The European Court of Auditors (ECA) published last week its annual activity report which gives an overview of its work in 2021 and provides information about the institution’s management, its staff and its finances.
The ECA is an independent external audit institution and EU’s counterpart to the supreme audit institutions (SAI) in the member states. Based in Luxembourg, it was established in 1977 and has developed over the years. It operates as a collegiate body of 27 Members, one from each member state, and employs around 900 staff. Two thirds of its workforce are auditors of all EU nationalities.
Its budget in 2021 was €153 million, 92 % of which was used during the year. The budget represents less than 0.1 % of total EU spending, or around 1.5 % of the EU’s total administrative spending.
ECA President Klaus-Heiner Lehne writes in the foreword to the 2021 activity report that ECA maintained business continuity throughout the year and continuously adapted to changing working conditions despite the ongoing pandemic
“In 2021, we published all our annual reports within the official deadlines. We also published 32 special reports and reviews, while keeping delays within reasonable limits.” ECA strives to complete its audits within 13 months, in line with the target set in the EU’s Financial Regulation.
He concluded the foreword with drawing attention to the on-going war in Ukraine. “We stand in solidarity with Ukraine. We have strongly condemned the Russian invasion of Ukraine and organised humanitarian help for the victims of the Russian aggression. These are dark times for Europe. Now more than ever, the EU needs to show unity.”
At the end of 2021, ECA completed the first year of its new strategy for 2021-2025. The strategic goals for this five-year period are to improve accountability, transparency and audit arrangements across all types of EU action; target the audits at the areas and topics where ECA can add most value; and provide strong audit assurance, in a challenging and changing environment.
Out of the 32 reports in 2021, only two covered COVID-19 related issues: a review of the EU’s public health response and an audit of air passenger rights during the pandemic. In July 2021, ECA published a report on how the supreme audit institutions in the EU member states reacted to the coronavirus crisis and allocated resources to assessing and auditing the response to the crisis.
For most of 2021, the travel restrictions and public health measures continued to limit ECA’s ability to carry out audit fieldwork. This is also expressed in the statistics on the number of working days by location. Compared to pre-COVID-19 years, the ECA auditors spent significantly fewer days auditing on the ground.
ECA compensated for the limited on-the-spot checks by making increased use of videoconference tools, remote auditing and gathering evidence electronically.
Who is held accountable?
Accountability is a key word in the activity report. ECA states that its publications – audit reports, reviews and opinions – are an essential element of the EU’s accountability chain. “They help the European Parliament and the Council to monitor and scrutinise the achievement of the EU’s policy objectives, and to hold to account those responsible for managing the EU budget, principally the European Commission.”
For the financial year 2020, ECA estimated the level of error for expenditure as a whole to be between 1.8 % and 3.6 %. The mid-point of this range, known as the ‘most likely error’, is 2.7 %.
The figure is quite stable over the years but it is still above the 2% threshold for material level of error which is considered as an acceptable or inevitable error rate. The actual figure might be somewhat higher or lower as the auditors are basing their estimates on a sample of transactions.
ECA also follows up its recommendation and the vast majority of them are accepted fully or partly by the European Commission and other audited EU bodies although it can take time until they actually are implemented, something which might require another follow-up. In the past, ECA has carried out special performance audits on the governance arrangements in the Commission.
A major issue concerns who is responsible and held accountable in the Commission for irregularities and mismanagement of funds. Is it the College, the group of Commissioners as a whole, individual Commissioners or the Directors-General in charge of the organization? Are officials sanctioned in some way?
The auditors do not directly state that accountability is diluted in the Commission but they have questioned whether the arrangements are clear. Its audit work highlights what works well, but also what could be improved and what does not work. The audit recommendations are addressed to the Commission as a whole and not intended to hold individual officials accountable.
“We are not a court of law with the power to issue binding judgments, but our conclusions and recommendations are independent, public and follow international auditing standards,” ECA President Lehne explained. “They are considered in detail by the Parliament and Council, and they directly help our auditees, first and foremost the Commission, to better manage EU funds and policies so that they deliver for our citizens.”
Update: ECA clarifies that 94 % of the 35 recommendations made in its 2017 annual report and 89 % of the 161 recommendations in its 2017 special reports have been implemented either in full, or in some or most respects.
The Brussels Times