WORKSHOP 1 AUDIT OF LEGALITY AND REGULARITY

Transcription

1 33 RD CONFERENCE OF THE DIRECTORS OF EU PAYING AGENCIES APRIL 2013 WORKSHOP 1 AUDIT OF LEGALITY AND REGULARITY Michael Cooper Director, UK Co-ordinating Body 1

2 ECA's audit opinion on the implementation of 2011 EU budget Accounts are complete and accurate, but there are too many errors in the underlying payments. Highest error rates in policy areas where national authorities spend EU money under 'shared management' arrangements. 2.9% CAP Pillar 1 (market measures and direct payments). 7.7% CAP Pillar 2 (rural development) and related areas. 2

3 New requirements for audit of legality and regularity EU Financial Regulation will require audit opinions on legality and regularity for all funds from 2014 (Art 59 of Regulation 966/2012). CAP Horizontal Regulation - certification bodies will have to extend their work to cover legality and regularity of expenditure (Article 9) CAP transitional regulation confirms this requirement will apply to CAP expenditure from 16 October Implementing and delegated acts expected in second half of

4 Article 9 Horizontal Regulation Council text agreed March 2013 Certification bodies 1. The certification body shall be a public or private audit body designated by the Member State which shall provide an opinion, drawn up in accordance with internationally accepted audit standards, on the completeness, accuracy and veracity of the annual accounts of the paying agency, the proper functioning of its internal control system, and the legality and regularity of the expenditure for which reimbursement has been requested from the Commission. The opinion shall also state whether the examination puts in doubt the assertions made in the management declaration. It shall be operationally independent from the paying agency and the coordinating body concerned as well as from the authority which has accredited that agency and shall have the necessary technical expertise. 2. The Commission shall, by means of implementing acts, lay down rules concerning the tasks of the certification bodies, including the checks, as well as the certificates and the reports, together with the documents accompanying them, to be drawn up by those bodies. Taking into account the need for maximal efficiency, of transaction testing and professional audit judgment, in respect of an integrated approach, the implementing acts shall also lay down: a) the audit principles on which the opinions of the certification body are based, including an assessment of the risks, internal controls and required level of audit evidence; b) the audit methods to be used by the certification bodies, having regard to international standards on auditing, to deliver their opinions, including, where appropriate, use of a single integrated sample for each population and, where appropriate, the possibility to accompany paying agencies' on-the-spot checks. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 112(3). 4

5 Next steps Trilogues on the Horizontal Regulation have begun. Implementing and delegated regulations. DG AGRI is consulting on 2 nd draft guidelines (issued April 2013) to address the requirements of Article 9 of the Horizontal Regulation Bilaterals between DG AGRI and Member States to discuss revised draft guideline. Conference of Directors of Paying Agencies Learning Network of EU Paying Agencies and Co-ordinating Bodies 5

6 DG AGRI's revised draft guidelines - 1 Responsibility regarding the compliance with the legal framework lies with the Paying Agency s management Certification bodies (CB) will need to give an opinion on the legality and regularity of the expenditure for which reimbursement has been requested to the Commission, i.e. to obtain reasonable assurance as to whether funds have been spent in conformity with contractual and legislative conditions and have been correctly and accurately calculated. 6

7 DG AGRI's revised draft guidelines 2 CB will carry out its work in accordance with international standards. Audit assurance will be built up via: Risk assessment, based on existing knowledge of systems Audit evidence obtained in previous audits and from other audit providers Audit approach to respond to the identified risks of material misstatement Sampling parameters 7

8 DG AGRI's revised draft guidelines 3 Assessment of the internal control system, including compliance testing Substantive testing for legality and regularity this will be a test of details for each sampled file from the claim receipt up to (and including) the validation of the expenditure to verify whether applications have been processed as required, data have been correctly entered, administrative cross-checks have been operated correctly, on-the-spot checks have been conducted in compliance with the applicable rules, the payment calculation has been performed correctly, including reductions and exclusions. 8

9 DG AGRI's revised draft guidelines 4 Build assurance for legality and regularity by analysing the functioning of the internal control system and validating the control statistics. CB s on-the spot verifications can be carried out either in a classical way (using GPS etc) or by remote sensing (tele-detection). The latter is allowed only for those files which were previously checked in the same way by the PA. Where it is impossible to re-perform on-the-spot checks, the CB is allowed to accompany the PA s first level of controls. 9

10 Questions for discussion in table groups - 1 (1) Will Member States be able to implement the new arrangements in time for financial year 2014 given the current draft status of the regulations and guidelines? How should the transition be managed? (2) What are your views on the proposed approach to the audit? How much additional audit work do you think is required by the CB (compared to the current certification audit) to reach an opinion on the legality and regularity of the expenditure? Should the reinforcement of assurance regarding the control statistics be the responsibility of the CB or the PA? 10

11 Questions for discussion in table groups - 2 (3) What are the risks or opportunities for your Paying Agency and for claimants as a result of the audit of legality and regularity? (4) Is your Paying Agency planning to review or change its internal compliance procedures in response to the introduction of the audit of legality and regularity and, if so, in which ways? (5) Does the implementation of the audit of legality and regularity raise any other issues for your Paying Agency? Please discuss one or more of the above questions and choose a spokesperson who will report back on your conclusions 11

12 THANK YOU! 12