforded
by modern technologies.
Lastly, social inter-collaboration must be considered the cornerstone of full transparency in the actions of public authorities,
but, as rOSe-aCKerMan (2001) reported, inspection reports are often written in a language replete with euphemisms
behind which authentic cases of fraud are hidden. Therefore, in line with the conclusions of the 16th inTOSai Congress
of 1998 on combating corruption, the establishment of a communications policy is recommended in order to maintain
a good relationship with the media, to create effective channels of public disclosure for audit reports and other relevant
information, and to produce appropriate reports that are understandable and easy for recipients to use.
as a corollary of the collaboration of the financial control institutions in the fight against corruption, the Spanish Court
of audit has been proposed as the ideal candidate to produce the regular report on the State of Corruption in Spain as
advocated by article 10 of the United nations Convention against Corruption, either directly or through a committee similar
to the Portuguese Council for the Prevention of Corruption.
European Court of Auditors Award for research into public sector auditing
JESÚS LÁZARO CUENCA
CONTRIBUTION À UNE SOCIOLOGIE DES
PRATIQUES MANAGÉRIALES DANS LES
POLITIQUES EUROPÉENNES - L’EXEMPLE DES
AUDITS DES ONG HUMANITAIRES : ENTRE
IMPORTATION ET APPROPRIATION
Par sara belleil
Sara Belleil est doctorante au Centre d’etudes et de recherches administratives,
Politiques et Sociales (CeraPS), laboratoire de recherche rattaché à l’Université de Lille 2
et au CnrS. Ses domaines de recherches portent sur l’aide humanitaire, sur les rapports
entre OnG et bailleurs institutionnels -dont la DG eCHO de la Commission européenne-,
sur les politiques de contrôle de l’usage des fonds et d’évaluation de l’efficacité et de la
qualité des politiques d’aide d’urgence au niveau européen.
Résumé du mémoire de recherche de Sara Belleil
Comme toutes les organisations recevant des fonds européens, les OnG sont contrôlées par audit. Bien au-delà de la
sphère européenne, la thématique de la « nécessité » des audits portant sur l’usage des fonds des associations trouve
un écho considérable dans les discours politico-médiatiques. Puisque les OnG recourent à la générosité du public, il est
nécessaire de s’assurer que l’argent récolté est dépensé selon les souhaits des donateurs, afin de maintenir leur confiance. en
raison de certains abus qui ont mené à des scandales de mauvaise gestion, voire de fraudes, les audits seraient « justifiés ». en
plus de leur fonction de surveillance, ces procédures de contrôles intensifs concourraient à améliorer la fourniture d’aide
humanitaire, en incitant à la rationalisation de l’aide, à l’amélioration du professionnalisme et à la responsabilisation
des acteurs.
30
COnTriBUTiOn À Une SOCiOLOGie DeS PraTiQUeS ManaGÉriaLeS DanS LeS POLiTiQUeS eUrOPÉenneS
L’eXeMPLe DeS aUDiTS DeS OnG HUManiTaireS : enTre iMPOrTaTiOn eT aPPrOPriaTiOn
Si les audits occupent une place croissante dans le secteur des OnG, ces dispositifs de contrôle s’appliquent et se diffusent
dans tous les secteurs économiques, politiques et sociaux, et notamment les services publics. L’audit et son fondement,
la nécessité de rendre compte (accountability), se sont développés depuis les années 80 grâce au processus d’exportation
de modèles de conduite des organisations propres à la sphère entrepreneuriale1. Les politiques de contrôle, au nom
de la responsabilité et de la transparence, se sont diffusées dans l’action publique sous l’impulsion des règles du nouveau
Management Public. Cette doctrine, qui prône de rapprocher le mode de gestion des administrations de celui des entreprises
privées, se serait répandue dans de nombreux États, menant à des réformes administratives2.
Cette recherche a pour ambition de questionner le succès des discours et pratiques managériales, ces dispositifs
qui font référence à la recherche d’efficacité par la mesure, l’évaluation et la valorisation de la performance, qui promeuvent
autonomie et responsabilité individuelle et qui accordent une importance primordiale aux formes organisationnelles et aux
procédures. Ce questionnement implique aussi d’analyser dans quelle mesure ils s’imposent dans des secteurs autres
que l’entreprise commerciale pour laquelle ils ont été forgés, en particulier dans des secteurs a priori peu ouverts, car mus
par des logiques potentiellement antagonistes ou contradictoires.
Le terrain proposé ici est le service d’aide humanitaire de la Commission européenne33, qui finance des OnG d’urgence
mettant en œuvre des projets humanitaires sur le terrain. C’est la politique de contrôle de l’usage des fonds par l’audit
qui est étudiée en tant qu’instrument managérial.
De quelle manière l’audit, marqué par une logique commerciale basée sur la recherche d’efficacité au service du profit,
peut-il se concilier avec des administrations publiques, dont la logique est marquée par des référents au service public et à
l’intérêt général, et avec la logique associative humanitaire, rattachée au désintéressement, à l’éthique et à l’engagement
militant ? Comment rendre compte de la place de l’audit dans un service public centré sur l’humanitaire? Comment analyser
l’importation et les usages de savoirs managériaux dans un service public et des associations d’aide d’urgence?
L’audit au sein de la DG eCHO peut apparaître comme une nécessité fonctionnelle et sembler évident. Certains facteurs
semblent faciliter l’intégration de l’audit dans l’humanitaire européen, notamment les « qualités intrinsèques » de l’audit,
comme sa neutralité et son effectivité, qui lui ont permis d’investir l’espace commercial, puis les espaces institutionnels et
associatifs.
Pourtant, la neutralité de l’audit n’est qu’apparente, puisqu’il produit des effets dans les secteurs dans lesquels il
s’applique.
Dans le secteur de l’aide humanitaire, les réformes managériales affectent les ONG d’urgence qui dépendent des financements
publics. La concurrence entre associations d’urgence pour l’accès aux fonds et le rôle majeur dans le financement joué par les
bailleurs institutionnels (banques de l’humanitaire de l’Union européenne, de l’OnU, des États, etc.) ont un impact sur la manière
dont les OnG accueillent, subissent, interprètent, accompagnent, promeuvent les contrôles et y résistent. Les OnG qui décident
de recourir aux fonds publics intègrent les requêtes des bureaucraties qui les financent afin de maintenir leur partenariat
et s’assurer des rentrées financières suffisantes pour poursuivre leurs actions. De nombreux acteurs de l’humanitaire sont
incités à intégrer les réformes managériales par la professionnalisation et la rationalisation des procédures, voire même par
une redéfinition de l’éthique humanitaire... ils y sont incités sous l’effet de plusieurs facteurs, comme les enjeux liés à l’accès aux
fonds sur le marché hyperconcurrentiel du don, les scandales et crises qui ont miné la crédibilité des OnG et la dépendance vis-à-vis
des bailleurs publics. Les OnG se « professionnalisent » et se transforment sous les effets des demandes de leur environnement,
elles se font parfois même les porteuses du message prônant la nécessité des contrôles.
1 Valérie Boussard, Sociologie de la gestion : les faiseurs de performance, Paris : Collection Perspectives sociologiques, edition Belin, 2008 et
Michael Power, The audit explosion, Demos, 1994, et The Audit Society. Rituals of verification, Oxford University Press, Oxford, 1997.
2 Philippe Bèzes, « Gouverner l’administration: une sociologie des politiques de la réforme administrative en France (1962-1997) », Thèse de
doctorat de science politique à l’institut d’etudes Politiques de Paris, sous la direction de Jaques Lagroye, 2002.
3 Cette recherche est centrée sur deux types d’acteurs de l’aide humanitaire : le bailleur institutionnel européen et les OnG d’urgence
partenaires de ce financeur. notre bailleur étudié, un service de la Commission européenne, est surnommé DG eCHO, ce qui signifie
Directorate General European Commission Humanitarian Office. Ces deux types d’acteurs sont liés par un contrat de partenariat, en vertu duquel
l’institution finance, et l’OnG met en œuvre le projet humanitaire sur le terrain. en contrepartie, l’OnG doit respecter ses obligations de des
comptes à son bailleur, et doit se soumettre à l’obligation d’être auditée.
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L’audit est un outil de contrôle loin d’être neutre, qui produit des effets sur le secteur dans lequel il agit, mais il n’est pas
tout puissant. L’instrument est saisi par divers acteurs, gouvernants, gouvernés et exécutants. Les usages qui en sont faits
et les effets produits sont multiples.
Le développement des audits au sein d’eCHO ne peut se comprendre par une simple nécessité de l’instrument.
en effet, l’étude de terrain laisse apparaître un décalage entre les ambitions de l’audit et ses usages réels. Si, a priori, l’aide
humanitaire semble « prise » par les pratiques et instruments managériaux, de nombreuses résistances sont néanmoins
observables :
au sein de la DG eCHO, l’audit est parfois contesté et occupe une place paradoxalement marginale. Les
changements récents dans la politique de contrôle, et notamment le recours à la sous-traitance, ont profondément modifié les
audits externes, créant des tensions avec les OnG qui contestent alors l’audit de manière croissante.
si l’importation de l’audit chez eChO ne se fait pas sans difficultés, c’est aussi parce qu’au sein même de leur administration,
les auditeurs n’ont pas toujours le soutien attendu. La collaboration inter-services pour mener à bien les audits peut se
montrer difficile, le soutien de la Direction est en demi-teinte, la politique d’audit est faiblement visible, ce qui rend marginale
la place des audits au sein de la DG. au sein même d’eCHO, les recommandations des auditeurs sont parfois mal comprises,
leur approche est parfois jugée pointilleuse, et déconnectée des réalités du terrain. Face à l’impopularité des audits et
aux difficultés d’acclimatation des auditeurs privés dans l’humanitaire, les auditeurs de la DG eCHO sont appelés à endosser
un rôle de médiateurs entre OnG et cabinets d’audit privés. ils s’efforcent d’adapter leurs discours tantôt aux associations,
tantôt aux experts privés du contrôle, pour permettre à l’audit de s’acclimater malgré les résistances. Mais il est reste
difficile pour les auditeurs de la DG eCHO d’user des avantages de leur multipositionnement, et d’imposer l’audit.
ainsi, l’aide humanitaire résiste aux instruments et aux pratiques managériaux. au sein des partenaires d’eCHO, les
audits sont perçus comme impopulaires, en particulier lorsqu’ils mènent à des sanctions financières. Les OnG mécontentes
n’hésitent pas à se fédérer pour défendre leurs intérêts, et leur stratégie de lobbying et de contestation les mène parfois
au succès. elles ne sont donc pas alors dans la position de sous-traitants qui subissent avec passivité des contrôles exigeants,
mais utilisent leur légitimité opérationnelle (valorisation de leur connaissance du terrain, de leur expérience dans l’action
humanitaire et dans la qualité de celle-ci), pour l’opposer à la légitimité technique (compétences techniques en comptabilité
et gestion financière) des auditeurs. ainsi, nous sommes éloignés d’une vision présentant des auditeurs tout-puissants, qui
dictent leurs lois et imposent leurs visions.
L’audit peut sembler peu efficace. Les thèses fonctionnalistes, selon lesquelles un instrument est un moyen de
résoudre un problème, qui doit être analysé sous l’angle de l’efficacité, montrent alors leurs limites.
Les fonctions coercitives et dissuasives de l’audit sont peu remplies, l’instrument semble « peu optimal », voire
dysfonctionnel, et il est relégué à une place relativement marginale.
Pourtant, bien que contesté, l’audit perdure et continue de se développer au sein d’eChO. Le budget consacré aux audits est
en progression, le nombre d’audits augmente chaque année, la direction de la DG eCHO plaide pour une plus grande transparence
dans la gestion des fonds…
Comment résoudre ce paradoxe? il semble nécessaire de déplacer le regard sur un autre questionnement: ce qui peut sembler
dysfonctionnel pourrait être fonctionnel à un autre niveau. L’audit alors se développe et occupe une place croissante car il répond à
d’autres logiques, qui ne sont pas purement managériales: la légitimation d’une politique publique, l’instrumentalisation
d’instruments au service de luttes bureaucratiques, l’affirmation de l’identité d’une administration,…
Tout d’abord, l’audit est au centre d’un système de contrôle bien plus vaste et puissant que l’instrument lui-même. en cela,
il s’apparente au panoptique de Bentham4, un système de contrôle discret et efficace, basé sur la persuasion, l’incitation
à l’intégration des normes par les acteurs contrôlés. L’audit exhorte les OnG à standardiser leurs formes organisationnelles et
leurs pratiques, pour se rapprocher d’une forme « idéale » (définie comme telle) de l’OnG d’urgence. Cette incitation se fait de
manière douce et non coercitive, par le développement de l’autocontrôle. Les auditeurs incitent les OnG à développer l’audit
4
Michel Foucault, Surveiller et punir, déjà cité, pp. 197-229.
32
interne, à multiplier les comités de surveillance, à élaborer des procédures permettant au siège de contrôler l’action du terrain,
et au terrain de rendre compte au siège, autant de moyens pour que l’ONG se contrôle elle-même. L’OnG devient porteuse
et rouage du contrôle et devient son propre surveillant. Les procédures de contrôle interne ne dessinent pas seulement un
modèle de l’OnG idéale, elles incarnent le contrôle, par l’effet d’appropriation des normes et des contrôles qu’elles génèrent
sur les membres des OnG. Le contrôle est alors basé sur la persuasion, l’incitation à l’intégration des normes par les
acteurs contrôlés.
La DG eChO évolue dans un environnement institutionnel où elle tente de gagner et de garder une place légitime.
L’audit est développé alors pour participer à la légitimation et à la revalorisation du secteur humanitaire dans les politiques
européennes.
Pour la DG eChO, le développement et la promotion du contrôle de ses partenaires permettent de professionnaliser ses
partenaires. Crédibiliser ses OnG, notamment auprès de la Cour des comptes, est un enjeu pour la survie même de l’institution, car
l’assurance d’une bonne gestion financière permet la disponibilité des fonds. La DG eCHO dépend de l’activité de ses partenaires,
de l’image positive des OnG et de la « société civile », de leur visibilité et de leur légitimité. Plutôt que de les renforcer, la DG doit
faire de ses partenaires des alliés. en retour, les OnG, grâce à leurs capacités de lobbying auprès des institutions européennes,
renforcent le positionnement de la DG eCHO.
Lorsque nous observons les rapports entre la DG eChO et la Cour des comptes, nous constatons que l’enjeu de l’audit
pratiqué à eCHO n’est pas de moraliser l’action humanitaire en instaurant un contrôle effectif de l’usage des fonds, mais plutôt
de participer à la légitimation et à la revalorisation du secteur humanitaire dans les politiques européennes. L’important
alors n’est pas que l’audit soit efficace, mais qu’il existe. La mobilisation de références scientifiques permet d’attester de
la crédibilité des partenaires d’eCHO et du professionnalisme de ceux-ci. elle participe ainsi à la revalorisation du secteur
humanitaire (politique relativement « dominée ») dans les politiques européennes, et légitime le recours aux OnG comme
partenaires.
Pourtant, professionnalisation et développement des structures de contrôle interne sont déjà à l’œuvre chez les ONG
les mieux dotées. Ces OnG cumulent toutes les ressources nécessaires dans le champ : poids financier, forme de l’organisation,
expérience dans le champ humanitaire, possession d’une expertise reconnue dans un domaine spécifique, légitimité et
popularité auprès du public et des médias, participation aux forums et arènes permettant aux OnG de produire des normes
pour la communauté humanitaire dans son ensemble, etc.
L’audit tente de s’adapter aux logiques spécifiques du secteur humanitaire et en même temps aux requêtes
issues de l’espace institutionnel européen. L’audit tente alors de s’imposer en tant que « réponse » à ces injonctions, issues de
deux secteurs, qui semblent parfois contradictoires. L’instrument d’audit est alors le fruit d’un « bricolage » et, en définitive, un
instrument remodelé et réinterprété. Cette nouvelle forme de contrôle ne s’impose pas d’elle-même. elle correspond à
une rationalité propre à eCHO. La DG interprète à sa manière les requêtes de contrôle qui sont issues de son environnement
institutionnel. Au lieu de s’adapter complètement aux injonctions de changement des institutions européennes, la
DG les réinterprète pour les rendre conciliables avec la protection de ses autres intérêts, notamment son identité de
bailleur humanitaire et sa proximité avec les OnG qui, en retour, lui apportent leur soutien.
face à la demande externe de contrôle accru de l’usage des fonds, issus du Parlement européen, du Conseil et de la Cour
des comptes, la DG eCHO a adopté une stratégie d’évasion durant les premières années. De sa création jusqu’en 2000, elle a
mobilisé peu de moyens pour répondre aux exigences d’accountability: son service d’audit est embryonnaire (tant en moyens
humains que financiers), sa méthodologie est balbutiante, ses audits sont peu nombreux et leur suivi inexistant.
À partir des années 2000, en réaction aux accusations de mauvaise gestion qui mettent en danger la crédibilité de la DG,
la stratégie de la DG eCHO se transforme. Le service d’audit est restructuré, son budget singulièrement augmenté, un contrat
de sous-traitance instauré, la couverture d’audit en est sensiblement augmentée, tandis que la méthodologie se rationalise. La
rhétorique et la communication auprès des OnG et du public sont axées sur la transparence et l’accountability.
33
Pourtant, nous sommes dans un cas non pas d’adaptation complète, comme il semblerait de prime abord, mais bien
d’adaptation des règles : le suivi des recommandations est très peu efficace, la collaboration entre unités est chaotique,
l’effectivité des recouvrements est infinitésimale, ce qui neutralise tout effet coercitif et affecte l’autorité et la légitimité
même du processus d’audit. La demande de contrôle est adaptée au but et à la mission de la DG eChO, qui est et reste
de faciliter l’acheminement de l’aide humanitaire, et donc de faciliter le travail de ses partenaires ONG. Le contrôle
demandé par les autorités budgétaires est mis en place de manière formelle, mais pas de manière effective, car il entre en conflit
avec les demandes issues des ONG, acteurs clés de l’environnement de la DG eChO.
Malgré des demandes de contrôles plus poussés, d’audits plus fréquents et de sanctions plus effectives, et pour un
certain nombre de raisons a priori « non rationnelles », l’organisation a préféré dans un premier temps construire son
autonomie et son identité. Ses priorités se sont portées sur la sélection de ses partenaires, sur l’élaboration de normes et de
pratiques destinées au champ humanitaire dans son ensemble plutôt que sur les contrôles financiers. Lorsque sa crédibilité
a été vigoureusement mise en cause, la DG eCHO, face au risque de manque de soutien politique, dans un instinct de survie, a
intégré de manière complète les normes de contrôle qui ne contrevenaient pas à ce qu’elle avait construit jusque-là: une
approche « NGO friendly ».
L’audit « version soft » serait donc une interprétation par eChO de la demande externe de contrôle, conciliable avec
l’attachement d’eChO à son mandat humanitaire et l’alliance avec les ONG.
COnCLUSiOn
Pratiques et discours managériaux ne s’imposent pas sans résistance. Ils peuvent occuper une place croissante tout en
étant marginalisés. Dans ce cas, leur développement répond à des logiques et correspond à des usages autres que managériaux
(concurrence bureaucratique, recherche de légitimité, affirmation identité).
il est alors possible d’identifier quelques-unes des conditions qu’il semble nécessaire de réunir pour qu’un outil managérial
s’impose dans un secteur a priori éloigné:
La première condition est un travail sur les valeurs, un travail délicat de justification de l’audit, de l’accountability et,
de manière plus générale, de la managérialisation. Une partie de la réponse passe par la nécessité de « construire des
ponts » entre des valeurs qui peuvent sembler antagonistes ou contradictoires.
Sous l’influence de la doctrine néomanagériale, les exigences d’efficacité, d’économie et de redevabilité se sont imposées,
se rattachant à la figure du citoyen-client du service public-contribuable, auquel l’administration doit rendre compte en
montrant que l’argent a été bien dépensé. L’accountability est le principe rassemblant ces exigences. C’est en établissant un
lien entre les références au service public, à la démocratie et à la « saine » gestion des finances publiques que l’audit issu
des entreprises commerciales peut s’intégrer dans les politiques publiques. Ce type de contrôle apparaît comme une réponse à
certaines préoccupations éthiques de l’administration publique et les traduit en termes économiques, en évitant de provoquer
des conflits de valeurs. Selon le discours de l’administration publique managérialisée, l’audit n’a pas pour but d’augmenter
le profit, mais de rendre compte aux citoyens, de mieux dépenser les fonds publics, d’être plus transparent et plus
démocratique.
Sous l’influence des bailleurs qui financent plus et contrôlent davantage, le secteur humanitaire s’approprie aussi ces référents
managériaux. La concurrence et les stratégies de captation de ressources provoquent des changements chez les ONG,
non seulement dans leur gestion financière et leur organisation, mais aussi dans les débats sur l’éthique et les valeurs
qui agitent le secteur. Si la genèse de l’humanitaire était marquée par une logique de vocation, d’éthique et de valeurs,
la complexification des crises associée au développement de la professionnalisation aurait favorisé l’apparition d’une
approche plus technicienne et moins militante de l’aide humanitaire. Les questions de financement ont ainsi modifié
la définition même des valeurs humanitaires, et l’accountability peut être vue comme une ressource, une version « moderne
» de l’éthique, adaptée aux nouveaux enjeux d’un champ professionnalisé. La nécessité de l’audit s’imposerait dans
l’humanitaire en liant l’éthique humanitaire au devoir de responsabilité et d’accountability, qui rendrait « nécessaires
34
» la professionnalisation et l’intégration des requêtes des bailleurs. Ce serait alors grâce à sa capacité à « se fondre » dans
des principes éthiques valorisés dans l’humanitaire que le devoir d’accountability, impliquant la professionnalisation, investirait
le champ humanitaire. Ce n’est pas la recherche de profit de l’audit commercial qui est mise en avant, mais la recherche
d’efficacité opérationnelle, de responsabilité, et la possibilité de maintenir la confiance et les fonds des bailleurs.
Ce n’est pas en heurtant de front des valeurs fortes que l’audit s’impose, mais en les «modernisant».
Le succès de l’importation de l’audit reposerait dans sa capacité à traduire des fondements managériaux en principes valorisés
dans des secteurs éloignés de son berceau commercial.
Mais discours, idées et rhétorique ne suffisent pas à imposer une pratique. Selon notre enquête de terrain, l’audit est
contesté, marginalisé, et le stigmate associé au profit ou au modèle de l’entreprise commerciale (des cabinets d’audits privés par
exemple) se maintient. Un important décalage est observable entre les objectifs revendiqués et les usages qui sont faits de l’audit
à eCHO. L’audit n’est pas un outil du contrôle de l’objectif de l’aide, mais un outil de contrôle du respect des procédures. Les
recouvrements sont peu effectifs, l’autorité des auditeurs est contestée, la politique d’audit est peu valorisée au sein d’eCHO,
les relations sont parfois tendues avec la direction et les services d’eCHO, ainsi qu’avec les partenaires. au sein des partenaires
d’eCHO, les audits sont plutôt impopulaires, surtout lorsqu’ils mènent à des sanctions financières. Les OnG mécontentes
n’hésitent pas à se fédérer pour défendre leurs intérêts; leur stratégie de lobbying et de contestation les mène parfois au
succès. L’audit doit être légitimé en permanence, par l’adaptation des règles aux OnG, par la mise en avant des pratiques de
terrain, par des opérations de communication, etc. Le rôle de ceux qui légitiment l’audit apparaît alors comme central.
Une seconde condition apparaît: il est nécessaire qu’existent des médiateurs qui, par leurs dispositions individuelles
et leur multipositionnement, parviennent à concilier des intérêts contradictoires.
C’est ici que le problème se pose sur notre terrain. Selon nous, les auditeurs privés sont marqués par le stigmate de leur trajectoire
professionnelle tournée vers la recherche de profit, ce qui provoque le rejet des audités, tant à leur égard qu’à l’égard du modèle
d’audit qu’ils portent. Les auditeurs d’eChO, eux, ne parviennent pas à jouer de leur multipositionnement. Certains
traits de leur profil marquent leur proximité avec les membres d’OnG : nombreuses missions de terrain, grande expérience
des projets humanitaires, réseau d’interconnaissance parmi les membres d’OnG, les experts de terrain d’eCHO, etc. en même
temps, ils sont auditeurs. ils sont parfois agacés par les réactions négatives des OnG à l’égard des audits, ils ne comprennent pas
toujours les plaintes de leurs audités. De plus, ils reçoivent peu de soutien de leur administration, se sentent isolés et dévalorisés.
ils se retranchent alors derrière une représentation de leur identité professionnelle, qui veut que les auditeurs soient détestés
(en raison de leur ingrate mission de contrôle et en raison de leur indépendance et de leur neutralité, qui attirent la jalousie)
et que ce soit une fatalité. Malgré quelques tentatives pour asseoir l’importance de l’audit au sein de l’administration,
les auditeurs d’eChO ne parviennent pas (le veulent)ils?) à jouer de leur multipositionnement, à en user comme d’une
ressource, pour imposer l’audit au sein de leur administration, et vis-à-vis des audités.
Alors, une troisième condition se dessine: les instruments managériaux doivent être appropriés et réinterprétés par
l’institution.
Les instruments et pratiques managériaux peuvent difficilement être imposés tels quels. La DG eCHO est à la fois une institution
européenne, un bailleur qui se veut leader de l’humanitaire, et une super OnG. elle doit composer avec cette identité
multiple, et si l’audit lui est imposé parce qu’elle est institution, il doit être retraduit et réinterprété pour s’accorder avec les
autres dimensions de son identité. La DG eCHO marginalise l’audit, tout en lui laissant une place croissante, ce qui semble être un
paradoxe. Le paradoxe n’est qu’apparent. Le multipositionnement d’eCHO, dans le champ institutionnel européen, marqué
par les réformes managériales et le primat de l’expertise, et dans le champ humanitaire, marqué par la liberté des acteurs et la
diversité des structures, permet de comprendre les stratégies apparemment antagonistes d’eCHO.
La DG eCHO évolue dans un réseau de contraintes (recours à des acteurs peu reconnus par les autorités budgétaires, action dans
un domaine à risque, image ternie par le passé) et de ressources (alliance avec les OnG, bénéfices tirés de leur image et de leur
légitimité). L’enjeu de l’audit tel que pratiqué à eCHO n’est pas de moraliser l’action humanitaire en instaurant un contrôle
35
effectif de l’usage des fonds, mais plutôt de participer à la légitimation et à la revalorisation du secteur humanitaire dans
les politiques européennes. L’important alors n’est pas que l’audit soit efficace, mais simplement qu’il existe. La mobilisation
de références légitimes revêtues du sceau de la scientificité permet sinon d’attester, du moins de conforter, la crédibilité
des partenaires d’eCHO et de leur professionnalisme. L’audit donne aussi aux OnG un label « managérial », qui, dans une
stratégie de légitimation, ennoblit le secteur humanitaire par son « économisation », et lui accorde un surcroît de légitimité.
La demande pressante, par les autorités budgétaires, d'une augmentation des audits et des contrôles est réinterprétée par
la DG eCHO. User d’un audit « version soft », privé d’aspect coercitif, permet de concilier les requêtes de l’environnement
avec l’attachement d’eCHO pour son mandat humanitaire et son partenariat avec les OnG. Car eCHO est aussi un bailleur qui
cherche à asseoir son partenariat avec les acteurs clés de son environnement, les grandes OnG d’urgence. Celles-ci demandent
une plus grande reconnaissance de leur professionnalisme, et c’est ce qu’eCHO leur offre en les incitant à s’autocontrôler.
au cœur de la DG eCHO se cristallisent les difficultés à concilier différentes logiques. La logique managériale d’efficacité,
appliquée à un service public, est ici traduite en mettant la priorité sur le respect des structures, des règles et des procédures,
et sur l’importance du contrôle de l’usage des fonds. La logique de l’environnement humanitaire de la DG place quant à
elle la priorité sur l’efficacité opérationnelle, dans une logique de désintéressement et d’éthique. Les audits et contrôles sont
au centre de ces enjeux de position: la DG eCHO les organise, dans le respect des règles européennes, en les adaptant
aux spécificités de son action et de ses partenaires. L’audit est utilisé par eCHO comme une ressource, au service de la
légitimation de la politique d’aide humanitaire. Le recours à un audit doux et peu coercitif est un moyen de résoudre les
contradictions de son environnement, en donnant l’illusion du contrôle, tout en maintenant ce qui est nécessaire à la DG
eCHO: l’alliance avec les OnG et la protection de son identité de « bailleur modèle », leader de l’humanitaire.
Par les usages qu’elle fait de l’audit, la DG eCHO marque aussi en la masquant sa stratégie politique. L’outil technique est
mobilisé pour contourner la question des orientations politiques d’une action publique. La célébration du modèle de l’OnG
« professionnelle » par le nouveau contrat-cadre de partenariat consacre ainsi, tout en l’occultant, un nouveau mode de
contrôle, intégré par les acteurs. De plus, tout en semblant reconnaître la diversité des structures, l’outil affirme surtout tout
en la dissimulant la politique de standardisation des OnG. C’est une stratégie de technicisation de l’action et d’euphémisation
de sa dimension politique. ainsi, sans que cela ne soit spécifique à notre terrain, les instruments participent à la construction
de l’activité politique, en lui donnant chair et en orientant ses finalités.
36
ESTIMATING THE COSTS AND BENEFITS OF CONTROLS CARRIED OUT
WITHIN THE FRAMEWORK OF THE MANAGEMENT AND CONTROL
SYSTEM OF THE EU STRUCTURAL FUNDS
This article is about the results of a parallel audit by the Working
Group Structural Funds iV established by the Contact Committee of
the Presidents of eU Sais and the european Court of auditors. The
subject of this audit were costs of control activities undertaken in the
framework of the management and control systems for 16 regional
Operational Programmes for 2007-2013 in Poland. The overall report
summing up the findings in all the Member States which participated
in the parallel audit will be presented to the Contact Committee
in October and published both at the CC's website and on the
websites of the Sais who carried out the parallel audit.
By beata błasiak-Nowak, economic advisor in the Polish Supreme audit Office’s Public administration Department,
Polish national expert at the european Court of auditors1 and
by Marzena Rajczewska, Technical advisor in the Polish Supreme audit Office’s Public administration Department
Introduction
The european Union has, over the years, developed a sophisticated body of legislation on which the common market,
environmental protection and regional policy are based. Whilst not questioning the validity of eU legislation in the abovementioned areas, it is felt that more careful consideration needs to be given to its interpretation at all stages of the legislative
procedure and its practical implementation by Member States. The Treaty on the Functioning of the european Union
provides that the european Commission (eC) should "take duly into account the need for any burden, whether financial or
administrative, falling upon the Community, national governments, local authorities, economic operators and citizens to be
minimised and proportionate to the objective to be achieved”2.
errors in the implementation of eU funds are due in part to complex rules. The eC acknowledges3 that their simplification would
benefit the implementation of various eU policies and help to reduce error rates. a certain level of complexity in the rules and
eligibility criteria is unavoidable, as they are established with a view to achieving desired policy objectives and are also the
consequence of a complex legislative procedure.
The eC has made a number of simplifications to the provisions governing the implementation of the Structural Funds4. Further
simplification measures for the Structural Funds, such as the possibility of declaring costs on the basis of flat rates, unit costs
and lump sums, were decided in May 2009 in the wake of the financial crisis. The impact of these simplifications is expected
to become visible in the medium to long term. Moreover, the Commission is currently working to identify possible areas for
further simplification, in particular in the context of its preparatory work for the triennial revision of the Financial regulation5.
The provisions of the Financial regulation have become increasingly complex and their simplification is crucial if the efficiency
and delivery of external aid is to be improved, particularly in the area of grants from the Structural Funds, including, inter alia,
the eligibility rules, management methods and control measures.
1
2
3
4
5
in the Unit for Financial audit of Structural Policies (from 1 February 2009 to 31 May 2010) and the Unit for Financial audit of the erDF/
CF, Transport and energy (from 1 June 2010 to 31 January 2011).
Point 9 of the Protocol on the application of the principles of subsidiarity and proportionality annexed to the Treaty on the Functioning
of the european Union – consolidated version (OJ C 115, 2008, p. 47).
Report from the Commission to the European Parliament on the follow-up to 2007 Discharge Decisions (Summary) – european Parliament resolutions drafted pursuant to art. 276(3) of the eU Treaty and art. 180b of the euratom Treaty, art. 147 of the Financial
regulation and art. 119(5) of the eDF Financial regulation, COM (2009) 526 final.
Council regulation (eC) no 1083/2006 of 11 July 2006 laying down general provisions on the european regional Development
Fund, the european Social Fund and the Cohesion Fund and repealing regulation (eC) no 1260/1999 (OJeU L 210, 2006, p. 25).
Commission regulation (eC) no 1828/2006 of 8 December 2006 setting out rules for the implementation of Council regulation (eC)
no 1083/2006 laying down general provisions on the european regional Development Fund, the european Social Fund and the
Cohesion Fund (OJeU L 37, 2006, p. 1).
Council regulation (eC, euratom) no 1605/2002 of 25 June 2002 on the Financial regulation applicable to the general budget
of the european Communities (OJ L 248, 16.9.2002, p. 1.), as amended by Council regulation (eC, euratom) no 1995/2006 of 13 December 2006 on the Financial regulation applicable to the general budget of the european Communities (OJ L 390, 30.12.2006,
p. 1).
37
eSTiMaTinG THe COSTS anD BeneFiTS OF COnTrOLS CarrieD OUT WiTHin THe FraMeWOrK OF
THe ManaGeMenT anD COnTrOL SYSTeM OF THe eU STrUCTUraL FUnDS
eU Member States have shown an interest in costing the administrative burden using the cost-unit accounting method
and two of them, the netherlands and Denmark, have estimated the administrative costs of the legislation in force using this
same method6. The eC has developed its own methodology for assessing the administrative costs imposed by legislation,
known as cost-centre accounting7, and launched a pilot study on such costs in 2006.
On the basis of the mandate conferred by the Contact Committee of the Heads of the eU Supreme audit institutions and
the european Court of auditors8, the Working Group on Structural Funds carried out a parallel audit9 to assess the costs and
benefits of carrying out controls within the framework of the management and control system of the Structural Funds. The
audit concerned was carried out over the 2009-2011 period on the basis of a programme entitled Parallel Audit of the Costs of
Controls (incl. Technical Assistance)10.
The Structural Funds covered by the Working Group’s parallel audit, i.e. european regional Development Fund (erDF) and/
or european Social Fund (eSF), are implemented under shared management and the related tasks, including audit, are delegated
to the Members States within the framework of the management and control systems set up by them11 at the national, regional
and local level. Community law sets out control structures and minimum levels of controls for managing authorities, certifying
authorities and audit authorities, and stipulates that errors and irregularities have to be prevented, detected, and corrected in the
first instance by the Member States12.
The Polish Supreme audit institution is involved in the work of the Working Group on Structural Funds. The Polish
Supreme audit Office (SaO) audits the utilisation of eU budget funds disbursed by Polish authorities, legal persons and
agencies. acquisition and use of funds from the eU Structural Funds and Cohesion Fund, management of operational
programmes (OPs) financed by eU funds and the public administration’s implementation of tasks connected with Poland’s
membership in the eU belong to the main areas audited by the Polish SaO13.
Methods for assessing the costs of controls
in the parallel audit programme drawn up by the members of the Working Group, two methods were adopted for assessing
the costs of controls incurred under the management and control systems set up by the Member States in accordance with the
principles of shared management. The Supreme audit institutions (Sais) of the eU Member States taking part in the parallel
audit were to assess the costs of controls incurred under the management and control systems of OPs co-financed with the
erDF and/or the eSF using both methods:
6
7
8
9
10
11
12
13
Cf. Communication from the Commission on an eU common methodology for assessing administrative costs imposed by legislation, COM (2005) 518 final.
eC working document SeC (2005) 1329 - annex to the Communication on an eU common methodology for assessing administrative costs imposed by legislation.
Resolution of the Contact Committee on the Audit of the Working Group on Structural Funds. Luxembourg 2008: www.contactcommittee.eu. expanding on the matter of the Working Group’s parallel audits to date and the Polish SaO’s involvement in its work,
see B. Błasiak-nowak, M. rajczewska, Udział Najwyższej Izby Kontroli w pracach Grupy Roboczej Komitetu Kontaktowego ds. Funduszy
Strukturalnych. “Kontrola Państwowa”, no 2/2009, p. 119 – available in the Polish language version only.
Parallel audits are conducted simultaneously by Supreme audit institutions (Sais) in a few or even several Member States. each State
applies its own audit procedure but does so in accordance with a single mutually agreed audit programme. after the audit the Sais describe their audit findings in national reports, on the basis of which a summary report is drawn up. Once the report has been approved
by the Contact Committee, it is posted on its website and on those of the Sais that took part in the audit.
The Contact Committee’s Working Group on Structural Funds iV, Parallel Audit of the Costs of Controls (incl. Technical Assistance), June
2009, not published.
For more details on the subject of auditing the management and control systems set up by Member States, see B. Błasiak-nowak,
M. rajczewska, Kontrola zewnętrzna systemów zarządzania i kontroli programów operacyjnych współfinansowanych ze środków z
budżetu Unii Europejskiej. “Kontrola Państwowa”, no 6/2009, p. 3, B. Błasiak-nowak, M. rajczewska, External Audit of Management and
Control Systems for Operational Programmes Cofinanced with the European Union Funds. “eCa Journal”, no 12/2009, p. 19.
art. 70(1) of Council regulation (eC) no 1083/2006 (OJ L 210, 31.7.2006, p. 25, as amended).
See, in greater detail, Raport zbiorczy o wynikach kontroli NIK w zakresie wykorzystania środków z budżetu Wspólnot Europejskich w
ramach polityki spójności w Polsce. Warsaw, niK (Polish SaO) 2009, available in the Polish language version only. This report summarises the findings of the audits the Polish SaO carried out in this domain from 2004 to 2008; they relate to the management of OPs
implementing cohesion policy, implementation of projects co-financed by the eU budget by their beneficiaries and other Polish
SaO audits concerning issues connected with Poland’s membership in the eU.
38
1) cost-unit accounting, which involves estimating the cost of every single control activity carried out by the auditee;
2) cost-centre accounting, where the costs are estimated on the basis of the budget allocated to an organisation unit
(department, office, division, etc.) of the auditee in order for it to implement tasks within the framework of the
management and control system and the number of staff responsible for carrying out a given control in relation to the
total number of staff in that same organisational unit.
The control costs estimated by the cost-unit accounting method represent the average cost incurred in carrying out a
control multiplied by the total number of controls carried out over the period concerned. However, the average cost of controls
is obtained by multiplying the average time taken to carry out a control by the average hourly rate. This is illustrated in the
diagram below.
Diag. 1. estimating the costs of controls using the cost-unit accounting method
Total costs of
carrying out controls,
e.g. assessment of the
payment claims in a
given year
Average cost of
carrying out a
control
=
Average cost of
carrying out a
control
*
Total amount of
control
activities
=
Average time taken to
carry out a control
*
Average hourly
rate
Source: own compilation based on the parallel audit programme entitled Parallel Audit of the Costs of Controls (incl. Technical Assistance),
June 2009, p. 12 – document not published.
The cost-centre accounting method is applied by the eC to identify the costs arising from controls. The eC uses a method
whereby the cost of an action carried out under the procedures is evaluated as the ratio of the number of staff carrying out a
control to the number of staff employed under the institution’s budget. This is illustrated in the diagram below.
Diag. 2. estimating the costs of controls using the cost-centre accounting method
Total costs of carrying
out a controll
=
Total annual budget of
the unit (e.g. Managing
Authority, Intermediate
Body)
*
Number of staff
carrying out controls/
number of unit’s total
staff (MA, IB)
Source: own compilation based on the parallel audit programme entitled Parallel Audit of the Costs of Controls (incl. Technical Assistance),
June 2009, p. 11 – document not published.
39
The costs of controls connected with the management and control system set up within the framework of the Structural
Funds are essentially made up of staff costs, as direct costs of controls, and of indirect costs. Diagram 3 shows the cost
structure.
Diag. 3. Cost structure
COSTS
indirect costs
Direct costs
indirect staff costs
indirect material costs
Source: own compilation based on the parallel audit programme entitled Parallel Audit of the Costs of Controls (incl. Technical Assistance), June
2009, pages 8 and 9 – document not published.
Direct costs comprise basic salary costs and other components of remuneration, e.g. traineeship, duty and special
allowances, awards and charges, i.e. contributions to the Social insurance institution and the Labour Fund, personal income
tax, other personal benefits falling outside the scope of salary level (e.g. State Fund for the rehabilitation of the Disabled) and
other costs such as travel expenses.
indirect costs may be divided into two categories: indirect staff costs and indirect material costs. indirect staff costs
are those not directly related to the work of persons involved in control activities. For example, they are the labour costs
of support staff (e.g. secretary, assistant, technical staff ), management costs (labour costs of staff employed in supervisory
or managerial positions) and general administrative expenses (e.g. costs of the structural units dealing with staff and pay
matters, accountancy, administration). indirect material costs relate to premises (e.g. rent), running material costs (e.g.
purchase of office supplies, cost of office equipment and furniture (including the cost of servicing and maintaining them,
etc.) and other costs relating to general administration and support for professional activities (e.g. staff training).
Controls and their benefits
a control is an activity that is carried out in order to verify that a beneficiary has met his obligations in accordance with the
regulations14. Member States set up a management and control systems for OPs in order to ensure that they are implemented
correctly and efficiently. Such systems contain (except for other elements) official procedures for specific operations that
incorporate control mechanisms for prevention or detection designed to ensure that the expenditure declared under an OP
is correct and regular. implementation of operations that include activities which actually constitute control mechanisms
(such as management control, certification control, operations audit) was referred to as controls in the parallel audit.
The term “control”15 may be interpreted in either a more restrictive or a broader sense. Control in the more restrictive sense
(control mechanisms) means activities aimed at examining the regularity of a beneficiary’s funding claims (e.g. prevention control,
Communication from the Commission to the european Parliament, the Council and the european Court of auditors entitled Towards a common understanding of the concept of tolerable risk of error, COM(2008) 866 final, p.14.
15 The term “control” was defined by J. Płoskonka, adviser to the Polish SaO President in the audit programme Koszty i korzyści z
wykonywania działań kontrolnych w ramach systemu zarządzania i kontroli dla Regionalnych Programów Operacyjnych w okresie programowania 2007-2013. niK, May 2010 – document not published.
14
40
detection control, certification of expenditure, on-the-spot checks). They consist of checking the actual situation in relation to
the requirements and, where irregularities are detected, ensuring that the situation is corrected. in the broader sense a control
means all the activities (operations) undertaken to ensure that specific objectives are achieved and tasks are implemented in
a lawful, efficient, cost-effective, and timely manner. Consequently, any operations that help to ensure proper and effective
implementation of an OP (formal and substantial assessment of projects, selection of projects, monitoring of the progress made
in implementing OPs, ex ante evaluations of OPs, etc.) add to the above-mentioned activities.
The term “control” taken in the broader sense does not mean a specified activity but a reliable system that helps the
manager of the audited unit to attain its objectives, whereupon we may talk about a management and control system in
accordance with Council regulation (eC) no 1083/2006. Such a system should prevent, detect and correct any irregularities. in
general, the system comprises all activities undertaken to ensure specified objectives and tasks are accomplished in a lawful,
efficient, cost-effective, and timely manner.
in this paper the term “control mechanisms” is used in the context of the more restrictive meaning of “control”, whereas
“controls” (activities) is used in the context of the broader meaning. all the controls (activities) build up in a management and
control system.
Controls16 comprise, inter alia:
−
carrying out ex ante evaluations of OPs;
−
establishing the elements of the management and control system in units involved in managing OPs;
−
analysing and selecting projects (carrying out formal and substantial assessments and selecting projects, examining
objections, signing contracts with beneficiaries);
−
verifying payment claims (verifying, making corrections, reporting on results, carrying out on-the-spot checks and
reporting on the results);
−
monitoring the implementation of OPs (carrying out official activities in order to monitor progress and prepare annual
reports on the progress of OPs, preparing information for the Monitoring Committee and providing support for its
meetings);
−
certifying and declaring expenditure;
−
auditing operations and the functioning of the management and control systems set up in order to ensure that they are
operating correctly.
The controls described above ensure that certain benefits are derived but also engender costs for the structural units/
institutions.
Under the Parallel Audit Programme it is acknowledged that the main financial benefit afforded by carrying out controls
(operations)17 is the value of the erDF funds allocated for the implementation of rOPs that are audited, which include the
following:
−
contractual sums (signed contracts);
−
amounts paid to beneficiaries;
−
sums declared to the eC.
16
The controls applicable in the context of management, certification and audit are listed in articles 60 to 62 of Council regulation
(eC) no 1083/2006.
17 The controls (operations) subject to parallel audit are the selection and assessment of projects for implementation (project verification), monitoring of OPs and reporting, certification of expenditure and audit work.
41
Other benefits of carrying out controls are the amounts withdrawn following cancellation of part or all of the cofinancing in
a project, amounts to be recovered and amounts resulting from mistakes with regard to eligibility of expenditure.
in addition to the preventive effect of controls, they also result in benefits with no financial impact (i.e. non-financial benefits),
such as:
−
performance of tasks in accordance with the legal requirements;
−
improvement in the implementation of programmes;
−
effective means of dissemination of information and less preoccupation with the supervision of documentation;
−
clear division of competences and responsibilities within an institution, precise delimitation of powers and responsibilities of
staff and increased responsibility of staff for tasks performed;
−
timeliness of tasks performed is ensured;
−
savings in time and human resources resulting from efficient use of an institution’s resources;
−
introduction of mechanisms for the detection and rectification of irregularities and continuous improvement of the tasks
performed.
The Polish sAO’s audit of the costs and benefits of controls
in accordance with the assumptions and methodology of the parallel audit programme, the Polish SaO carried out an audit
entitled Koszty i korzyści z wykonywania działań kontrolnych w ramach systemu zarządzania i kontroli dla Regionalnych Programów
Operacyjnych (RPO) w okresie programowania 2007-2013 (“The costs and benefits of carrying out controls within the framework
of the management and control system for regional Operational Programmes (rOPs) during the 2007-2013 programming
period”). The aim was to determine whether it was possible, in the case of the institutions involved in the rOP implementation
system, to calculate the costs and benefits arising from carrying out controls within the framework of the management and
control system using the two cost-calculation methods.
The audit was conducted on the basis of audit findings in two institutions and on that of a questionnaire sent to the 61 units
carrying out the tasks of the Managing authority, intermediate Body for Management, Certifying aufhority, intermediate Body
for Certification and audit authority respectively, in connection with the 16 rOPs.
Institutions in the management and control system
The Voivodeship (regional) Government acts as the rOP Managing authority, which is responsible for preparing
and implementing OPs, and the activities associated with that function are carried out by the Office of the Marshal in the
corresponding Voivodeships (regions). The Managing authority may delegate part of its duties to the intermediate Body. even
though the Managing authority delegates tasks, it has overall responsibility for implementing the OPs18.
The function of the Certifying authority, which is responsible for drawing up and submitting to the eC certified statements
of expenditure and applications for payment, is exercised by the Minister for regional Development via a Certifying authority
Department at the same Ministry. Under an rOP the Certifying authority delegates part of its certification duties to the
intermediate Body for Certification. The latter’s duties are performed by the Voivodes in the area and under the terms specified
in a separate agreement. Tasks connected with this function are performed by a specific structural unit within the Voivodeship
administration. The Ministry for regional Development also acts as the Coordinating Body for the 16 rOPs.
The function of the audit authority, which performs tasks in the area of audit of eU funds, is fulfilled by the inspectorGeneral for Tax Controls19, which has its tasks performed by an organisational unit in the Ministry of Finance and 16 tax control
offices, which operate under a single tax control service.
18
Tasks performed by institutions became regulated under the law of 6 December 2006 on the principles for the application of development policy (Development Policy act) (Polish Government’s Official Journal no 84 of 2009, item 712, as amended).
19 This function is fulfilled by the Secretary or Under-Secretary of State at the Ministry of Finance on the basis of the provisions of the Law of
28 September 1991 on tax controls (Polish Government’s Official Journal no 8 of 2004, item 65, as amended).
42
Results of the Polish sAO’s audit
The results of the audit may be viewed as an exploration of the options with regard to calculating the costs incurred by
institutions involved in the system for implementing rOPs when they carry out controls under the control and management
system. The results obtained provide an initial overview of the level of costs generated by the controls carried out by the
offices involved in implementing the 16 rOPs.
The preparation of programming documents for the 16 rOPs was still under way in 2007 and the programmes were
approved by the eC in the second half of the year. in 2008 the management and control systems were set up, compliance
audit of the systems went on in all the institutions involved in implementing the rOPs, the criteria for selecting projects were
drawn up and approved by the Monitoring Committees and the first calls for project-funding proposals were launched. 2009
was the first year in which the projects were implemented more fully. in 2008, when the call for projects was launched and
their implementation began, the percentage of the total cost of the controls covered by the audit in relation to the resources
allocated to beneficiaries for certain rOPs was close to or over 50 %. in 2009, when the regular call for applications followed
and the projects were implemented in full, the indicator ranged from 1 % to 7 %.
The cost-unit accounting method gives more accurate results but is more complicated to implement and more labour-intensive.
The institutions had to estimate the cost and time needed to carry out each control because such data are not generally recorded. in
this respect the costs of controls calculated by the institutions should be regarded as a realistic approximation of the costs incurred.
The cost-centre accounting method seems to be quicker and easier to apply but is less accurate than the cost-unit
accounting method. The need to estimate the entire budget of an organisational unit performing the tasks of the Managing
authority, intermediate Body for Management, Certifying authority, intermediate Body for Certification and audit authority
respectively also presented a major difficulty, because it has not been the practice to separate the budget for these units
under the budget for the entire institution. The accuracy in estimating the full budget (hence including both an organisational
unit’s direct costs and the full indirect costs) of an organisational unit performing tasks connected with implementing rOPs
(in cost-centre accounting) and the time taken to carry out a control by each member of staff (in cost-unit accounting) had
a significant impact on the estimated amount of the costs of the controls that were examined and the convergence of the
results in both methods.
The audit of the costs and benefits of controls carried out in the institutions involved in the system for management
and control of the 16 rOPs showed the steps giving rise to costs and drew attention to the need to rationalise the costs
of controls in terms of their benefits. The auditees familiarised themselves with the methodologies the eC and some eU
Member States use to estimate costs, providing a useful tool in the management decision-making process. Looking ahead,
the methodologies for costing controls could be used in public finance management and not solely in connection with the
eU budget.
The study also indicated that the controls carried out result not only in financial benefits but also significant non-financial
ones, e.g.:
−
−
−
−
contacts with potential beneficiaries increase knowledge of eU funding;
the staff of the Managing authority and intermediate Body for Management improve their knowledge and competence
in evaluating projects for financing and acquire new experience;
on-the-spot controls on the implementation of a project allow checks to be made on its progress and verification
of the results achieved; they also make it easier to detect irregular expenditure and take action to recover disputed
sums. The findings and observations following inspection of a project also lead to the improvement of implementation
procedures;
direct contact with a beneficiary allows a better understanding to be gained of problems that arise in the course of a
project’s implementation.
summary
in furtherance of the objectives of the parallel audit, the Sais cooperating within the Working Group have undertaken
to evaluate the costs and benefits of carrying out controls within the framework of the management and control system of
the OPs in units dealing with implementation of the Structural Funds. The results of the Working Group’s parallel audit will be
submitted to the Contact Committee in October 2011 and then posted on the websites of both the Contact Committee and
the Sais that have taken part in the parallel audit.
43
The complexity of the rules on the eligibility of expenditure is directly linked to the intensity and cost of the controls needed
to obtain reasonable assurance as to the legality and regularity of expenditure reimbursed by the Structural Funds. if simplified
eligibility rules were adopted and implemented efficiently, the expenditure concerned would be less prone to the risk of error,
which would allow a reduction in control intensity. action should also be taken to eliminate the causes of errors; they often
stem from overcomplicated Community rules. The disbursement of funds effected within the framework of management shared
between the eC and a Member State is governed by Community law and the provisions of the national law of whichever of
the 27 Member States is concerned, which gives rise to complex financial management systems. errors may often be due to
misunderstanding or incorrect application of the complex rules and provisions governing eU funds.
analysing the costs of controls under the management and control system of structural funds and the benefits of carrying
out such controls can help to define the limits beyond which further expenditure on them would be unjustified in economic
terms in that the benefit would not be proportionate to the corresponding expenditure (e.g. in the form of an increase in the
number of documents checked by a member of staff, reduction of expenditure subject to the recovery procedure as a result of
errors regarding its eligibility, reduction in the level of irregular expenditure).
The effort being made to estimate the level of the real costs of controls under the systems for the management and control
of OPs co-financed by the erDF and/or eSF may make a practical contribution towards achieving an approach/method for
measuring the costs of controls.
The Working Group may constitute a forum to discuss the matter of producing a set of common objectives to monitor
progress with regard to the quality of controls and adjusting the costs of their performance in line with the benefits obtained,
both at eU level and in the Member States. The Polish SaO, which is carrying out the study on the basis of the objectives of
the parallel audit programme, is actively involved in the above-mentioned work.
44
ENVIRONMENTAL AUDITING SEMINAR
European Court of Auditors, 23 May 2011
by Rosmarie Carotti
President Caldeira welcomed the participants to this first seminar in the european
Court of Auditors on environmental auditing. The seminar was chaired by
Mr Ioannis sarmas, Member of the Court. The moderator of the seminar was John
sweeney, head of unit of CeAD-Methodology
from left to right: Heinrich LanG, Head of the Department austrian Sai, Georges KreMLiS, Director DG enV. a
european Commission, Jorgen KOSMO, auditor General norvegian Sai, Vítor CaLDeira, President of the Court,
ioannis SarMaS, Member of the Court, John SWeenY, Head of Unit at the Court.
environment is mentioned in the Court’s outline strategy as a cross-cutting issue. This reflects
increasing awareness for environmental auditing, as the eCa is looking not only at the three es:
economy, efficiency and effectiveness but also to a fourth e for environment.
There seems to be no contradiction between the mandate of the Court and environmental
auditing but the future will need to show which way to go, as several organisation patterns are
conceivable, such as a dedicated decision-making structure, or the setting up of a support unit
which would assist the different Chambers in preparing their individual environmental audits.
The aim of the seminar was to raise awareness, build knowledge and share audit experience from
both, within the Court and from experts from national audit institutions and the Commission.
eCa aims at developing a guideline for environmental auditing benefiting from the work done
within the different Seminar workshops. The intention is to prepare the guideline before autumn,
as a contribution to the annual work programme and to be put on the internet.
The eCa thought it would be interesting to have somebody from the policy-making of the
Commission to introduce the subject in order to learn where the main risks lie. Mr Georges-Stavros
Kremlis, acting Director Legal affairs and Cohesion presented the main global and european
environmental trends. DG-environment is one of the 20 policy departments of the european
Commission. recently a new DG-Climate has been created and the european environment
agency (eea) is the eU agency responsible for environmental data compilation.
But environment cuts across departments and units and this aspect is shown in article ii of the
Treaty on the functioning of the eU: “environment protection requirements must be integrated
into the definition and implementation of the Union policies and activities, in particular with a
view to promoting sustainable development”.
45
enVirOnMenTaL aUDiTinG SeMinar
Willing to gather, internally, as well as externally, best practices, the eCa had also invited Mr Jørgen
Kosmo, auditor General of norway and Chair of the european Working Group on environmental
auditing (eUrOSai WGea). in his mind, Sais have a unique role in overseeing and contributing
to improved public management, including environmental issues like sustainable development.
Sais have the responsibility to audit public spending and the government’s performance. eCa is
in a unique position because it can cooperate with many national audit institutions.
inTOSai and eUrOSai Working Groups on environmental auditing (WGeas) support at global
and european level the auditing institutions in developing systems, methodology and ways of
cooperation. The inTOSai WGea is chaired by the Office of estonia and comprises 71 countries.
eCa is one of the more recent members. eCa is also member of the eUrOSai WGea, the Secretariat
of which is being held by norway.
The XX inCOSai meeting had last year environmental audit on its agenda and it is not by chance
that the next XXi inCOSai meeting will be held in 2013 in the People’s republic of China. Capacity
building for environmental auditing in developing countries is indeed of extreme importance.
The austrian Court of audit has no special mandate for environment but can, like the eCa,
audit all levels of legislation and governance. Mr Heinrich Lang, Head of the Department for
Comprehensive environmental Protection, agriculture, Forestry and Water Management in the
austrian Court of audit emphasised the close link of the austrian Court to universities and nGOs.
He then discussed the practices and future possibilities in planning and performing environmental
audits.
Mrs Kristine Lien Skog, national expert in the eCa sent from the norwegian Office told in more
detail how the Office of norway actually plans its audits. in environmental auditing there are
for her three materiality dimensions: economic, social, fundamental importance (human right
principles). institutions often mainly consider the economic impact and that’s why a new
awareness for environmental issues needs to be built.
There are no specific standards for environmental auditing but environmental policies have some
main qualities which make them challenging. There are hundreds of international environmental
agreements. The auditors can check whether the governments have ratified and implemented
the agreements in line with international conventions. This could also be a task for the eCa,
because the eU is responsible for ratifying and implementing conventions like the one on climate
change.
For the Court, Mr robert Markus, Head of Unit in Chamber i, discussed environmental auditing in
agriculture, for which several special reports have been published, including on agri-environment
and cross-compliance. Key findings are that the policies are not effective and lack clear data.
Mr Julian Chapman, Head of Unit in Chamber iii, presented the environmental aspects of the
Commission’s development cooperation.
Mr John Sweeney summarised the main points raised. The development of environmental
auditing is not a question of money but of education and prioritising the work of Sais. The
challenges derived from environmental conditions we face in future will be more serious than
those of the current financial crisis. if Sais do not act soon, they risk loosing the confidence of the
stakeholders and the general public. While capacity building in this area within Sais is needed, as
46
enVirOnMenTaL aUDiTinG SeMinar
well as the suitable organisation of the work, there was a real need to sell the reports of Sais and
the messages in them to those who make the decisions, without coming under undue influence
of external interest groups.
Parallel workshops dealing with different topics were held after the presentations to exchange
knowledge and develop concrete ideas on how to improve the methodology of environmental
auditing in the Court.
During the panel discussions, Mr Sarmas mentioned 3 main issues :
−
The issue of sAI’s mandate : This is still a difficulty for many Sais, in respect of their legal
remit, linked to public spending. eCa has, up to now, not faced such difficulties when
performing environmental audits (on fish quotas or waste water management for instance);
−
The issue of knowledge sharing and training: providing guidelines for environmental
auditing, to be included in the Court’s audit manual, is necessary. Opening Sais
doors to external advice (such as nGO) should be considered with great caution,
to avoid interferences with impartiality. The best way to learn, and build capacity
in environmental auditing, is by doing, if so with the help of recruited expert staff;
−
The issue of organisational arrangements: dealing with cross-cutting issues, such as
environment, in a Sai organised vertically around clusters of policy areas is very difficult.
One idea could be to have a dedicated horizontal Chamber, but this raises a number of
difficulties. another idea could be, without changing the existing arrangements, to have
an horizontal unit providing support and expertise to all units of the vertical Chambers
for preparing and performing environmental audits.
47
«YOU CANNOT SURVIVE IF YOU CANNOT BREATHE»
Interview with Mr Jørgen KOsMO Auditor General of Norway and Chair of the european
working Group on environmental Auditing (eUROsAI wGeA)
by Rosmarie Carotti
Mr Jørgen Kosmo auditor General of norway
R. C. : we have 300 or more directives and about 200 international agreements relating to
environmental issues. however, the eCA can only audit the money which goes through the
eU budget. how can you state that the role of eCA is unique for the future development of
environmental audit?
Mr Jørgen Kosmo: The eCa audits the performance in respect to the money spent by the eU. it is
a lot of money and many areas are touched upon. The eU and the Commission have to follow the
international agreements they have participated in developing, the Kyoto Protocol for example. eCa
checks if and how far it has been implemented, and if the goals can be attained. in this respect, the eCa
is not different from a national audit office. But the eCa is in a unique position because it can cooperate
with the different Offices of the auditors General in the Member States and organise common audits
together with them. Only eCa has this possibility.
R. C. : you said that the role of the supreme audit institution (sAI) of Norway is to issue
recommendations to the government, helping to develop and shape new policies. The main
auditee of the eCA is the Commission, which does not make policies, as these are made by the
Council.
Mr Jørgen Kosmo: Of course, there is a great difference, but the international standards for auditing
are the same for eCa as for norway. The issue is not to whom the report is delivered, but that it is made
public. as long as the reports are public, any european body can read them and participate in forming
future strategy, while questions may also be asked in the european Parliament. The aim of the report is
to give an overview, to analyse what needs to be done even better. The issue is now to coordinate the
resources within the european Court of auditors, in order to deliver the reports and create an interest
for environmental auditing.
R. C.: you talk about international standards but there is also IsO 14000, a series of international
standards on environmental management. Does this not cause confusion?
Mr Jørgen Kosmo: We talk about national audit standards. There are no international standards for
environmental audits. We have developed standards for financial audit, enabling the auditor’s General
Office or the institution to include environmental audit in the financial audit. We have developed audit
standards for compliance audit making it possible to include environmental audit in compliance audit
and we have developed performance audit into which environmental audit can easily be included.
48
inTerVieW WiTH Mr JØrGen KOSMO aUDiTOr GeneraL OF nOrWaY anD CHair OF THe
eUrOPean WOrKinG GrOUP On enVirOnMenTaL aUDiTinG (eUrOSai WGea)
apart from the standards, each institution is responsible for developing its own methodology and while
doing so to learn from each other. That’s why i said that it is not a question about where one works, in
what kind of model you are in; it is a question about the leadership’s setting of priorities.
R. C.: The“polluter pays”principle is a generally recognized principle of international environmental
law, and it is a fundamental principle of environmental policy of both the Organisation for
economic Co-operation and Development (OeCD) and the european Union. what is your opinion
on it?
Mr Jørgen Kosmo: it is a ruling principle in the Western world. The principle creates awareness in people
who lead a company that they risk paying for the damage they cause. if the polluter is not able to pay,
the State, or at the eU level, the european Commission, has to take the responsibility.
R. C.: what would you wish for in terms of international audit standards? Not all are applied
globally.
Mr Jørgen Kosmo: My personal wish is that the developed Sais, together with the World Bank and
all the donors like the european Commission, would give priority to capacity-building in developing
countries for developing Sais. an audit institution is important for securing democracy. Secondly, we
need to fight corruption in the public sector. This should motivate all of us to do the uttermost to build
audit institutions in developing countries.
it is true that international audit standards are also not all harmonized. However, countries like the US
and Canada participate in inTOSai. i am confident that all standards will at one point be harmonized.
Standards are a guarantee for the quality of the work of an Sai and we have to work together in a longterm view to fight corruption.
R. C.: you have been chairing the wGeA secretariat in eUROsAI since 2008. what tasks do you
want to achieve in the second term you are applying for?
Mr Jørgen Kosmo: norway has said to be willing to take responsibility for the next period, too. The
decision will be taken at the congress of Lisbon in the beginning of June. My goal will be to contribute
as much as possible to capacity-building within Sais, to facilitate coordinated audits in areas like the
Mediterranean, the Black Sea, and along the Danube. The aim is to bring countries together and support
them in their administrative work, so that everybody can participate.
R. C.: what will you take home from today’s seminar?
Mr Jørgen Kosmo: First of all, the willingness within the eCa to better coordinate its work between the
chambers and its willingness to give priority to environmental audit, because ultimately, a sustainable
environment is more important than the economy for the people of europe.
You cannot survive if you cannot breathe.
49
ADVOCATE GENERAL UPHOLDS ECA AUDIT POWERS
By Lauren MULLen, stagiaire and Birgit SCHÄFer, Legal Service of the Court
On 25 May 2011, advocate General TrSTenJaK issued her Opinion in Case C-539/09 European Commission
v. Federal Republic of Germany. in reviewing a dispute over the competence of the Court of auditors and the
scope of its auditing powers within the Member States, the advocate General concluded that the Court of
auditors has the power to review administrative cooperation in the field of value added tax under regulation
no 1798/2003. While the Opinion of the advocate General is not itself binding, it provides a detailed analysis
of the legal aspects of the case and suggests to the Court of Justice the response which should be given to
the problems raised. in practice, the Opinion of the advocate General is often followed by the Court of Justice
in its judgments.
background: in 2006, the Court of auditors informed Germany that it was planning an audit mission.
The audit was to cover the administrative cooperation between Member States in the field of VaT. The
German Government repeatedly refused to permit the Court to carry out the planned audit in Germany,
arguing that the Court’s audit powers in the field of VaT were limited to the determination of the net VaT
revenue actually received by the Member States and to the calculations made on the basis of that revenue in
order to determine the assessment base for the own resources accruing from VaT. The German Government
argued that the relevant rules for that calculation did not include any correction mode to add the VaT revenue
which the Member States could have additionally obtained, for example through the smoother running of
intergovernmental administrative assistance.
The Court of auditors finally informed the Commission of Germany’s repeated refusal to permit the
audit. The Commission, sharing the Court’s view that Germany was in breach of its obligations under the eC
Treaty, began infringement proceedings against Germany, with the european Parliament and the Court of
auditors intervening in support of the Commission (cf. rosmarie CarOTTi’s article on the Hearing of 15 March
2011 in the april edition of this Journal, p. 20).
The ultimate question raised by the dispute is whether the Court of auditors has the power to carry out
audits concerning the measures adopted by the Member States to ensure the proper collection of VaT by
their tax authorities.
Analysis of the Advocate General: The advocate General explains that the Court of auditors has the
power in principle to audit all acts which have a sufficiently direct connection with the Union’s revenue or
expenditure.
refering to the Sixth VaT Directive and the case-law of the Court of Justice, the advocate General
highlights the close connection between the Member States’ VaT revenue and the Union’s revenue from
own resources accruing from VaT. in fact, specific obligations in the context of VaT collection by the Member
States may arise from the obligations in respect of the provision of own resources accruing from VaT by those
Member States. administrative cooperation in the field of VaT helps to ensure the regular assessment of VaT
in the member States, with the aim of suppressing VaT evasion and VaT fraud and therefore increasing VaT
revenue.
The advocate General concludes that it cannot reasonably be denied that administrative cooperation in
the field of VaT under regulation no 1798/2003 has a sufficiently direct connection with the Union’s revenue
and therefore falls within the scope of the audit powers of the Court of auditors.
50
aDVOCaTe GeneraL UPHOLDS eCa aUDiT POWerS
The advocate General also examined the Court’s audit powers in relation to administrative cooperation
in the field of VaT in the light of the principles of subsidiarity and proportionality. noting the cross-border
aspects of the object of the audit (as in virtually all of the Court’s audits, several Member States were involved
in the procedure), she concludes that the principle of subsidiarity has been respected. additionally, she
concludes that the measures taken by the Court of auditors were appropriate, necessary and reasonable,
thereby complying with the principle of proportionality.
Finally, it is worth noting that at the very beginning of her Opinion, the advocate General draws
attention to the particular situation that, under the present Treaty provisions, the Court of auditors does not
have the right to bring direct actions against Member States which purportedly disregard the audit powers
of the Court. instead, the Court of auditors must report the infringement to the Commission, who then
decides whether to initiate proceedings. The advocate General recalls that in the past the Court of auditors
has expressly argued that it should be accorded a right to bring actions with a view to the independent judicial
enforcement of its powers vis-à-vis the Member States and that a provision according the Court of auditors
a right independently to bring direct actions against Member States could have been included in the TFeU
without major impairment of the new Treaty structure.
Conclusion: The Opinion of the advocate General is valuable for the Court of auditors because it helps
to define the scope of the Court’s competence when performing audits in Member States. if the opinion is
followed by the Court of Justice, the Court of auditors will have a binding authority to rely on when performing
audits on the Union’s own resources accruing from VaT. The judgment of the Court of Justice is probably not
to be expected before autumn.
51
ADDED VALUE OF AUDIT IN THE PROTECTION OF THE EU
FINANCIAL INTEREST
by John sweeny, head of unit CeAD-Methodology
earlier this year the Court was invited by the european Law research association
(eLra) of Poland to give a presentation at its seminar on april 14 - 16 in Warsaw
on the "Fight against irregularities - administrative and criminal law aspects"
organised jointly by OLaF and the eLra. The following is the text of the
presentation which was made by Mr John Sweeney of the Methodology and
Support Unit of CeaD a, in the session "accountability towards taxpayers - added
value of audit in the protection of the eU financial interests".
John Sweeny, Head of
unit CeaD-Methodology
The European Court of Auditors’ public sector audit role
The european Court of auditors (the Court) was created in 1975 under the Treaty of Brussels and has been
operational since 1977. it became an eU institution in 1992, with the Treaty of Maastricht, which required the
Court to provide a Statement of assurance on the eU Budget. The Treaty of nice in 2003 established that the Court
should have one member per Member State, each being appointed for a renewable term of six years. The President
is elected from amongst their number for a three year, renewable term of office. The Court has no judicial powers
to investigate and prosecute irregularities and fraud. However, with the Treaty of amsterdam in 1997, the Court
can refer cases to the european Court of Justice. The Court’s role as the independent legal external auditor of the
eU budget can be identified from the public sector accountability model below (figure 1).
figure 1: Public sector accountability model
52
The legislature (eC Parliament, Council) is the elected representative of the people which decides on policy and expenditure
priorities. The executive (the european Commission) is entrusted to provide the services decided by the parliament, using
public funds and public assets for the intended objectives. it then reports back to parliament on what it has done. The
legislative auditor is an independent third party who audits the executive’s actions, and reports to parliament on whether
funds have been used for intended purposes and implemented according to legislative rules. This public audit function is
essential in maintaining confidence in the stewardship of public funds and in improving financial management.
This role of the Court as the independent guardian of the financial interests of the citizens of the Union is to facilitate
accountability, but also to contribute to improving eU financial management. it carries out audits in accordance with
international auditing standards, by assessing whether the collection and spending of eU funds have been properly recorded
and disclosed, and legally and regularly executed and managed, to ensure economy, efficiency and effectiveness. article 287
of the Treaty on the Functioning of the european Union (TFeU) sets out these responsibilities. Firstly, the Court provides a
Statement of assurance or opinion on the eU’s annual consolidated accounts which covers the reliability (i.e. accuracy and
correctness of presentation) of the accounts and the legality and reliability of the underlying transactions to the accounts.
Secondly, it carries out performance audits on the economy, efficiency and effectiveness of eU programmes, organizations,
and undertakings. While the Court has no judicial powers, it publishes reports and delivers non-binding opinions as a
collegiate body.
The characteristics of irregularity and fraud
according to Council regulation no 2988/95 an irregularity is an “infringement of a provision of Community law resulting
from an act or omission by an economic operator, which has, or would have, the effect of prejudicing the general budget of
the eU or budgets managed by it, either by reducing or losing revenue accruing from own resources collected directly on
behalf of the Communities, or by an unjustified item of expenditure” (abridged definition).
according to Council act of 26 July 1995 fraud is, in respect of expenditure/revenue, “any intentional act or omission relating
to the use or presentation of false, incorrect or incomplete statements or documents, which has as its effect the misappropriation or
wrongful retention of funds from the general budget of the European Communities (EU)…, non-disclosure of information in violation
of a specific obligation, misapplication of such funds…, illegal diminution of the resources of the general budget..”(abridged
definition).
international Standard on auditing (iSa) 240 further defines fraud as “an intentional act by one or more individuals among
management, those charged with governance, employees, or third parties, involving the use of deception to obtain an unjust or
illegal advantage”.
While intent can be difficult to prove, possible motivation for initiating fraudulent behaviour can sometimes be identified
with the following factors:
−
Personal financial problems;
−
a corporate ethos that is tolerant of corruption. Low standards of ethical behaviour may be considered acceptable, and
corrective action and reinforcement of sound corporate ethics is required from the top down;
−
Peer pressure;
−
Disgruntled or malicious employees or outsiders;
−
ego – beating the system;
−
ideological reasons.
What is important to understand however, from the legislation and regulations, is that fraud (or proven fraud) is a legal term
applied to certain facts, the existence of which is the responsibility of national authorities to confirm.
Corruption can be active or passive – active, in the use of a position of trust to get dishonest gain; or passive, through a lack
of integrity or honesty, susceptibility to bribery, or a state of mind or ethos that can spread in an organisation. in both cases
53
corruption is less tangible than fraud. From an audit viewpoint, it is more complex and more difficult to establish, as there
is usually little hard evidence of its existence. For example, decisions on recruitment, promotion, and redundancy, are areas
where favouritism and prejudice can play a determining role. Favouritism can be the main manifestation of corruption in
public services, but often goes unnoticed.
The role of auditors their responsibilities
is the auditor a “watchdog1” (who passively monitors and keeps guard), or a “bloodhound” (with a very keen sense who actively
seeks out fraud and irregularity). according to iSa 240 “An auditor conducting an audit in accordance with ISAs is responsible
for obtaining reasonable assurance that the financial statements taken as a whole are free from material misstatement, whether
caused by fraud or error” (paragraph 5).
it further states that “The primary responsibility for the prevention and detection of fraud rests with both those charged with
governance of the entity and management” (paragraph 4). Therefore, it is clear that managers’ role is to identify risks, and to
design and implement sound, practical operational standards and regulations that prevent irregularity, fraud and corruption,
and allow it to be identified if it does occur.
Meeting the obligation of obtaining “reasonable assurance”?
according to the auditing standards an auditor must do three things: firstly, consider whether fraud risk factors are indicated
in the information presented; secondly, discuss with the audit team the susceptibility of the entity to fraud; and thirdly,
maintain an attitude of professional scepticism throughout the audit.
risk assessment procedures can take a number of forms: enquiries with management and staff of the auditee; an assessment
of the oversight role of those charged with governance; the consideration of unusual or unexpected relationships, and an
evaluation of other risk assessment procedures. For example, one might ask: what is management’s own assessment of the
risk of fraud? What procedures have management in place to identify and respond to possible fraud? Have those charged with
governance (e.g. the board of directors) been informed about these procedures? Has management (including internal audit),
any knowledge of fraud or suspected fraud? The unusual relationships one should consider could be financial relationships,
identified through an analytical review of profit & loss account and balance sheet, or indeed personal relationships, where
arms lengths arrangements might be difficult to justify (e.g. between a service provider and a procurement officer).
Some examples of risk factors would be:
−
Management’s significant disregard for regulatory authorities;
−
Failure to correct known material internal Control weaknesses on a timely basis;
−
attempts to influence the audit, its scope, duration, or auditors;
−
Significant pressure on the organisation to obtain needed finance;
−
Significant related party or complex transactions;
−
High vulnerability to interest rate changes;
−
Weak corporate governance structure. Too much control vested in one or two individuals. Poor separation of
duties.
During audit planning, risk analysis can identify areas that are prone to fraud, e.g. large construction projects, or projects
for innovative development where concrete results are difficult to measure or determine. a review of the annual reports
of OLaF (the european anti-fraud office) may provide an indication that certain eU regulations or legislation are weak or
insufficiently fraud-proof. Over time, auditors can build a picture of the quality of financial management in certain budgetary
areas. From this intelligence, a formal risk assessment of the expenditure area could be carried out, as a prelude to preparing
audit proposals.
1 1896 Kingston Cotton Mill case determined the “passive philosophy” towards fraud detection
54
it should be clear however that assurance audits, no matter how well planned and executed can never give complete
assurance that the financial statements are free from material misstatements, particularly where there is concealment of
information or collusion between individuals. But neither is an assurance engagement intended to do this. The challenge for
auditors in meeting their professional obligations is to design and perform adequate audit procedures to reduce the risk that
irregularities, fraud or other illegal activities which may be present and which could have a material effect on the financial
statements, will not be detected.
The second responsibility is for the engagement team to consider the susceptibility of the entity’s financial statements to
material misstatement due to fraud, when planning the audit, but also during the audit engagement. For this assessment,
auditors need to ignore preconceptions they might have of the honesty and integrity of management and those charged
with governance. They also need to provide for contingencies (resources, timing) resulting from unpredictable events
occurring during the audit, which would need to be followed-up.
The third responsibility is that of maintaining professional scepticism as described in ISA 200 as: “An attitude that includes
a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud, and a critical
assessment of audit evidence.”
While scepticism is naturally occurring characteristic that we all possess to varying degrees, in the context of audit, a higher
degree of skepticism than normal is needed, in order to obtain sufficient corroborative evidence to justify a judgment on
financial statements and the reliability of control systems. For example, auditors should be alert to:
•
contradictory audit evidence;
•
information that questions the evidence’s reliability, and
•
conditions that might indicate possible fraud, e.g. the unusual absence of key accounts staff during an audit.
The Court’s Approach towards Fraud
The Court’s strategy has a number of dimensions: Firstly, the Court systematically screens major legislation and associated
administrative and control systems for weaknesses which would facilitate fraud and irregularity. For example the Court issues
an Opinion on proposed revisions to the financial regulation, assessing it for potential deficiencies in control arrangements.
Secondly, the Court produced a paper for parliament on the identification of risk areas affecting the eU budget in 2010. it has
also produced special reports on the effectiveness of anti-fraud activities (e.g. the governance and operations of OLaF in 2005
and 2011), and irregularity reporting regulations. in 2000, the Court performed an audit on the effectiveness of the financial
system control of the Structural Funds and on the system for reporting and follow-up of irregularities by the european
Commission and national and regional authorities. These reports provided the discharge authorities of the european
Parliament with an independent assessment of the effectiveness of the systems for combating fraud and irregularity. Finally,
the identification of risk to sound financial management is one of four key factors used by the Court in the selection of topics
and areas for performance audit.
The Court communicates to OLaF cases of possible serious irregularity and fraud discovered in the course of audits, as well as
those received in “denunciation letters” from the general public. The TFeU2 also requires that “The Court ... report in particular,
on any cases of irregularity”.
in recent years denunciation letters have increased from 34 (2007) to 69 (2009). However, the number of cases of suspected
serious irregularity detected during audit work has remained constant at approximately 3 to 6 cases per annum.
Improving financial management
The Court’s annual report reports on the legality and regularity of underlying transactions across eU budget sectors (e.g.
agriculture, cohesions funds, external aid, etc.) its performance audit reports (called Special reports) generally contain
conclusions and recommendations on the effectiveness of management systems (see examples in figure 2 below).
2 Article 287, 2 Treaty on the Functioning of the European Union
55
aDDeD VaLUe OF aUDiT in THe PrOTeCTiOn OF THe eU
FinanCiaL inTereST
Furthermore, the Court’s audit visits to Member States and individual beneficiaries followed by the issuing of
management letters of preliminary audit findings, often have a direct positive impact on those charged with management
responsibilities.
figure 2: Some recent performance audit reports
Cooperation with stakeholders
art 325 of TFeU requires the eU and Member States to counter fraud and other illegal activities affecting the financial
interests of the Union by taking the same measures to counter fraud affecting the financial interests of the Union as they
take to counter fraud affecting their own financial interests, and by coordinating their actions, and organising close and
regular cooperation with the competent authorities and the Commission.
When auditing in Member States (MS) the Court invites the supreme audit institutions to participate in the Court’s field
work. Currently the Court is conducting coordinated financial and compliance audits with Dutch and Czech republic Sais;
and a joint audit on environmental issues was conducted in the past.
Given that 80% of expenditure of the eU budget is implemented through shared management, with Member States
implementing the policies and programmes and the Commission having a supervisory role, there is a clear need for
coordination of policies, procedures and efforts across the institutions and Member States. Thus the Commission’s proposal
for the reform of the Financial regulation applicable to the general budget after the Lisbon Treaty, to come into force
from 1 January 2014, proposes that Member States provide annual management declarations. it is proposed that these
annual management declarations would go further than political declarations and the current annual summaries provided.
For example, senior officials in charge of payments from eU funds would certify as to the legality and regularity of these
payments. in fact some Sais are already responsible for carrying out audits of eU expenditure, while in other Member
States, eU funding is audited by private audit firms or the Ministry of Finance. The proposed management declarations,
certified by external audit opinions, would provide more assurance than present national declarations, and would reinforce
cooperation with Member States in the implementation of the budget by underlining their control and audit obligations
stemming from the Lisbon Treaty.
To conclude, being vigilant to the possibility of fraud and irregularity being present in the use of eU funds is something
we should all take responsibility for. The Court’s role as the independent auditor of the eU budget places on it special
responsibilities, which i have outlined above. However, it is only through the good cooperation of all stakeholders, european
and national institutions and authorities, project managers and beneficiaries alike, that the resources of the eU budgets can
be protected.
The opinions expressed by the author in this publication/article in no way commit the european Court of auditors to which
he belongs.
56
VISIT OF A DELEGATION FROM THE AFGHAN NATIONAL ASSEMBLY AND
THE AFGHAN CONTROL AND AUDIT OFFICE (CAO)
by Rosmarie Carotti
a high-ranking delegation from afghanistan visited the Court on 30 and 31 May 2011. They were on a
study tour of the european Union organised and financed by a World Bank capacity building programme.
The delegation was one week in Brussels visiting the european Parliament and the european Commission
before coming to the eCa.
Mr Juan ramallo, Member of the Court from Spain welcomed the delegation on behalf of the President of
the eCa, Mr Vitór Caldeira and all the Members of the eCa and presented then the Court’s mission as the
independent guardian of the financial interests of the european Union.
Mr Cvikl spoke to the study tour on the subject of relations between national Parliaments and national
audit institutions in the eU. in addition he spoke about the budget process and emphasised the importance
of the scrutiny of the budget implementation by the national audit institutions.
The delegation showed great interest in the work of the eCa and the audit methods and procedures
used.
57
«AS CONTROL AND AUDIT OFFICE (CAO) OF AFGHANISTAN, WE NEED
TO KNOW THAT THE MONEY WHICH COMES FROM THE INTERNATIONAL
COMMUNITY IS SPENT IN A CLEAR, PROPER AND TRANSPARENT WAY»
Interview with Mr s. Mohammad Mahdi hussaini, Deputy Auditor General of Afghanistan and
Mr sadeqizada Neli, Member of the National Assembly of Afghanistan
by Rosmarie Carotti
Mr sadeqizada Neli
Mr s. Mohammad Mahdi hussaini
R. C.: In your respective roles, as Deputy Auditor general
and Member of Parliament what wishes would like to
bring forward to your Government?
R. C.: Is there something you can do as CAO? Donors
often do not trust the Government and the CAO is a
talking partner for the Afghan government.
Mr Mohammad Mahdi hussaini: i thank you very much
for giving us the opportunity of an interview with you.
afghanistan has a number of priorities in order to help the
government to go forward. One of them is law enforcement.
another one is law implementation and then comes the
need to fight against fraud and corruption.
Mr Mohammad Mahdi hussaini: The donor countries
do not trust the Government of afghanistan in spending
the national budget but at the same time the people of
afghanistan do not trust the donor countries.
in the course of our study tour, we have discussed this
issue in our meetings with other eU institutions and we
have proposed to establish a kind of joint committee
comprising the CaO of afghanistan, the national assembly
of afghanistan and the eU institutions which would have
a kind of monitoring role on the eU funds when there are
deficiencies in the coordination between the Government
and the eU.
The international community is concerned about
transparency in the governmental departments. as Control
and audit Office (CaO) of afghanistan, we need to know that
the money which comes from the international community
is spent in a clear, proper and transparent way. 80% of the
international aid spent in afghanistan is channelled through
international organisations; only 20% goes through a
governmental channel. The Government of afghanistan is
therefore not informed about objectives, beneficiaries and
implementation of international projects.
if there is joint monitoring, no side can complain. in
afghanistan many say that most of the international funds
flow back to national countries and they complain about
the high salaries paid to international personnel who are
responsible for signing the projects.
R. C.: who should inform the Government?
Mr Mohammad Mahdi hussaini: The donors. it is the
responsibility of the donor countries to build a direct relation
and cooperation with the Government of afghanistan
regarding the aid spent in the country. Unfortunately there
is not a very useful coordination of that kind and if the aid
supply process continues in the current form, it can’t fulfil
public need in the future. Distrust and lack of confidence
and coordination between the government of afghanistan
and the donors will increase. it’s essential to be cooperative
to achieve effectiveness and efficiency of objectives.
R. C.: At the table you said that you hope in a future
cooperation between our institutions. In what can we
be helpful, in capacity building, in training?
Mr Mohammad Mahdi hussaini: We want a close and
direct relationship with the european Court of auditors
which has the responsibility of ensuring that the eU funds
are spent properly.
58
«aS COnTrOL anD aUDiT OFFiCe (CaO) OF aFGHaniSTan, We neeD TO KnOW THaT THe
MOneY WHiCH COMeS FrOM THe inTernaTiOnaL COMMUniTY iS SPenT in a CLear, PrOPer
anD TranSParenT WaY»
We want the eU projects in afghanistan to be audited by
a joint committee of CaO and the eCa. as the supreme
audit institution in afghanistan, we have the authority to
audit all public money including all the grants and projects
spent through the Government’s budget. We audit also the
World Bank projects in afghanistan and the World Bank
really appreciates the work we have done in the last years,
its quality and the fact that we were able to finish all our
projects on the deadline. a close and direct relationship
with the eCa would allow an exchange of knowledge and
experience and help us in capacity building.
R. C.: how is the cooperation between the CAO and the
authorities in the Provinces?
Mr Mohammad Mahdi hussaini: We have ongoing relations
with the provincial authorities and they are cooperative.
But we experience some problems in Provinces where the
security is not very good. There it is difficult to receive the
needed audit documentation. Besides, these Provinces lack
professionals, specialists and experts. They would need to
recruit staff but they do not get the right attention from the
donors and the government. it needs time and a lot of effort
to solve their capacity building problems,
R. C.: Mr sadeqizada Neli, as Member of the Afghan
parliament, what can you do to fight corruption?
R. C.: what can a Member of Parliament do to improve the
relationship between the Provinces, creating the feeling
of being one country, to even out local disparities?
Mr sadeqizada Neli : The national assembly of afghanistan
can adopt two measures to fight fraud and corruption:
approve good laws by which it can bring transparency and
accountability to the country and support parliamentary
oversight on the government performance.
Mr sadeqizada Neli : in the national assembly we try
our best to eliminate the feeling of being different which
sometimes exists in the Provinces. We have 18 committees
and in each of them different regions, provinces, nations,
religions are represented in order to convey the message
that we are one country and committed to the same
Government. Besides, we have tried to create real nationwide groups in Parliament in order to convey such a
feeling and when approving the provincial budgets we
aim at an equal distribution according to the number of
the population and the needs. in order to reach a better
balance amongst the Provinces, we plan to increase the
provincial budgets next year by 2 million USD. But also with
our legislation we aim at guaranteeing equal treatment and
equal opportunities for all the peoples of afghanistan.
R. C.: back to my first question: your wishes to your
Government.
Mr sadeqizada Neli : i am a representative of the people
of afghanistan and i express the people’s opinion. The
people of afghanistan want security and the end of the war.
They also wish job opportunities for young people who are
jobless and seeking work. Once they have found a job, these
young people will be very useful in making afghanistan
prosperous. The third wish concerns the reconstruction of
the country, which is not possible without security.
R. C.: Mr Mohammad Mahdi hussaini, a few last words
on the CAO. The CAO is based in Kabul, but are there
also local offices spread over the country?
Mr Mohammad Mahdi hussaini: CaO was established
60 years ago. it is right now based in Kabul and does not
have provincial offices, but plans to establish this year two
regional offices, in the Province of Balkh and in the Province
of Kandahar .
The CaO prepares an annual audit plan and sends out audit
teams to all the Provinces of afghanistan for a specific period
. Depending on the value of the transactions, the activities
and the projects, the audit teams stay shorter or longer on
the spot. There are eight technical audit departments in the
CaO. each of them deals with different audit responsibilities
like the audit of grants,of the municipality of the financial
statements of the State a.s.o..
59
8th ISLAMIC FINANCIAL SERVICES BOARD SUMMIT
«ENHANCING GLOBAL FINANCIAL STABILITY :
CHALLENGES AND OPPORTUNITIES FOR ISLAMIC FINANCE»
10-13 MAY 2011, LUXEMBOURG
by Rosmarie Carotti
The BanQUe CenTraLe De LUXeMBOUrG and the iFSB invited to this second iFSB Summit to be
organised in europe all islamic financial services industry stakeholders, regulatory and supervisory
bodies, international and inter-governmental organisations. President Vitór Caldeira represented
the eCa.
Mr Yves Mersch, President of the BanQUe CenTraLe De LUXeMBOUrG
islamic finance is today a relatively fringe industry
The transformation of the financial industry requires
rapid action and a change of the legal and regulatory
framework. a small country like Luxembourg can in this
context become an important player.
compared to the global financial market, but if the 21
century is to be considered the century of emerging
countries, it might well become the century of islamic
finance.
The private sector in Luxembourg has shown great
interest in the activities of the iFSB. Luxembourg intends
to contribute to the development of islamic finance, to
interconnect islamic finance and global finance, and
to deepen the capacity of islamic finance not only in
the private but also in the public sector. To this effect,
Luxembourg has signed in May a memorandum of
understanding between the inCF, a global university
of Malaysia of islamic finance and the University of
Luxembourg.
The financial crisis causes substantial disruption and calls
for initiatives to strengthen the global framework for
financial stability. against this background islamic finance
has an important role to play. especially the principles of
re-sharing and materiality have protected islamic banks
from exposure to subprime and toxic assets.
The appeal of islamic finance is certainly based on ethical
values and risk-based. The question is now whether
islamic finance should standardise and harmonize its
rules and better integrate into global finance.
according to the World Bank, islamic finance has an
important role to play in order to strengthen the global
framework for financial stability. especially the principles
of re-sharing and materiality have protected islamic
banks from exposure to subprime and toxic assets.
The sources, the level and distribution of risk are different
in traditional and islamic finance but need to be fought
in both. Global standards are needed for regulation, for
auditing and accounting. international cooperation is
therefore of particular importance for the future.
60
8TH iSLaMiC FinanCiaL SerViCeS BOarD SUMMiT
«enHanCinG GLOBaL FinanCiaL STaBiLiTY : CHaLLenGeS anD OPPOrTUniTieS FOr
iSLaMiC FinanCe»
«CONCEPT AND CONTRACTS OF ISLAMIC
FINANCE»
(The presentation was given by Daud viyry Adullah,
CIfP, Global Islamic finance Leader, Deloitte
Corporate Advisory services)
islamic Finance is about the efficient and economic
mobilisation of assets and benefits of the real economy.
The basic equation for islamic finance is that there is no
conflict with Sharīàh, or the principles of islam, that
there are ethical values associated with it, that there is an
element of risk and profit-sharing and that the economic
transactions are real and asset backed.
The global community has moved to adjust the resilience
of the international financial system. it is not sufficient to
look at individual institutions, to exert micro prudential
supervision; a more systemic view on the development of
the international finance, a macro prudential approach is
needed. islamic finance can add to this approach, help
avoiding excessive exposure to risk and create a better
understanding of interdependences. On the other hand,
Basel iii to improve the supervision and regulation of
banking activities could also challenge active islamic
banks.
Since the global financial crisis, where a lot of what
happened was based on paper, the idea of having real
economic transactions has started to attract some
interesting levels of attention from jurisdictions around
the world, one of which is the Federal reserve, which the
iFSB will address later this year in terms of the adaptation
of islamic finance further in the USa.
The different sources of islamic law start with the Koran,
a divine revelation which served as the code of conduct
in all aspects of human life. it is backed up by the Sunnah,
the saints or the Prophet. ijma’ is the Consensus of jurists
and followers of the Prophet. Finally comes the level of
analogy, rulings which were issued much later but were
based on the Koran.
The iFSB has been working to strengthen he regulatory
and supervisory framework for islamic finance institutions
by either introducing new standards or adapting existing
international standards that are shariah compliant. These
efforts pursued by the iFSB are supported by the World
Bank.
a secondary resource is scholarly interpretation, where
legal reasoning is used to interpret the realities of life. islam
in fact affects all aspects of a person’s life.
But islamic finance is still wrestling with some weaknesses.
Many jurisdictions do not have customised standards
for islamic financial institutions and find it difficult to
conduct tactic prudential oversight. accounting and
auditing standards for the industry are not yet applied
evenly across the jurisdiction, this limiting transparency
and complicating the assessment of the institutional
risk. Furthermore, the legal undertaking of financial
transaction is not yet robust. it is unclear whether the
existing law in secular countries will allow for financial
contracts and in case of dispute it is uncertain if a secular
or a shariah law-based Court will be responsible. There
are also other unsolved issues like profit distribution and
the handling of fraud and insolvency.
The whole idea of islamic finance is to benefit society, for
a more equitable distribution of wealth. Two important
principles are profit sharing and real economic transactions.
To get a return from islamic finance, one has to be prepared
to take a loss. it is also important that there is an equitable
distribution of the risks and profits and losses in accordance
with the contract.
Conventional finance takes a view of risk-free reward. There
is fixed interest on deposits and, when the bank collapses,
there is deposit insurance. in islamic finance the money can
only be used to expand the real economy; it is used for a
project, not for speculation and excessive credit expansion.
61
«enHanCinG GLOBaL FinanCiaL STaBiLiTY :
CHaLLenGeS anD OPPOrTUniTieS FOr iSLaMiC FinanCe»
The main prohibitions in islamic finance are:
° money as a measuring tool for value and not an “asset” in
itself.
at the moment about 1% of global assets are S Sharīàh
compliant while 25% of the world population is Muslim.
interestingly enough, 70% of islamic finance is taken up by
non-Muslims. One of the fastest growing areas of investment
in islamic finance right now are pension plans, while the
US and Canada are investing aggressively in Sharīàh ah
compliant funds.
° excessive uncertainty leading to speculation and
gambling.
There are three fundamental elements for islamic finance
contracts.
Conventional banking and insurance are not permissible:
conventional banking deals predominantly in interest; in
conventional insurance the policy holder is dependent on
an event which may never occur.
° There must be an offer and acceptance by both parties.
This can either be written or verbal.
Companies which derive significant income from defence
and munitions, from adult entertainment or gambling are
not permitted, nor are the production and consumption of
alcohol and non halal food.
° The subject matter of the contract needs to be very clear.
There has to be demonstration that the asset or what has
been contracted for could be handed over from the seller
to the buyer.
Brazil is the largest exporter of halal food to the Muslim
world and is concerned about a new trend. it is no longer
sufficient for many Muslims just to know that the animals
were slaughtered according to the rule. They actually want
to be sure that the entire food process is halal and they
want to know how it was financed. By and large, most of the
financing is done conventionally and Brazil is anticipating
that there will be a change and is looking at issuing corporate
sukūk (bonds) raising finances in a Sharīàh compliant way.
There are five areas of contracts: partnership based contract,
sales-based contracts, lease-based contracts, security-based
contracts and others.
° the use of “real interest”, defined as the increase above the
value of an asset.
° The contracting parties must be mature and sane.
The most popular contracts are based on equity sharing or
are partnership-based. There are two types of partnershipbased contracts: Mudhārabah and Mushārakah .
For Mudhārabah there is a capital provider and an
entrepreneur who contributes his skills. The profit will be
shared on a pre-agreed ratio. There is no interest rate but a
There is an opportunity for islamic finance to grow further.
62
«enHanCinG GLOBaL FinanCiaL STaBiLiTY :
CHaLLenGeS anD OPPOrTUniTieS FOr iSLaMiC FinanCe»
distribution of profit. if there were a loss, it would be carried by the capital provider, unless misconduct or negligence of
the entrepreneur could be proven.
For Mushārakah there are two or more parties: the profits are shared on a pre-agreed ratio but the loss is shared in
proportion to each partner’s share of capital.
The market trend goes to Sukūk which are islamic financial certificates, similar to a bond in Western finance. They are used
as a means of raising finances in the capital market. Sukūk must be able to link the returns and cash flows of the financing
to the assets purchased, or the returns generated from an asset purchased. The accounting and auditing Organisation for
islamic Financial institutions (aaOiFi) issued standards for 14 Sukūk types.
Sukūk is still a relatively new market. There is work going on regarding future guidelines for Sukuk, standardisation and
documentation, a trading platform for Sukūk and a primary market handbook. islamic finance has reached the global stage
and needs to grow, but to do so it needs broader acceptance und understanding of Sharīàh compliant Sukūk structures.
There are different schools of jurisprudence and a documented process of decision-making would help to demonstrate to
the market its transparency.
Cross-border liquidity is a key issue that has been addressed by the iSFB member countries. it is raising a lot of interest in
the Global Financial Stability Forum because it is an issue for the whole finance industry. Most Sukūk are not rated and
having a credible rating for Sukūk is an important development.
There is a need to strengthen the financial safety net. Work has been done by the Financial Stability Forum with the
contribution of the iFSB in it. a crisis management resolution is being worked on, and the structure for the secondary
islamic capital market is being developed.
Background (www.ifsb.org)
The Islamic financial services board (Ifsb), which is based in Kuala Lumpur, was officially inaugurated in 2002 and
started operations in March 2003. it serves as an international standard-setting body of regulatory and supervisory
agencies that have a vested interest in ensuring the soundness and stability of the islamic financial services industry,
which is defined broadly to include banking, capital market and insurance.
To this end, the work of the iFSB complements that of the Basel Committee on Banking Supervision, international
Organisation of Securities Commissions and the international association of insurance Supervisors.
as of March 2011, the 191 members of the iFSB comprise 54 regulatory and supervisory authorities, seven international
inter-governmental organizations and 130 market players, professional firms and industry associations operating in
43 jurisdictions.
63
E
FOCUS A DELEGATION OF THE REGIONAL COURT OF AUDITORS OF THE
A
LAND BERLIN VISIT THE ECA AND ARE RECEIVED BY DR HARALD
NOACK, MEMBER OF THE COURT
by Dagmar freudenstein Attaché, Dr Noack’s Private Office
a high level delegation of the Landesrechnungshof Berlin
visited Dr noack on 25 May 2011 during a study tour of the
european institutions. Prior to the meeting in Luxembourg
the Berlin Court had visited the european anti Fraud Office
in Brussels, where it also met with Members of the european
Parliament as well as Commission representatives from DG
BUDG, DG reGiO and DG Competition.
erFD and the Cohesion Fund amounted to some 30 billion
euro, of which a statistically representative sample is audited
by a team of approximately 30 auditors. On-the-spot work
in the member states normally lasts for up to two weeks,
while usually one day is allocated to each audited project,
including travelling time between sites.
The erDF is implemented in multiannual programming
periods, similarly to the european Social Fund and the
Cohesion Fund. There are some 300 so called “operational
programmes” co-financed by the erDF which add to the
complexity of their audit. Mr Weber further clarified that the
audit results are not representative for specific recipients
or member states. rather, they reflect the audits of the
individual policy groups, this being the reason why the
Court does not present error rates by country. Moreover the
eCa follows a different time schedule compared to national
courts of auditors as it prepares its annual report in year n +
1, which also adds to the time pressure and tight deadlines
the Court has to meet every year.
after a welcome note by Dr noack addressed to the president
of the Landesrechnungshof Berlin Ms Claßen-Beblo and
the delegation, Dr Manfred Kraff, director in the Court’s
CeaD Chamber (coordination, evaluation, assurance and
development), presented to the visitors the Court’s audit
approach, with special emphasis on the annual statement of
assurance. Dr Kraff explained the difference between error
rate and frequency of errors and the statistical methods
used to calculate both. More in detail, Dr Kraff illustrated
the audit results of the 2009 statement of assurance while
highlighting the main findings.
The first methodological part was then followed by a
description of the practical work leading to the Court’s
annual report and its statement of assurance, using the
example of the european regional Development Fund
(erDF). The erDF’s main aim is to strengthen economic
and social cohesion in the european Union by improving
regional imbalances.
The meeting continued with a wide-ranging exchange of
views with Dr noack on current european and national audit
issues. The delegation left Luxembourg in the afternoon, to
catch the return flight to Berlin which fortunately had been
restored after the latest volcano eruption in iceland.
Mr Martin Weber, head of financial audit of the erDF,
Transport and energy Unit in Chamber ii provided insights
in the operation of his division. The 2010 payments of the
64
E
FOCUS ÉLÈVES DE L’UNIVERSITÉ JUAN CARLOS EN VISTE À LA COUR
by Alexandra Ramunni, Assistante au cabinet de M. Ramallo
A
Le cabinet de M. ramallo a eu le plaisir d’accueillir le 25
mai 2011 les élèves de l’Université Juan Carlos. Ce groupe
se compose d’élèves de plus de 50 ans ayant repris leur
cursus Universitaire. Cette visite s’inscrit dans le cadre
d’un programme qui inclut une connaissance sur le
fonctionnement des institutions européennes et la visite à
la Cour des Comptes faisait partie d’un voyage de trois jours
de Bruxelles à Strasbourg en passant par le Luxembourg.
M. Daniel Costa de Magalhães a fait une présentation
très inter-active sous forme de questions-réponses sur le
fonctionnement de notre institution et du budget de l’Ue.
Le groupe fort enthousiaste lors de la présentation a montré
un réel intérêt par sa participation très animée.
E
C
FO US IN JULY 2011 THE COURT SAYS :
A
HELLO TO
wAIDMANN
MeDeIROs
Michaela
Pedro
beAUfILs
KACZOROwsKI
Xavier
arkadiusz
GOODBYE TO
JanTUnen
MiCHaLa
SarKaUSKiene
rZeWUSKa-WaLiGOra
KYLanPaa
OrTiZ Y MUnOZ
PaULY
SZaBO
ari-Pekka
Dimitra
ramune
Maria
Tuomas
angela
Benoit
David
DÉCÈS
nous avons le regret d’ annoncer le décès
de notre ancien collègue ANDReAs heCKeR survenu
le 14 mai 2011
nous avons le regret d’ annoncer le décès
de notre ancien collègue TIMOThy CLARKe survenu
le 4 juin 2011
65
ECA SAILING TEAM PARTICIPATES
IN SIGGY’SCUP REGATTA 2011
E
US
FOC
A
The eCa Sailing Team participated in the annual Siggy’s Cup Sailing
regatta 2011. This year the team finally consisted of Juan ignacio
Gonzalez Bastero, antonius Moonen, Kim Huble, Judit Oroszki, John
Speed, Jacques Sciberras, and our retired colleague Hendrik Fehr.
The regatta was held in Greece over four days of sailing starting
from the port of alimos in athens on the 6th of May. 28 teams from
Luxembourg participated in the event and eCa sailed the boat
‘Filomela’ with rail no. 11. eCa was ranked overall number 14 in the
regatta.
each day consisted of one or two legs races of a total of around 20-25
nautical miles, and the course saw the boats visit a number of famous
and beautiful Greek islands and ports like nisos Poros, epidavros or
Perdika in nisos aigina
The team sailed and lived on board the ‘Filomela’ for the entire
duration of the regatta, and tested the fine sailing skills of the crew
in both strong as well as mild wind conditions. Hidden cooking and
deck-hand talents also started to emerge in all team members over
the nearly five days spent living together on the sea.
This race has become a major yachting event and an annual fixture in Luxembourg's community
calendar. it is a good opportunity to meet colleagues, network and meet new people in a competitive
but also friendly sailing spirit. The regatta is open to all companies based in Luxembourg and to all
individuals living or working in Luxembourg.
The first Siggy's cup took place in May 2007 and
has been held annually in different locations
in the Mediterranean ever since. The regatta
bears the name Siggy’s Cup after Sigismund of
Luxembourg who was the last emperor of the
house of Luxembourg and in Luxembourg he is
often referred to by his nickname 'Siggy'.
all team members enjoyed the race and their
overall success in a number of legs, and are
looking forward to the next boat race.
66
E
FOCUS
A
sPeCIAL RePORT N°4/2011
THe aUDiT OF THe SMe GUaranTee FaCiLiTY
One OF THe FinanCiaL inSTrUMenTS eSTaBLiSHeD UnDer THe
COMPeTiTiVeneSS anD innOVaTiOn FraMeWOrK PrOGraMMe
OF THe eUrOPean UniOn iS THe SMe GUaranTee FaCiLiTY. in THiS
rePOrT, THe COUrT eXaMineS THe FaCiLiTY‘S DeSiGn anD PLanninG,
THe ManaGeMenT OF iTS OPeraTiOnS anD THe aCHieVeMenT OF
iTS OBJeCTiVeS in OrDer TO aSSeSS iTS eFFeCTiVeneSS. WHiLe THe
COMMiSSiOn HaS aLreaDY MaDe SiGniFiCanT PrOGreSS COMPareD
TO THe PreViOUS PrOGraMMeS, FUrTHer iMPrOVeMenTS are
reCOMMenDeD COnCerninG THe DeSiGn, THe OPeraTiOnaL
ManaGeMenT anD FOr MeaSUrinG THe aCHieVeMenTS OF THe
FaCiLiTY
sPeCIAL RePORT N°5/2011
SinGLe PaYMenT SCHeMe (SPS):
iSSUe TO Be aDDreSSeD TO iMPrOVe
iTS SOUnD FinanCiaL ManaGeMenT
THe SinGLe PaYMenT SCHeMe (SPS) iS a KeY FeaTUre OF THe 2003
reFOrM OF THe COMMOn aGriCULTUraL POLiCY. iTS OBJeCTiVeS are
TO enCOUraGe FarMerS TO BeTTer reSPOnD TO MarKeT DeManD
anD TO SUPPOrT THeir inCOMe. THe COUrT COnDUCTeD an aUDiT
OF THe iMPLeMenTaTiOn OF THe SPS.
THe COUrT OBSerVeS THaT THe LeGiSLaTiOn PerMiTTeD PerSOnS
Or enTiTiTieS nOT Or OnLY MarGinaLLY enGaGeD in aGriCULTUre
TO BeneFiT FrOM SPS PaYMenTS. iT reCOMMenDS THaT THe
LeGiSLaTiOn Be aMenDeD TO enSUre THaT SPS aiD iS DireCTeD
TO aCTiVe FarMerS. THe CaLCULaTiOn OF SPS aiD SHOULD BeTTer
reFLeCT THe COSTS FOr enVirOnMenTaL eXTernaLiTieS anD
SHOULD Be BaSeD On CUrrenT FarMinG COnDiTiOnS in THe
DiFFerenT reGiOnS. FinaLLY, a MOre BaLanCeD DiSTriBUTiOn OF
SPS aiD BeTWeen FarMerS SHOULD Be SOUGHT
67
Comment vous procurer le Journal de la Cour des comptes européenne?
Publication gratuite disponible sur le site de EU bookshop :
http://bookshop.europa.eu
How to obtain the Journal of the European Court of Auditors
Free publication:
via EU Bookshop : http://bookshop.europa.eu
© European Union, 2011
Reproduction is authorised provided the source is acknowledged/Reproduction
autorisée à condition de mentionner la source
68
QJ-AD-11-007-2A-N

journal - European Court of Auditors

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