The role of National Audit Institutions The role of National Audit Institutions in the audit of EU fundsin the audit of EU funds

An EU perspectiveAn EU perspective

by Irena Petruškevičienė,by Irena Petruškevičienė, Member of the European Court of Auditors Member of the European Court of Auditors

Vilnius, 20 March 2007

2

Over €100 bn is raised each year to fund the EU budget, mostly from Member States contributions based on their Gross

National Incomes (GNI) and Value Added Tax bases

€108,4 billion ≈1% of GNI

3

The majority of EU funds are spent within the EU implementing the Community’s agricultural and

structural policies

Stuctural policies

30%

Pre-accession

strategy 2%External

action 5%

Internal policies 8%

Admin 6%

Other 1%

Agriculture 47%

Arrangements for implementing the EU budget are complex; the majority of spending involves shared management

between the Commission and Member StatesEU

EU-budgetAdmin External

actionsInternal policies

Structuralpolicies

Agriculture

Payment Payment- Advance- Payment

- Advance- Payment

- Advance- Payment

Verification

Beneficiary

Third country

Beneficiary Beneficiary

Activity ActivityActivity

National budget

Paying and implementing agencies

Payment

Verification

Documentation Documentation Declaration Declaration

Member state

4

5

Shared management results in responsibilities for controlling and auditing the use of EU funds

at both EU and national level

6

The relative importance of EU funding is different from the Lithuanian national budget perspective than from the EU

budget perspective

% share of respective budgets in 2006

Lithuania

Lithuania

EUEU02468

101214

EU Revenue EU Expenditure

7

The Court adds value by auditing EU policies (not Member States) from Commission level down to the

level of the final beneficiary of EU funds

8

Cooperation by the ECA with NAIs is required by the Treaty and professional standards, and takes a number of forms

Contact committee & Liaison officers

Correspondence

Participation inon-the-spot visits

9

The Court must provide assurance on the reliability of accounts and the legality and regularity of underlying transactions, and

examine whether financial management was the sound.

Were the rules

followed?

Are the accounts correct?

Was the money

well spent?

9

10

The Court presents its findings to the European Parliament and Council and publishes its reports and opinions in the

Official Journal of the EU and on its website

Annual Report: Statement of Assurance, observations on the implementation of the EU budget

Specific Annual Reports: on EU organisations or agencies

Special Reports: on specific budgetary areas or management topics

Opinions: on new or amended legislation with financial impact

www.eca.europa.euwww.eca.europa.eu

10

11

Key messages of the Court’s Annual Report 2006 are in line with previous years; material level of error in some areas

but significant progress made in others

• EU accounts are reliable

• Material error in some areas of expenditure, particularly structural policies

• Marked fall in error rate in agriculture due to the operation of the Integrated Admin. and Control system (IACS)

• Revenue, administration, pre-accession strategy and part of external actions free from material errors

12

No major observations about Lithuania in the annual report but illustrative observations about other Member

States identify risky areas on which to focus audit work

• the Court audits by policy area not Member State, so reference to Member States in the reports of the Court are often illustrative

• Lithuania receives only 0,8 % of EU funds; the number of audit missions carried out in Lithuania reflects this

• Lithuania only recently joined the EU so funding still in the “take off” phase

• National administrations are in similar situations, so observations about other Member States could apply

• Such observations can and do help National Audit Institutions like the National Audit Office of Lithuania to identify risks