Klaus-Heiner Lehne, President of the European Court of Auditors (ECA), credit: ECA
The supreme audit institutions in the EU member states reacted swiftly to the coronavirus crisis and allocated substantial resources to assessing and auditing the response to the crisis according to a report published last week (22 July).
The report in the form of an audit compendium was published by the Contact Committee of the EU supreme audit institutions (SAIs) and provides an overview of the audit work carried out by them in relation to COVID-19.
The Contact Committee is an autonomous, independent and non-political assembly of the heads of SAIs of the EU and its member states. It provides a forum for discussing and addressing matters of common interest relating to the EU. It does not include the SAIs in the candidate countries that still are in the process of building up their audit capacity and have a separate cooperation forum.
According to the report, in most areas severely affected by the pandemic, the EU has only limited power to act, partly because competence for public health is not exclusive to the EU, and partly because there was little preparedness or initial consensus among member states on a common response.
Due to this lack of a coordinated approach, national and regional governments acted independently when putting in place prevention and containment measures, when procuring equipment or when setting up recovery packages and job retention schemes to mitigate the socio-economic. However, after a difficult start, the EU and member states improved their cooperation.
This state of affairs affected apparently also the SAIs that adapted their audit work programmes to include assignments of different types, such as advice, reviews, assessments and full-fledged audits, to address the problems that emerged during the crisis.
“The COVID-19 pandemic caused a multidimensional crisis that has affected nearly all areas of public and private life, be it public health, economic activity, labour, education or public finances,” said Klaus-Heiner Lehne, President of the European Court of Auditors (ECA). “It is already clear that COVID-19 will have long-lasting consequences on the way we live and work in the future.”
“As viruses do not care about national borders, the EU needs the means to support the member states. It remains to be seen whether we have learned our lessons, including the need for better cooperation.”
The audit compendium includes summaries of a sample of 17 audit activities carried out by the SAIs of Belgium, Cyprus, Germany, Latvia, Lithuania, the Netherlands, Portugal, Romania, Slovakia, Sweden and ECA itself and covers five priority areas, public health, digitalisation, socio-economic response, public finances and risks, and the general response at different levels of government. Each summary gives context and reasons for the audit activity, as well as some principal findings and conclusions.
Altogether 48 audits related to COVID-19 were completed in 2020 by the above SAIs and more than 200 other audit activities are still ongoing or planned for the coming months. Whether other SAIs also have carried out audits related to the crisis is not clear from the audit compendium.
However, according to ECA’s activity report last year, ECA had already published an Audit Compendium on how auditors across the EU scrutinise public health. To what extent did the SAIs audit this sector, including hospital preparedness, before the outbreak of the coronavirus crisis?
“A number of national auditors regularly carry out audits on hospitals,” ECA replied then. “The compendium presents some examples in this regard. Due to the COVID-19 pandemic, public health has obviously become an even more important subject for external audit in Europe. Currently, EU SAIs are having an ongoing exchange on COVID-related work, including possible audit-related collaborations.”
New form of audit cooperation
There are clear benefits of audit cooperation between SAIs. According to a guide on collaborative audits, drafted by the international organisation of SAIs (INTOSAI), such audits help them to identify solutions to common problems and to pilot new methods. They enhance their capacity and enable the participating SAIs to learn good audit practice.
Did ECA initiate cooperation during the crisis between the SAIs in the EU member states, for example in the form of parallel audits (a project by a number of SAIs on the same audit topic, with a shared audit approach but resulting in separate national reports)?
“The Compendium is the result of the first EU Network Audit,” ECA President Lehne replied. “It’s a new form of audit cooperation among EU SAIs that focuses on strategically selected policy areas over a certain period of time, or on exceptional events which are having or are highly likely to have a significant impact on our societies.”
“The great advantage of the EU Network Audit is that it allows for more flexible coordination among participants than rather traditional formats such as parallel audits, meaning in turn that they can focus better on specific (national) situations and needs. Given the disruption the pandemic has caused and its foreseeable mid- to long-term impact on the EU and its member states, the pandemic lent itself as an obvious theme for this new type of cooperation.”
He added that the ECA is in regular contact with EU SAIs, but also worldwide, to discuss and exchange on the exigencies of this extraordinary situation, audit approaches, findings and recommendations as well as best practices, be it on the audit or the administrative side.
Are there examples of audits carried out in real time as events were unfolding, lockdowns imposed and emergency measures put into place?
“As the SAIs of the member states and the ECA have quickly undertaken many audit and monitoring activities, most of them can be considered as ‘real-time’ audits carried out while the situation and the events were unfolding,” the auditors replied. “The term ‘real-time audit’ is not referring to a standard type of audit and only some SAIs have developed specific approaches in this regard.“
It seems impossible to summarize the main common conclusions of the audits in audit compendium and anyone interested of the work of the SAIs will have to read the report which includes an annex of all activities by ECA and the SAIs concerned.
To take some examples, Belgium has carried out a compliance audit of a contract for contact tracing and analysed the impact of the COVID-19 health crisis on social security revenue and expenditure.
In the Netherlands, the SAI audited the risk of abuse and improper use of a job retention scheme, digital teleworking, individual support to companies during the COVID crisis, and the risks of sureties and loans to public finance.
The Swedish SAI told The Brussels Times already in March 2020 that it had not decided on any performance audits in ‘real time” about the crisis and Sweden’s preparedness to it but did decide to audit the government’s application of the fiscal policy framework during the crisis, the purpose of which is to ensure a long-term sustainable and transparent fiscal policy.
“It would be difficult to synthesise a set of general audit conclusions since they cover not only a broad range of audit topics at different levels of government, but also reflect various types of assessments and audits,” ECA commented.