Roadmap%20to%20an%20integrated%20internal%20control%20framework

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Shared management and declarations by Member
States Brian Gray
Roadmap to an integrated internal control
framework
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Assurance on EU funding

• Treaty obligations
• Court of Auditor's opinion
• Strategic objective
• Action plan
• Integrated control framework

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The Treaty Who does what?
Article 276 1.   The European Parliament, acting
on a recommendation from the Council which shall
act by a qualified majority, shall give a
discharge to the Commission in respect of the
implementation of the budget //
Article 248 1.   The Court of Auditors shall
examine the accounts of all revenue and
expenditure of the Community. It shall also
examine the accounts of all revenue and
expenditure of all bodies set up by the Community
in so far as the relevant constituent instrument
does not preclude such examination. The Court of
Auditors shall provide the European Parliament
and the Council with a statement of assurance as
to the reliability of the accounts and the
legality and regularity of the underlying
transactions which shall be published in the
Official Journal of the European Union. This
statement may be supplemented by specific
assessments for each major area of Community
activity.
EUROPEAN PARLIAMENT
EUROPEAN COURT OF AUDITORS
Article 274 The Commission shall implement the
budget, in accordance with the provisions of the
regulations made pursuant to Article 279, on its
own responsibility and within the limits of the
appropriations, having regard to the principles
of sound financial management.
COMMISSION
DGs
Article 274 Member States shall cooperate with
the Commission to ensure that the appropriations
are used in accordance with the principles of
sound financial management.
MEMBER STATES
Regions / Programmes / Projects
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And the Court says (2004 DAS)

• Accounts Positive with a reservation on sundry
  debtors.
• Commitments Positive.
• Own resources Positive
• Payments Positive for agriculture (IACS when
  properly applied), pre-accession strategy and
  administrative expenditure. Negative for all
  other expenditure.

Roadmap to an integrated internal control
framework
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The case for Action

• Eleven years of negative DAS on the underlying
  transactions.
• The Court of Auditors' opinion on the 'single
  audit' model (and a proposal for a Community
  internal control framework).
• New legal bases (Financial Perspective exercise).
• Political momentum in Parliament and Council.
• New Commission's strategy.

Roadmap to an integrated internal control
framework
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The political mandate (Commission)
Accountability should be enhanced by striving
for a positive declaration of assurance from the
European Court of Auditors. Strategic Objectives
2005-2009 (COM(2005)12 final, page 5)
Roadmap to an integrated internal control
framework
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Commission's Action Plan

• The Action Plan sets out the 16 actions that the
• Commission is taking in order to attain its
  strategic
• objective.
• Focus is put on
• - simplification of legislation for the
  programming
• period 2007-2013
• - harmonisation of control principles and
  standards
• used by the Commission and Member States
• - and the use of existing management
  declarations at
• Member States level.

Roadmap to an integrated internal control
framework
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Actions for Member States

• n1 support proposals for simplification
• n 2 support control principles risk
  management in the Financial regulation
• n 5 management declarations and synthesis
  reports at national level
• n 8 additional assurance from SAIs
• N 16 sign contracts of confidence
• All other actions your services in collaboration
  with the Commission

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The logical chain structure
Gives OK
PARLIAMENT
Checks the architecture
EXTERNAL AUDITOR
OK
AUDITOR
MANAGER
Checks systems
OK
MANAGER
AUDITOR
Implements and pays
Checks underlying operations
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The Community Integrated Control Framework
European Parliament
BUDGETARY DISCHARGE
European Court of Auditors
ECA Annual Report
Positive DAS
Replies and hearings in EP discharge
Audit Progress Committee
Annual Report from Internal Auditor
Political level
Synthesis Report
Commission
Statements of assurance annexed to Annual
Activity Reports
Declarations from Resource Directors Internal
Audit Service
Signing off by COM accountant
Operational level
ADMIN
AGRI
AIDCO
etc
Summaries of assurance available
Audit assurance from Supreme Audit Institutions
Political level
Member States
Belgium
Denmark
Germany
etc
Annual Statements from Paying Agencies, Ex-ante
disclosure statement, Ex-post declarations of
assurance
Declarations from independent auditors
Operational level
Nieder- sachen
Hainaut
Bayern
etc
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Role of National Parliaments

• Place controls over EU funds on your annual
  agenda
• Can Ministers or Heads of Service confirm
• that a suitable control framework is in place?
• Can they confirm that it works as intended?
• Can your SAI verify these statements?
• What is the risk of financial corrections?