EUROPEAN COURT OF AUDITORS ECA/07/23 Luxembourg, 18 October 2007 Opening address by Dr Hubert Weber, President of the European Court of Auditors Seminar on "The future of public audit in the EU" in the framework of the celebrations of the Court's 30 th anniversary The spoken text will prevail, in the event of differences. 1
Dear Colleagues, Ladies and Gentlemen, It is a great pleasure for me to welcome you here today to the European Court of Auditors for this "Seminar on the future of public audit in the EU" organised in the framework of the celebrations for the Court's 30 th anniversary. First, I want to express my particular gratitude towards our keynote speakers and round table participants: Mr Herbert Bösch, Chairman of the European Parliament's Committee on Budgetary Control - Prof. Danuta Hübner, Commissioner for Regional Policy - Dr Árpad Kovács, President of INTOSAI and the State Audit Office of Hungary - Dr Tuomas Pöysti, Auditor General of the State Audit Office of Finland - Prof. Helga Nowotny, Vice-President of the European Research Council - Mr José Tavares, Member of the Supreme Audit Office of Portugal and Messrs François Colling and Jean-François Bernicot, Members of the European Court of Auditors. I am also very pleased to welcome the Members of the European Parliament's Committee on Budgetary Control, the Heads of Supreme Audit Institutions as well as their delegations, senior representatives from the European Commission as well as my predecessors, the former Presidents of the European Court of Auditors, Messrs Middelhoek, Friedmann and Fabra Vallés. Then I also want to express my special thanks to all those - Member States' Supreme Audit Institutions, the European Court of Auditors' sister Institutions - who have given us considerable support as regards maintaining our institutional position, which the Treaty establishing a Constitution for Europe proposed to change. According to the latest information I have available, it seems likely that there will be no modification to the European Court of Auditors' institutional position. More generally, I also want to thank all of you for your presence here today and for your interest in the seminar subjects. I encourage you all to participate as actively as possible in the debates, to elicit the widest range of contributions and ideas. Very often, when celebrating an anniversary, the temptation is to look back at what has been achieved. We have taken this historical approach via the exhibition that we have organised on the 30 years of the Court. Comparisons with many other events in contemporary history come to mind. In the case of the European Court of Auditors, it is of interest to remember that our Institution started operating in exactly the same year - 1977 - as the Lima Declaration of Guidelines on Auditing Precepts was adopted by acclamation by the delegates at the IX INTOSAI Congress in Lima (Peru). While the creation of the European Court of Auditors was based on an initiative of the European Parliament, its mandate was built on the Lima Declaration foundations, a document that is often considered to be the Magna Carta of external public auditing. 2
Today, exactly 30 years since the first meeting of the Court, rather than looking back over the past, however, we want to look to the future, including predicting the potential impact of existing trends. This must currently be in vogue, as this forward-looking approach has also been a feature of other recent international events organised in the area of public auditing. As you can see from the programme, we will be discussing two themes: In the morning, "The challenges of auditing EU funds" theme is close to the Court's specific area of activity, whereas in the afternoon, "The future of public auditing and accountability" is a theme which is more generally relevant for the whole of the public auditing profession. Before we start with the first theme, I would like to share with you some of my own thoughts and views on the challenges and opportunities facing the European Court of Auditors and, I believe, all Supreme Audit Institutions. Further development of performance auditing The first trend I want to refer to - the further development of performance auditing - is nothing new but has yet to reach its full potential. Increasingly, the emphasis is on achieving economy, efficiency and effectiveness in the use of public funds. The Supreme Audit Institutions, as service providers to their stakeholders and to interested members of the public, provide information to help achieve the best possible use of public funds. One example to show how topical these concerns are for Supreme Audit Institutions worldwide is the fact that one of the themes for the upcoming XIX INTOSAI Congress that will take place in a few weeks in Mexico is Performance Assessment Systems Based on Universally Accepted Key Indicators. In the case of the EU, performance indicators - such as those linked to output and impact - are becoming more widely used. The auditor has a key role to play in pronouncing on the relevance and reliability of the data given, information that may be used by Parliament as well as by citizens to judge the success of government and help hold it to account. One of this morning's themes on "The challenges of auditing EU funds" is the financing of research by the EU. The Court is well aware that - as is often argued - the concrete results and impact of research projects, in particular for fundamental research, are difficult to anticipate. Despite this constraint, there is nevertheless plenty of, sometimes challenging, audit scope to be tackled by the European Court of Auditors as regards the funds spent on research projects. The ever increasing emphasis on performance auditing also has a major impact on the public audit institutions themselves. Just to mention one example, to be able to carry out audits with demonstrable value added, additional expert knowledge in a wide range of areas needs to be developed. In some cases, this means that outside experts have to be called in. Supreme Audit Institutions developing counselling activities Another trend is that the Supreme Audit Institutions will more and more be asked to engage in counselling activities. As such, we need to consider how, with our different mandates and political and institutional arrangements, we can play a leading role in giving advice to government, whilst at the same time maintaining the required independence. 3
This is in particular true in the area of public administrative and government reform. It was already identified as such in the so-called "Seoul Accords", the conclusions of the XVII INTOSAI Congress that took place in Seoul in 2001. In our fast-changing environment, more and more countries in the world undergo profound administrative and government reforms that have the objective of providing a better service to citizens at the right cost and improving the performance and accountability of public-sector management. The advisor role can take different forms, such as providing studies, prior reports, best practice guides and other information to decision makers. It may also include being consulted by government when reform initiatives concern issues directly relevant to the expertise of Supreme Audit Institutions, to address shortfalls and management weaknesses. That is the spirit in which the European Court of Auditors has for a long time now been producing opinions, a trend that I am sure will further expand. I would like to cite two recent examples: Opinion No 2/2004 on the "single audit" model - including a proposal for a Community internal control framework - and Opinion No 6/2007 on the annual summaries of Member States, "national declarations" of Member States, and audit work on EU funds of national audit bodies. Special Report No 10/2004 concerning the Devolution of EC external aid management to the Commission Delegations was a contribution by the Court in the context of an administrative reform. When this major reform was announced by the Commission in May 2000, the European Court of Auditors decided to accompany it by auditing this transfer of responsibilities in order to provide useful recommendations for optimising "deconcentration". Similarly, the Court will also perform audit work to accompany the Lisbon Agenda, the Barroso Commission's flagship policy. This Agenda, also called the growth and jobs strategy, focuses on four priority areas: 1) investing more in knowledge and innovation; 2) unlocking the business potential, especially of small and medium enterprises; 3) greater adaptability of labour markets based on "flexicurity" and 4) energy and climate change. Supreme Audit Institutions leading by example Based on the INTOSAI aim for Supreme Audit Institutions to be model organisations, public audit institutions are to lead by example in respect of their reform and continuous improvement processes. The European Court of Auditors wants to meet this challenge, which is also referred to in its new Mission Statement currently being developed. Supreme Audit Institutions are exposed to competition at various levels. One of the most obvious examples is our most important resource, our staff. For recruiting but also retaining our staff, we face increasing competition from private-sector and public-sector employers. It is therefore crucial to be able to offer competitive careers, including working conditions, remuneration and sufficient progression in hierarchy and responsibility but also to accept much greater flexibility and mobility of our workforces. Encouraging our staff to widen their experience in the immediate or wider outside world, as well as employing experienced outsiders, should help maintain the practical knowledge and dynamic intellectual environment needed to fulfil our role effectively. 4
Nevertheless, owing to their special position, the Supreme Audit Institutions are, in terms of their performance, in an area that is shielded from competition. This means that the Supreme Audit Institutions must constantly strive by themselves to improve their operations and enhance their credibility and, therefore, effectiveness so that they lead by example and thus become model organisations. We should adopt the best management practices and apply to ourselves all relevant recommendations that we make to other organisations. This effort should cover many different areas, including the areas of financial management, information technology, strategic planning, organisational alignment and human resources management. The INTOSAI and its regional organisations, such as EUROSAI, also play a major role in striving to serve as a model in public management, as they offer a basis that enables the Supreme Audit Institutions to learn from each other by comparing or benchmarking their practices. The INTOSAI has also established a working group under its strategic plan for 2005-2010 that has the task of "promoting best practices and quality assurance through voluntary peer review". Peer reviews are a fast developing tool to enable Supreme Audit Institutions to learn from each other. They can be carried out for a number of different reasons: some Supreme Audit Institutions may wish to improve their procedures and their results, others may wish to obtain proof of the high standards governing their work, and others again may consider themselves obliged to have a peer review carried out in response to criticism from outside. The European Court of Auditors is not only an active member of this working group but has itself already carried out a self-assessment, which was followed by an action plan currently being implemented. A peer review, due to start shortly, will give us useful recommendations for the future development of the Court. Notwithstanding specific major actions such as peer reviews, the Supreme Audit Institutions' efforts to lead by example are a permanent task. After these introductory words with my thoughts and views on some of the challenges and opportunities lying ahead of the European Court of Auditors and the Supreme Audit Institutions in general, it is now time to start with the first theme itself. I do sincerely hope that you will find today s debates very interesting. Again, in order to make these discussions as lively and interesting as possible, I count on your active participation. The ultimate purpose is for all of us to be able to receive some food for thought that we can take with us, think about, in order to help us all in shaping the future development of our own institutions and organisations. I wish you all an excellent seminar. 5