Toespraak Voorzitter van de Europese Rekenkamer over het werkprogramma 2008 (en)

ECA/08/06

Brussels, 26 February 2008

Speech by mr Vítor Caldeira,

President of the european court of auditors

Presentation of the 2008 work programme of the European court of auditors to the committee on Budgetary control of the european parliament

The spoken text will prevail in the event of differences.

Mr Chairman,

Honourable Members of the Committee,

Ladies and Gentlemen,

I am pleased to be here today for the first time in my capacity as President to present to you the Court's planned work for 2008. My presentation will necessarily be limited to an overview. Full details of our work programme are available for consultation on our website ( www.eca.europa.eu ). I would also like to take this opportunity to inform you of the way the Court is changing in order to better meet the challenges of the future.

In order to facilitate the presentation of the Court's work programme, I have grouped the relevant information into three different topics, and will deal with each in turn:

• - 

  the work supporting the statement of assurance for the 2007 financial year and accompanying annual report;
• - 

  selected audit tasks - mostly of performance - completed and planned to be published during the year; and
• - 

  ongoing work during the year, of which the results are only likely to be seen in 2009.

The Court is currently in full preparation for the annual reports on the 2007 financial year. As previously, our work covers three major fields: the general budget, the European Development Funds and the agencies, which now number over 25.

As you are well aware, the main subject of the annual report on the general budget is the statement of assurance - or DAS - which absorbs a significant proportion of our audit resources each year. Indeed enlargement has brought with it the need to audit transactions in 12 more member states to reach the same level of results as previously. The introduction of accruals-based accounting has increased the complexity and resources required for our audit of the reliability of the accounts.

The Court will continue to consolidate the use of its audit assurance model to provide the sufficiently robust results in the most efficient way. As in previous years, the DAS will draw on four sources of evidence: two principal and two secondary. The two main sources of audit evidence are:

an assessment of the functioning of supervisory and control systems, and their ability to ensure that transactions are legal and regular; and

direct substantive testing of underlying transactions to the level of the final beneficiary.

This work is complemented by two other key sources of evidence:

a review of the director-generals' declarations, and for the first time how they take into account the annual summaries to be provided by member states; and

the work of other auditors, including where available the audit opinions and declarations provided as voluntary initiatives by some member states and/or their supreme audit institutions, in line with the Court's opinion 6/2007.

I wish now to turn to the way that the results of the DAS work are presented in our annual report. The Court will introduce some significant changes to this key document, both to reflect the new format of the budget and to improve the clarity of presentation.

2007 is the first year of the new financial framework, which is focused around policy delivery. The Court is taking this opportunity to better reflect an earlier change: the move by the Commission to activity-based budgeting and management, and the organisation of the budget in 31 policy areas, covering some 220 activities. The 2007 annual report will be presented in terms of logical groupings of policy areas, which are closely but not completely based on the new headings in the financial framework.

This will help the Court ensure focus on policy areas in their entirety, and organise its resources in the most effective way.

At the same time the Court will continue to build on the greater level of information provided on the DAS results in 2006, in particular on the results of transaction testing. We believe that this - together with codified information on the result of systems assessments - provides useful monitoring information to allow progress in financial management to be measured. This is an essential element of transparency and a stimulus for change and improvement.

We will of course monitor the reaction to the new format and presentation of the 2007 annual report, to ensure we are meeting our objectives. I am sure I can count on this committee for feedback to help us even better meet the expectations of our readers in future reports.

As you are well aware, in addition to the annual reports - which essentially comprise our financial audit work over the main spending areas - the Court also performs selected audit tasks, generally performance audits covering sound financial management, or sometimes compliance audits.

The common feature of these audits is that they concentrate on specific budgetary areas or management issues, allowing a greater depth and focus through the resulting special reports than can be achieved in the annual report. Such audits take significant time to plan, undertake and report due to their scale and complexity. It is therefore very unusual that a selected audit task will be completed and published in a single year, which of course makes out work programme somewhat complex to present.

I will now outline the audit tasks that have been completed or are in the process to be concluded and, subject to formal adoption by the Court, are likely to be published as special reports during 2008. The work on these audits was mostly completed in 2007. The following reports have their publication foreseen before the summer break:

• - 

  Evaluation of major investment projects in structural measures
• - 

  The application of the Binding Tariff Information system
• - 

  The EU Solidarity Fund
• - 

  Milk Quotas in new Member States
• - 

  Getting results - a key management concern for the European Agencies
• - 

  Rehabilitation aid in areas affected by natural catastrophes

In addition, some ongoing audit tasks are expected to be completed during 2008. This is likely to be the case for the following audits:

• - 

  EU's own resources based on GNI and VAT
• - 

  CAP clearance of accounts procedures
• - 

  Cross compliance issues in agriculture
• - 

  The Intelligent Energy programme 2003-2006
• - 

  Structural measures spending on waste water projects
• - 

  TACIS Justice and Home Affairs programmes
• - 

  The instrument for structural policies for preaccession (ISPA)
• - 

  Performance of Executive Agencies

During 2008 the Court intends to continue to progress in the methodological field, namely by updating its financial audit manual and further enhancing its quality assurance function. It will also continue to be increasingly active in the areas of cooperation with international audit organisations and with national audit institutions.

You have received a list of audit tasks selected by the Court under its 2008 work programme presented by financial framework heading. Each task is described briefly, and details given of the audit field and scope. It is important to state that not all of these tasks will result necessarily in a special report.

Having said this, the main focus of our audit task selection procedures is to maximise the use of our scarce resources by identifying audit subjects through risk analysis which are likely to yield the greatest impact. An important part of this process is the carrying out of preliminary studies, some of which have been included in this list. These comprise an initial analysis of the subject and are used to determine whether to carry out a full-scale audit should be undertaken.

The Court's audit strategy has identified a number of priority areas for particular attention in 2008:

• - 

  innovation and the internal market
• - 

  human capital;
• - 

  sustainable energy;
• - 

  the Commission's strategy to simplify the regulatory framework for European business and citizens.

Other areas where important changes have taken place are also highlighted by the Court within the work programme as meriting special attention, namely:

the introduction of the new or revised rules and regulations covering the new spending programmes for the 2007 to 2013 period, particularly in the Structural Funds;

progress of the Commission's action plan towards an integrated internal control framework; and

the ongoing introduction of the single farm payment system for agriculture, and the "health check" of this spending.

Allow me now to share with you my perspective on where the Court stands today and the direction it is taking for the future.

Enlargement has, as you are all aware, brought with it an influx of fresh ideas and opportunities for EU institutions, but also significant challenges.

The Court has, since 2004, grown rapidly, both in terms of personnel and budget. We have welcomed 12 new Members; the budget audit field has increased by 16%; the number of new officials has increased by 14%; and our budget has increased by 25%.

This process has led to the introduction of new rules of procedure and organisational changes in the Court, but also to the recognition of a "gap" between resources and audit coverage. This indicates the need for additional staff and to further improve efficiency in certain key areas in view of increasing performance and optimising output.

In 2006, the Court took the initiative of starting a reform process articulated around a peer review approach. This involved first carrying out a self-assessment exercise by Court staff of all aspects of its organisation and work. The result of this exercise lead to the establishment of an action plan - presented to you by my predecessor last year - identifying specific areas or topics for reform.

I am pleased to report to you today that many of the planned actions are now either complete or close to completion and work is ongoing on the changes identified. An agreement covering the peer review was reached with the state audit offices of Canada, Norway, Austria and Portugal, and the peers have now started their work. The final report is expected by the end of 2008.

The self-assessment, action plan and peer review are linked elements of our aim for substantial and substantive improvement in the way our institution operates. I want now give you some more information about the results to date by setting out some of the main areas of progress.

The focus of the changes I wish to describe are around two key areas:

the principles that underpin the Court and its work - its mission, vision, values and strategic objectives;

the stance for a more communicative Court.

Principles - a new mission and vision

It is important for any organisation to have a clear focus and direction to the way it operates. The Court identified that it should not only update its mission statement to more clearly set out its roles and responsibilities, but also define the principles by which it operates and its aspirations for the future.

The new mission statement emphasises that the Court contributes to improving the financial management of the EU, and acts as the independent guardian of the financial interests of the citizens of the Union. The mission statement introduces the notion that the Court not only audits, but provides audit services; this gives us the scope to act more widely, such as using our skills and experience to provide more pro-active advice without compromising our independence. The revised mission statement also underlines the assistance we provide to you, the Parliament, and the other branch of the discharge authority, the Council, in your key oversight role. The Court is committed to making this support as effective as possible.

In setting out its vision the Court wishes to be recognised for its integrity, professionalism, efficiency and of course the quality of its output. This requires excellence at all levels of management, as well as being progressive and innovative, while protecting and nurturing our biggest asset, the competence and motivation of our staff. In this respect I wish to convey an important message: the staff regulations, particularly since they were reformed, make it increasingly difficult to attract and retain the best professionals from all member states that we need to protect the integrity of our institution in the medium and long term. We need greater flexibility and autonomy to allow us to compete successfully against an increasingly competitive industry. I ask this committee to help consider how this could be best achieved.

Every institution requires a set of values by which it operates, and the Court is no exception. Indeed, it may be even more important in the Court's case given its role as independent external auditor. The Court has therefore defined its values as:

• - 

  independence, integrity and impartiality - allowing it to undertake fair, balanced audits without interference from the auditee;
• - 

  professionalism - both by producing work of the highest standard, and contributing effectively to the wider public audit profession;
• - 

  adding value - through useful reports, effective recommendations and effective communication; and
• - 

  excellence and efficiency - in all aspects of our work.

These three elements (mission, vision, values) are complemented and completed by a set of strategic objectives, setting out how we will meet our goals. These detailed objectives cover the four areas of the professional approach to our audits, improving the number and quality of our output, improving communication and dialogue with stakeholders (including this committee) and measures to develop our resources to ensure learning and growth. Rather than going into specific detail on individual objectives here, I would direct you to the full list available on our website ( www.eca.europa.eu ).

A more communicative Court

Public audit has an important role in any democratic system - we are knowledge providers and thereby help to holding decision-makers to account, as well as contributing to raise awareness on the developments and achievements of public policy in the interest of the citizens of the Union.

To have impact, our work should not only be of the highest quality but also be read and acted upon by our stakeholders. The Court has over the last year adopted a more ambitious stance in this area by giving specific responsibility for communication to a member - my colleague Lars Heikensten.

Another outcome of the action plan is the adoption of a strategy for improving the quality and readability of our reports, which includes targeted guidelines and improved training. The Court also has the intention to start publishing its special reports outside the official journal in a more attractive and user-friendly way.

In the meantime you may have noticed some of the measures to improve our reporting already taken: more useful information to supporting our DAS opinion, in particular the results table presented in chapter 1 of the 2006 annual report; and an improved information note highlighting the main messages of the annual report, and providing background and context information to improve understanding for non-expert readers.

I believe it is also fair to say that relations with this Committee - one of our key stakeholders - have progressed positively. In particular I would like to refer to the conclusions of the workshop held by this committee in November 2006 on the strengthening of the functions of the Committee on Budgetary Control, where the strategic partnership between the Court and the Committee was addressed. I should like in this context to pay tribute to the work of your Chairman, Mr Bösch.

An improved procedure has also been introduced for this Committee's debates of our special reports, allowing better cooperation between the respective rapporteurs and a more detailed and thorough debate with the participation of the auditee. Within this spirit I also hope that you will agree to consider a different venue and arrangements for the presentation to the Committee of the Court's 2007 annual report.

Work in progress

We are currently working on other areas, from which I want to underline the following ones:

• - 

  how the Court is organised and operates - its governance structure; and
• - 

  how the Court monitors and measures its output - its performance indicators.

As I mentioned, the Court has had to cope with a large increase in both the size of the college, and the number of staff. Despite some change in its rules of procedure, the reform programme has identified the need to reconsider the way we are organised to ensure the most effective and efficient decision making process and making the best use of our resources in the framework of the Treaty.

The Court, in its professional work, recognises that sound financial management of any organisation needs at its heart clear objectives, and an effective system for monitoring progress and output. The Court has recognised the need and importance to introduce such an approach to its own work with an action to define and implement a set of performance indicators to measure progress to our work programme goals and strategic objectives. We are now in the process of identifying and defining the relevant key performance indicators for our institution.

I will inform you on the results of our deliberations in due course.

The Court has set itself some ambitious targets which will require the commitment and application of all our staff, management and members to succeed. I am convinced that not only will the results be worthwhile, but essential to ensure the Court faces the next thirty years of its existence in the most efficient and effective way.

As President of the Court, I will do all in my capacity to ensure that these objectives are followed and achieved. In this sense, I am committed to ensure that the Court - as a full EU institution, as reaffirmed by the Lisbon Treaty - is:

• - 

  recognised for its independence, integrity, impartiality and professionalism; for the quality and impact of its audits; and for being closer to its stakeholders and to the European citizens;
• - 

  committed to bringing added value to EU financial management through its recommendations, playing an active role within the EU construct; and
• - 

  a well managed organisation aiming at achieving excellence and efficiency.

Concluding, Mr. Chairman, I would say that the Court faces a number of challenges over the coming year: to produce a substantially revised and improved annual report; to increase the number of its selected audits, while completing those already started; to deliver on time all the specific annual reports on the agencies; and undertaking an ambitious reform programme. And all this needs to be done under the watchful eye of a comprehensive peer review.

I believe, however, that the Court possesses the will and resources to address these challenges head on, and emerge a better organised and better performing institution. This can only be to the benefit of the citizens of the Union, in whose financial interest we endeavour to work.

Thank you for your kind attention.