EUROPEANCOURTOF AUDITORS

09NO.OCTOBER 2015

JournalEuropean Court of Auditors

The contents of the interviews and the articles are the sole responsibility of the interviewees and authors and do not necessarily reflect the opinion of the European Court of Auditors

Cover: - Bettina Michelle Jakobsen, new ECA Member as of 1 September 2015

Past editions of the Journal can be found on:ECA’s website: http://eca.europa.eu/en/Pages/Journal.aspxEU bookshop: http://bookshop.europa.eu

PRODUCTIONRédacteur en chef / Editor in Chief : Rosmarie Carotti Tél. / tel.: 00352 4398 - 45506 - e-mail : rosmarie.carotti@eca.europa.euMise en page, diffusion / Layout, distribution : Direction de la Présidence - Directorate of the Presidency Photos : Reproduction interdite / Reproduction prohibited

© ECA

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02 My priorities will be citizen-related audits, reader-friendly reports and the streamlining of performance audit Interview with Bettina Michelle Jakobsen, new ECA Member as of 1 September 2015 By Rosmarie Carotti

05 Entretien avec M. Vassilios Skouris, président de la Cour de justice de l'Union européenne (CJUE), 16 juillet 2015 By Rosmarie Carotti

07 Special Report N°8/2015 Is EU financial support adequately addressing the needs of micro-entrepreneurs? Questions to Iliana Ivanova, ECA reporting Member i By Rosmarie Carotti

11 Special Report N° 9/2015 EU support for the fight against torture and the abolition of the death penalty By Werner Vlasselaer, team leader 14 Special Report N°10/2015 Public procurement – Taking a look from the other side By Katharina Bryan, private office attaché

18 Special Report N°2/2015 EU funding of urban waste water treatment plants in the Danube river basin By Marion Colonerus, task leader

22 How to carry out a parallel performance audit project By Mose Apelblat, former official at DG Enlargment (now DG Near)

24 FOCUS Special reports N° 9 & 10 /2015 Hello to / Goodbye to In Memoriam

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TABLE OF CONTENTS

2My priorities will be citizen-related audits, reader-friendly reports and the streamlining of performance audit

By Rosmarie Carotti

Interview with Bettina Michelle Jakobsen, new ECA Member as of 1 September 20157 September 2015

Bettina Michelle Jakobsen, ECA Member

R. C. : Ms Jakobsen until your nomination as ECA Member, you were the Assistant Auditor General of Denmark. Your predecessor, Henrik Otbo, passed away unexpectedly on 1 February 2015. The ECA welcomed you on 1 September on 2015. Until when will your mandate last? Is there already a date for your solemn undertaking before the European Court of Justice?

Bettina Jakobsen: I am in office for the remainder of Henrick Otbo’s mandate, so from 1 September 2015 I have two and a half years of mandate. Then, the normal procedure of renewal will apply with the possibility of another mandate. For the solemn undertaking in the Court of Justice I have no date yet.

R. C.: Can you give some background information about your application and how you were nominated by your government?

Bettina Jakobsen: Actually it is Parliament which handles this issue. The Chairman of Parliament asked the Public Accounts Committee of the Danish Parliament and they consulted the Auditor

General as it is the wish of the government that a highly skilled audit professional occupies this position.

R. C.: What is the fascination of public sector auditing at international level for you? I refer not only to your nomination at the ECA but also to the many other positions you held, for example in NATO and the EIB

Bettina Jakobsen: Since I joined the National Audit Office of Denmark in 1990, I have always been interested in international auditing and fortunately I had the opportunity to work for NATO and broaden my perspective. When I came back to the National Audit Office I had several international assignments, among them the Vice Chairmanship and then Chairmanship of the INTOSAI Professional Standards Committee (PSC) and various other international assignments in audit committees. For example the audit committees of the EIB and the EIF and at the Council of Europe in Strasbourg, whose remit includes the European Court of Human Rights in Strasbourg.

R. C.: What is the difference between national and international auditing?

Bettina Jakobsen: Hopefully there is not so much difference because we follow the international audit standards but I would say that the development of the international standards has broadened the perspective of SAIs and has created a solid foundation for, for instance, quality assurance and communication.

The financial standards are based on the International Federation of Accountants (IFAC), which is the private audit association. We actually use the same audit standards as private auditors but with practice notes which expand on specificities. These notes include public sector perspectives and are attachments to the private sector standards.

In addition, we have also developed several standards that are specifically for the public sector audit and concern performance audit, compliance audit, standards for quality assurance, value and benefits of SAIs and for independence,

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the principles of which were set up in the Lima declaration.

I normally say that we have the best of two worlds, because we have the financial audit standards that we share with the private auditors and in addition we have something extra, the performance and the compliance audit standards, which the private auditors do not have.

We have a great variety of audit standards that support all members of INTOSAI in 192 countries.

R. C.: In INTOSAI, EUROSAI commits itself to its 2011-2017 Strategic Plan to promote the application of ISSAIs (International Standards of Supreme Audit Institutions) in Europe and to contribute to their further development. What still needs to be done?

Bettina Jakobsen: The audit standards are developed to ensure that SAIs can state that they are in accordance with internationally acknowledged standards. I think that the SAIs of Europe are quite well developed in following standards, but for AFROSAI, ASOSAI, CAROSAI and other parts of the world it is really important to have the standards to raise the work of the SAI and have something to increase credibility when they go to their parliaments. Standards are very much about credibility: it creates credibility when you follow standards.

For EUROSAI, some SAIs could maybe do a little more on making a gap analysis, which involves the comparison between its own standards and international standards with the aim of closing possible gaps between the two. That’s what we have done in Denmark. We had our old standards and then made a gap analysis in order to find out what we needed to strengthen, to be in adherence with the international standards.

R. C.: Back to your international experience. What have you audited in NATO? Was it only military audit or economic audit as well?

Bettina Jakobsen: In NATO we would make financial, performance and compliance audits. In addition we also have what was called

infrastructure audit, where we audit the funds that NATO is paying to member nations for facilities such as airfields used by other NATO members. So, you can say I have been auditing military but NATO has many agencies and a lot of the expenditure is in an agency’s payroll. That’s like auditing non-military expenditure.

For instance, I was the main auditor for NAHEMA in Aix en Provence, which is the NATO agency for development of the NH90 helicopter, of NAMEADSMA in Alabama, in the US, which is the NATO air defense system agency. But there would also be military commands like the rapid reaction force, troups that are to be deployed within 30 days wherever NATO decides. Then I have been many times to Germany, “in den Stadtbauämtern”, where the infrastructure invoices of Germany are held.

R. C.: You also were a member of the Audit Committee of the European Investment Bank and the Audit Board of the European Investment Fund? Could you explain those roles?

Bettina Jakobsen: The roles are based on a system of good governance and accountability. The EIB Audit Committee is an independent body answerable directly to the Board of Governors (the Ministers) and responsible for verifying that the operations of the Bank have been conducted and its books kept in a proper manner. At the time of approval of the financial statements, the Audit Committee issues its statements thereon.

In the EIF, the committee annually confirms that the EIF's operations have been carried out in compliance with the requirements, and that the financial statements give a true and fair view of EIF's financial position as regards its assets and liabilities, and of the results of its operations for the financial year under review. This information is included in the Annual Report submitted by the Board of Directors to the General Meeting.

R. C.: You spoke about financial, performance and compliance audit. Do you think that the ECA has an appropriate balance between the three?

Bettina Jakobsen: I think that all SAIs should strive to perform more performance audit. There

4Interview with Bettina Michelle Jakobsen, new ECA Member as of 1 September 2015 continued

is a general tendency, also in the ECA, to start out with the aim of doing a performance audit but end up with a compliance audit due to many factors. We should definitely have more focus on real performance in our reports.

R. C.: That would also mean providing better information to citizens, not only to the European Parliament. How would you choose the subjects?

Bettina Jakobsen: The EU has an increasing number of citizen-related areas, for instance consumer protection or ecology. In the planning phase, an auditor should always be aware of interesting items that would make a good subject to audit. What we did back in Denmark was that we tried to expand on what was included in the financial audit because the Public Accounts Committee often felt our annual report was a bit boring. Therefore, we started to include some performance related issues when doing the financial audit, looking for instance at economy aspects and include relevant findings to the annual report. That proved quite successful.

I think that the ECA has undertaken quite a number of initiatives in terms of increasing the focus on financial performance, for instance Chapter 3 of the annual report, and by producing special reports on subjects such as the European Banking Authority.

But it is also a question of how to present our reports. Are they written in a reader-friendly way, can the normal citizen understand them? And perhaps we should aim at making some shorter performance audit reports that will be performed in a shorter time-frame, so that they are more timely and relevant to the stakeholders.

R. C. : Cooperation with the SAIs is very important, especially in the context of the Europe 2020 strategy. How could this cooperation be improved?

Bettina Jakobsen: Our cooperation with the SAIs stems from the Treaty. From my long SAI experience, I feel it is very useful to cooperate with the ECA on various subjects. Of course, you need to find a good relevant subject to cooperate about. Let’s find a few good projects. We do not need to work with all the SAIs at the same time, but let’s cultivate this cooperation.

R. C.: What priorities would you set?

Bettina Jakobsen: As I said during my hearing in the Committee on Budgetary Control of the European Parliament, one of my priorities would be citizen-related matters. That could be ecology, consumer protection, something that is also relevant in a national perspective. On the planning for next year, we have for example the rural broad-band audit.

R. C.: You often refer to a sound financial management culture in the public sector which includes many different elements. Which ones in particular still need to be improved at EU level?

Bettina Jakobsen: I am quite new to speak for the ECA but I can speak from my own perspective. It is important to always have a good management culture and transparency in handling public funds. It is also important to have clearly defined needs and specific targets and objectives for what policies are intended to achieve.

Our power as ECA would be our audit reports. We need to produce good audit reports that would put pressure and give Parliament a good reason to hold the Commission and Member States accountable. Should it be through high quality audit recommendations, providing examples of best practices or by naming and shaming? Perhaps a variety of all of these, depending on the subject.

R. C.: You have come to the ECA full of new energy. We wish you all the best for the future.

Bettina Jakobsen: Let me perhaps just mention one issue from my hearing in European Parliament: my experience with streamlining performance audit reports. In my national audit office we also had to struggle with quite a long production time. I think I have good experience in defining the audit subject and trying to streamline the processes, so that some reports can be more speedily forwarded to Parliament.

To sum up, my priorities would be the citizen-related audits, producing reader- friendly reports and the streamlining of the performance audit, in order to demonstrate to our stakeholders that we can produce both timely and relevant reports.

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Monsieur le Président, quelles ont été les évolutions les plus importantes à la CJUE dans les 12 ans de votre présidence ?

Il y a eu plusieurs évolutions importantes auxquelles j’ai eu le privilège d’assister en tant que président de la Cour. J’en citerais 3, à savoir : l’élargissement de l’Union en 2004, qui a contribué à la réunification du continent européen permettant ainsi l’application des valeurs communes sur un territoire toujours grandissant; l’adoption du traité de Nice, signé en 2001; et surtout l’entrée en vigueur du traité de Lisbonne en 2009, qui a contribué à une amélioration du fonctionnement de l’Union par la modification des normes existantes et donc à l’évolution du droit européen dans de nombreux domaines et, en plus, a offert la base d’une série de modifications des règles procédurales de la Cour prouvant une efficacité spectaculaire.

Quel est le rôle du Président de la Cour; son jugement a-t-il un poids particulier ?

Le Président de la Cour a une fonction de primus inter pares, et doit surtout veiller à la coordination entre les différents composants de la Cour et au respect et à la cohérence de sa jurisprudence.

Quelles affaires vous ont tenues particulièrement à cœur ?

Les affaires que je considère marquantes pendant ma présidence sont les affaires Kadi (2008) et Google (2014), qui constituent des décisions phares de la Cour, reflétant la primauté donnée par cette institution à la protection des droits et libertés fondamentaux dans des domaines très divers l’un

de l’autre. L’arrêt Digital Rights Ireland (2014), ainsi que l’affaire Pringle (2012), constituent par ailleurs des décisions importantes qui montrent la portée attribuée aux droits fondamentaux dans l’Union européenne et par lesquelles la Cour réaffirme son rôle de garante des valeurs fondamentales de l’Union. L’avis 2/13 mérite également d’être mentionné. En effet, la Cour dans cet avis identifie les problèmes persistants dans le projet d’adhésion de l’Union européenne à la Convention Européenne des Droits de l’Homme, afin d’assurer la mise en place d’un système de protection uniforme et efficace des droits et libertés fondamentaux en Europe.

Où en sommes-nous avec la réforme de la CJUE qui prévoit une augmentation du nombre des juges pour le Tribunal ?

Avec toute réserve, pour ne pas empiéter sur le rôle des institutions assumant le rôle du législateur européen, l’augmentation du nombre de juges visant a permettre un meilleur fonctionnement du Tribunal, dans des délais plus rapides, et une répartition du travail équilibrée semble entrer dans le stade final du processus législatif.

Le droit communautaire est tout un ensemble. Là-dedans, quel est le poids de la jurisprudence de la Cour de justice de l’Union européenne (CJUE)? Comment a-t-il changé au cours des années ?

La Cour de justice a deux principales fonctions au sein de l’Union, à savoir l’interprétation et l’application uniformes du droit communautaire, et ce à travers ses décisions. C’est en effet par le biais de sa jurisprudence que la Cour a dégagé des règles qui doivent désormais être appliquées par tous les États Membres, comme le principe de l’effet direct du droit de l’Union. La Cour a d’ailleurs, par sa jurisprudence, consolidée ses compétences, par exemple, dans le domaine de la protection des droits et libertés fondamentaux, contribuant ainsi au développement de leur protection au sein de l’Union. La jurisprudence de la Cour a donc servi à la création et au développement du droit de l’Union dans des domaines très divers.

Est-il correct de dire que l’un des rôles de la CJUE est d'harmoniser les législations nationales ou de les coordonner?

La Cour veille au respect de la séparation traditionnelle des pouvoirs, et ce respect exclut

Entretien avec M. Vassilios Skouris, président de la Cour de justice de l'Union européenne (CJUE) 16 juillet 2015 By Rosmarie Carotti

Vasssilios Skouris, président de la Cour de justice de l'UE

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toute tentative de coordination des législations nationales de sa part.

Combien de renvois préjudiciels, fondés sur la collaboration entre les juges nationaux et le juge communautaire ont été accueillis par la CJUE à ce jour ?

Parmi un total de 20.093 affaires introduites devant la Cour, plus de 9.000 concernent des renvois préjudiciels. Or, cette comparaison ne reflète point la réalité actuelle par rapport à l’importance que ces renvois ont au regard du dialogue entre les juges nationaux et le juge communautaire. Celle–ci peut être mieux comprise si nous examinons la diachronie de ce phénomène, puisque le pourcentage de renvois préjudiciels par rapport à la totalité des affaires introduites devant la Cour s’est accru au fur et à mesure : ils représentaient 37% en 1990, 47% en 2004, 61% en 2010, et sont allés jusqu’à 69% en 2014. Nous pouvons donc constater l’importance croissante qu’a été accordée à ces renvois au cours des dernières années.

Les arrêts de la CJUE sont-ils directement applicables dans les États membres ?

Les arrêts de la Cour ont des caractéristiques assez particulières quant à leurs effets. Pour les recours directs, les arrêts ont autorité de chose jugée et seront donc juridiquement contraignants pour les parties. Enfin, dans le cas des renvois préjudiciels constituant la masse de saisines de la Cour comme dit plut tôt, le juge est appelé à interpréter des dispositions du droit de l’Union et par conséquent cette interprétation, bénéficiant de l’effet de chose interprétée, sera elle aussi contraignante.

Quels sont les développements jurisprudentiels et institutionnels récents dans le domaine bancaire et financier ?

Après l’arrêt Pringle, l’arrêt Gauweiler (2015) constitue une des décisions récentes les plus importantes dans le domaine bancaire et financier. En effet, cette décision, qui concernait la légalité du programme OMT (Opération Monétaire sur Titres) de la Banque centrale européenne, consistant en l’achat par la Banque de titres de dette souveraine sur le marché secondaire, confirme la nécessite d’un cadre renouvelé et adapté aux règles relatives à l’Union économique et monétaire de l’Union européenne.

Ces développements justifieraient-ils à votre avis une révision et une nouvelle interprétation du mandat de la Cour des comptes européenne ?

Une telle révision ne serait pas nécessaire, compte tenu du bon fonctionnement de la Cour des comptes, qui maintient son rôle de contrôle des comptes de l’Union européenne et des organismes créés par celle-ci.

Le recours à la CJUE des institutions contre une autre institution est théoriquement possible mais pas fréquemment pratiqué. Pourquoi ? Pensez-vous que cela pourrait changer à l’avenir et quelle est votre avis sur un tel recours?

Même si cela ne constitue pas une pratique très commune, nous pouvons retrouver un certain nombre d’affaires dans lesquelles un recours a été porté par une institution à l’encontre d’une autre. De nos jours, 69 recours ont été notamment portés devant la Cour par la Commission à l’encontre du Conseil, et 55 opposent le Parlement au Conseil. De plus, des affaires ont opposé le Parlement et la Commission, ou même la Commission et la Banque centrale européenne. Ces recours, même si pas très nombreux, sont importants puisqu’ils permettent à la Cour de contrôler le respect du droit européen dans les activités des différentes institutions.

Il y a de plus en plus de domaines de jurisprudence communautaire. À votre avis, faudrait-il une spécialisation des juges ?

Une spécialisation des juges ne me paraît pas nécessaire actuellement. Une des principales caractéristiques des magistrats européens est en effet leur flexibilité et capacité d’adaptation à différentes situations. Plus particulièrement, l’évolution du type de contentieux dont la Cour est chargée et la gamme de problèmes sur lesquels elle doit pencher en tant que haute juridiction européenne fait en réalité que le juge auprès de la Cour de justice est appelé à opérer plutôt comme un généraliste. Toutefois, la Cour n’est pas contraire à l’existence d’une certaine spécialisation. En effet, la Chambre PPU (procédure préjudicielle d’urgence) est mise en rotation annuellement, permettant ainsi aux chambres de se mettre en contact avec ce contentieux spécifique.

Entretien avec M. Vassilios Skouris, président de la Cour de justice de l'Union européenne (CJUE) continued

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R. C.: What is the Commission’s definition of microfinance?

Iliana Ivanova: The origins of microfinance can be traced back to the 1800s when the first cooperative lending banks started supporting farmers in Germany. More recently in the 1970s financial institutions such as the Grameen bank in Bangladesh shaped the modern industry of microfinance as a tool to fight poverty. While this tool has been very popular in the last 30 years in the developing countries its increased utilisation is more recent in the EU.

The Decision establishing the European Progress Microfinance Facility (EPMF) defines “microfinance” as guarantees, microcredit, equity and quasi-equity provided to persons and micro-enterprises. In addition, in its staff working paper “Microcredit for European small businesses”, the Commission defines microcredits as loans under € 25 000 that are provided to micro-entrepreneurs.

In our report we have also considered as microfinance, European Social Fund grants provided to launch or develop new businesses respecting the same threshold of € 25 000.

R. C.: Micro-entrepreneurs are experiencing problems with accessing the conventional credit

Special Report N°8/2015 Is EU financial support adequately addressing the needs of micro-entrepreneurs?

By Rosmarie Carotti

Questions to Iliana Ivanova, ECA reporting Member

market. EU support aims to address to some degree the existing funding gap by providing grants to micro-enterprises (under the ESF) or making access to loans easier thanks to financial instruments for microcredit providers namely loans and guarantees.Please, explain the difference between grants, loans and guarantees.

Iliana Ivanova: Indeed, micro-entrepreneurs often have difficulties in accessing finance to start or develop new businesses in the EU and this phenomenon has increased even more during the financial and economic crisis. To improve this situation during the 2007-2013 period the EU provided financial support to the sector mainly through the European Social Fund (ESF) and as of 2010 through the instrument European Progress Microfinance Facility (EPMF).

The main difference between grants and financial instruments is that grants are not repayable. On the contrary, financial instruments may be reinvested several times after being reimbursed by the beneficiaries.

More information about the mechanisms for providing support to micro-entrepreneurs through ESF grants, financial instruments and the EPMF can be found in Figure 1 of the report.

From left to right: Christian Wieser, Auditor; Romuald Kayibanda, Team leader; Emmanuel Rauch, Head of Unit; Iliana Ivanova, Reporting Member; Tony Murphy, Head of Private Office; Dennis Wernerus, Team leader; Piotr Senator, Auditor; Mihail Stefanov, Private Office Attaché

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R. C.: The EU support is provided mainly by two different instruments: the European Social Fund (ESF) and the European Progress Microfinance Facility (EPMF) implemented on behalf of the Commission by the European Investment Fund.

What is the difference between the ESF funding and the support granted by the EPMF? What is the difference for the applicant?

Iliana Ivanova: The ESF support to micro-entrepreneurs includes measures implemented through grants or through financial instruments. These tools are defined by the Member States in their national or regional Operational Programmes and approved by the Commission.

On the other hand, the EPMF has been managed by the European Investment Fund on behalf of the Commission and provides fairly standardised loans and guarantees to financial intermediaries. These financial intermediaries then provide the support to micro-entrepreneurs in the EU Member States.

While the EPMF proposes more “off the shelf” products, for the ESF, Member States have the possibility to create and use the channels they consider most appropriate to the specific market conditions in their country.

Usually grants are managed by the national authorities, while financial instruments, both ESF and EPMF are disbursed through financial intermediaries.

R. C.: What was the total support granted in the 2007-2013 programming period under the ESM and the EPMF, and how much of it targeted the unemployed?

Iliana Ivanova: During the 2007-2013 programming period 96 out of 117 ESF OPs funded measures, mainly through grants, under a specific classification code “support for self-employment and business start-ups” for a total amount of

around € 2,4 Bn. By the end of 2013 ESF financial instruments supporting micro-entrepreneurs had a total endowment of € 680 mln. Regarding the EPMF as of 30 June 2014, 55 banks in 20 Member States have disbursed € 208 mln to micro-entrepreneurs with € 103 mln provided by the EU budget.

R. C.: How much of the money provided goes into administrative costs for each Member State and for each funding mechanism?

Iliana Ivanova: One of the main findings of our report is that for the ESF Operational Programmes examined, the managing authorities had limited information about the administrative cost. Moreover, the Commission and the Member States do not have comparative information on the public administrative cost per Member State or per funding mechanism. This situation prevents the consideration of the most-efficient way to deliver support for the EU micro-entrepreneurs.

In this regard, the report includes a recommendation for the new programming period regarding the establishment of the different implementation costs. In particular, it is suggested that the Commission should carry out a comparative analysis of the implementation costs for ESF grants, ESF financial instruments and EaSi1 financial instruments.

R. C.: Administrative costs do not include the costs borne by the recipients of EU financial support. How high were the latter in average for the recipients? Did they include interests to be paid to the intermediaries?

Iliana Ivanova: The different nature of the audited mechanisms for financial support provides for different costs depending on the type of measure/instrument. While usually for grants there is no cost borne by the final recipients, there might be interest to be paid to the intermediaries in some cases for ESF or EPMF supported loans.

1 EaSi- EU Programme for Employment and Social Innovation. One of its three strands will progressively replace the EPMF for the 2014-2020 Programming period

Entretien avec M. Vassilios Skouris, président de la Cour de justice de l'Union européenne (CJUE) continued

Special Report N°8/2015 Is EU financial support adequately addressing the needs of micro-entrepreneurs? continued

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R. C.: Where do small entrepreneurs get information about the EU instruments which provide microfinance to micro-enterprises?

Iliana Ivanova: There are different ways to learn about the availability of financial support in the specific region or Member State. Information campaigns, coaching and other communication means may also be provided and even, in some cases, co-funded with ESF funds.

R. C.: Which support, from the ESF or the EPMF, is more effective?

Iliana Ivanova: The objective of this audit was not to compare the ESF with the EPMF per se because these are two different funding mechanisms with different structures, which may serve different objectives. However, we concluded that for the ESF support to micro-entrepreneurs there are weaknesses in the programming and the design, a lack of sufficient and reliable information on performance and no comparative information on the administrative cost for each mechanism – grants vs financial instruments. On the other hand the EPMF is considered to have satisfactory setup arrangements regarding risk management systems and to have attracted some private funding. However to date the amounts allocated from the EU budget to the EPMF, when compared to ESF, have been limited.

R. C.: Which were the most difficult aspects of the ECA’s audit?

Iliana Ivanova: This audit was very challenging due to shortcomings in the availability of information. Firstly, apart from the global total for ESF funding allocated under code “support for self-employment and business start-ups” no information has been provided on how much of this has been allocated specifically to micro-entrepreneurs.

Secondly the limitations in the performance information provided by the Member States in relation to the ESF funded measures/instruments resulted in a situation whereby it is not possible for the Commission to aggregate meaningful, consistent and reliable performance monitoring information.

We consider that the lack of this information makes it impossible to come to an overall conclusion about the achievement of the overall objectives of the support for micro-entrepreneurs.

R. C.: What is the ECA’s overall conclusion on the usefulness of the support to micro-entrepreneurs?

Iliana Ivanova: As stated in the report, because of the problems related to the availability of performance data, we were not able to come to an overall conclusion about the achievement of objectives of the overall support to micro-entrepreneurs. Therefore, we have sampled a number of projects to check whether micro-entrepreneurs have been reached and how many of them have been previously unemployed. Our conclusion based on the limited sample of projects audited is that in general micro-entrepreneurs have been reached, around half of whom were previously unemployed and the average EU financial support was commensurate with their needs. R. C.: What impact do you expect this report to have?

Iliana Ivanova: We hope that our recommendations will improve the implementation of the EU financial support to micro-entrepreneurs. In particular reliable monitoring information on performance and the availability of information on the implementation costs would provide the Decision makers with valuable feedback and ideas on how to deliver more effective and efficient support for European micro-entrepreneurs.

R. C.: Could you briefly explain the audit approach and methodology used, and particularly any innovative techniques that may have been applied?

Iliana Ivanova: The audit team first gathered relevant knowledge and understanding of the audit field through interviews with experts and a participation in a specialised conference on the questions of the microfinance.

Entretien avec M. Vassilios Skouris, président de la Cour de justice de l'Union européenne (CJUE) continued

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The audit consisted of four modules, which combined allowed for a better coverage and more interesting results:

- Examination of documents at the Commission and the EIF;

- Review of a sample of 27 projects providing financial support to micro-entrepreneurs, including visits in 5 Member States;

- Analysis of clients files (grant beneficiaries and borrowers) at the level of banks and other financial intermediaries;

- A survey of 18 additional Managing authorities in 14 Member States in charge of 22 ESF operational programmes with spending on self-employment and business start-ups.

The survey was a good experience and allowed for an extended coverage. It had a very good response rate of 89% and provided interesting feedback on the managing authorities’ experience with measures for micro-entrepreneurs.

R. C.: Are there any lessons to be learned from this audit for the spending under the new European Fund for Strategic Investments?

Iliana Ivanova: Financial instruments are one of the possible disbursement channels of EU support for micro-entrepreneurs and may have similarities related to their set-up with the instruments to be funded through the European Fund for Strategic Investments. In this respect our recommendations 1 and 2 relating to the existence of a needs assessment and a robust risk management system may be relevant and may help to avoid fund oversizing.

This special report was published on 27 July 2015. The full text of the report can be found on our website eca.europa.eu in 23 EU languages.

Special Report N°8/2015 Is EU financial support adequately addressing the needs of micro-entrepreneurs? continued

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Special Report N°9/2015 EU support for the fight against torture and the abolition of the death penalty By Werner Vlasselaer, team leader

From left to right: Sabine Hiernaux-Fritsch, head of unit; Thomas Arntz, attaché in Klaus-Heiner Lehne's Private Office; Klaus-Heiner Lehne, ECA reporting Member; Athanasios Tsamis, auditor; Kim Hublé, auditor; Werner Vlasselaer, team leader

The EU’s commitment to promote human rights

The EU recently reaffirmed its determination to promote democracy, human rights and fundamental freedoms worldwide. To pursue these objectives, the EU deploys a range of diplomatic initiatives that include bilateral agreements, political dialogue and participation in multilateral forums. Furthermore, the EU considers progress in the adherence to human rights as a key condition for its development cooperation and funds projects devoted to these issues. The main financial instrument used is the European Instrument for Democracy and Human Rights (EIDHR), which provides grants to civil society organisations for implementing projects. The EIDHR has been granted an overall budget of €1.1 billion covering all EU human rights objectives for the 2007-2013 period.

The ECA’s audit

It was more than 10 years ago that the ECA carried out an audit of support to human rights outside the EU. This audit for the first time exclusively focused on the EIDHR expenditure for the promotion of prevention of torture, the rehabilitation of victims of torture and the abolition of the death penalty. The audit work involved missions to London, Democratic Republic of Congo, Georgia and South-Africa as well as desk reviews relating to projects implemented in China and the United States. The results of the audit will improve the Commission’s management and contribute to the 2016 mid-term review of the EIDHR for the programming period 2014-2020.

The fight against torture and the abolition of the death penalty

The international community has made many efforts to eradicate torture and other ill-treatment. Nevertheless, torture and other ill-treatment persist and impunity for the perpetrators remains a reality in many countries worldwide. As regards the death penalty, there are still 58 retentionist countries. Each year, more than 5 000 executions take place.

The EIDHR contributes to the eradication of all forms of torture and other ill-treatment as well as to abolish the death penalty throughout the world. Over the 2007-2013 period, the Commission awarded 183 EIDHR grants totalling €100.9 million for projects relating to the fight against torture and the death penalty. The grants involve co-financing as they finance only up to 80 % of project expenditure. The EIDHR has global coverage, including many industrialised countries, and enables funding without bilateral consent as no government approval is required of the country where the projects are implemented.

The amounts of the individual grants range between € 21 000 and €1.5 million. Most of the projects supported concern awareness campaigns, monitoring practices, prevention actions, legal support to victims or the treatment and rehabilitation of victims.

The allocation of EIDHR funding

As the financial resources allocated to the fight against torture and the death penalty are modest

12Special Report N° 9/2015 EU support for the fight against torture and the abolition of the death penalty continued

compared to the challenges, they need to be focused on countries and issues with substantial needs and considerable potential for improvement. The Commission obtains adequate information about the human rights situation in partner countries and appropriately uses it to establish human rights priorities for each partner country. The Commission does not take sufficiently account of these priorities. The global calls for proposals used to allocate grants did insufficiently focus on the countries where the EU considers the fight against torture and the fight against the death penalty to be part of the priorities.

With the exception of Georgia, projects funded have not been well coordinated with other EU action, such as traditional development support and dialogue with the partner country. In fact, EIDHR projects have not been part of a coherent, strategic and coordinated approach for addressing issues relating to torture and the death penalty.

The grants are awarded to civil society organisations following calls for proposals. This demand-driven approach to finance projects ensured that projects were generally implemented by motivated civil society organisations with good expertise. The project selection itself was well-documented but lacked rigour. This was related to the use of inadequate standardised evaluation grids, insufficiently detailed guidelines for assessors, the insufficient adherence to procedures by the project assessors and an inconsistent approach to project re-assessments. Furthermore, when weaknesses of selected projects were identified, the project designs were not improved accordingly, which was a missed opportunity.

The implementation of EIDHR funding

Projects have in most cases been carried out as planned. However, there have been frequent extensions of project implementation periods and there is a risk that this was mainly to enable beneficiary organisations to spend the budget in full rather than to achieve the project objectives.

As grant contracts are awarded following calls for proposals and not a tendering procedure, it is difficult for the Commission to fully ensure the cost-effectiveness of the expenditure. Furthermore, the Commission did not define benchmarks to assess the cost-effectiveness. There is nevertheless

no indication that the overall cost of most of the projects examined is not reasonable for the expected results. Nevertheless, the ECA found evidence that the projects implemented by the organisations located in beneficiary countries are more cost-effective than those based in European countries.

Results of EIDHR funding

The modest funding available was thinly spread out over many projects implemented in more than 120 countries worldwide, thus diluting its impact. The systems for measuring impacts are rather weak with unclear logical frameworks for projects, a lack of well-defined benchmarks and targets and an inconsistent approach to project evaluations. Furthermore, progress depends not only on project achievements but also on many exogenous factors. This makes it difficult and in some cases impossible to assess the extent to which the activities contributed to progress. The Court could nevertheless obtain sufficient evidence to conclude that:

• when projects provide direct assistance to victims, the impact is tangible albeit limited to relatively small target groups;

• the impact of other projects, which typically seek legislative or policy reforms, is only limited.

There are various reasons for this:

• some project objectives were overambitious;

• progress in the area of torture and the death penalty is generally slow and tends to take longer than the duration of the projects themselves;

• progress also depends on many other factors in particular the political context in the targeted countries. These were not always conductive to substantial progress. Government willingness is particularly important for project objectives that do not directly target final beneficiaries.

The results that were achieved have good prospects to be sustainable. The civil society organisations supported, however, remain very dependent on financial support. Only few projects included activities to make civil society organisations more self-sustainable.

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The ECA’s recommendations

The ECA makes a number of recommendations for the Commission to improve the support for the fight against torture and the death penalty:

• concentrate EIDHR funding on the most relevant issues and on the countries with the greatest needs and where the greatest impact can be expected;

• wherever possible, openly state the EU priorities as defined in the human rights country strategies and focus project selection, the Commission’s traditional development support and political dialogue on those priorities in a coordinated manner;

• further improve the selection of projects with better evaluation grids, better guidelines for assessors that more precisely set out how scores for criteria should be awarded and a clear approach to re-assessments;

• better use the possibilities for improving project proposals where assessors have identified design weaknesses;

• further develop the performance measurement framework;

• promote measures to make civil society organisations more self-sustainable and consider ways to provide continued support for beneficiary organisations that are performing well.

This special report was published on 28 September 2015. The full text of the report can be found on our website eca.europa.eu in 23 EU languages.

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The ECA recently published a Special Report entitled “Efforts to address problems with public procurement in EU Cohesion expenditure should be intensified”. 1 This performance audit was overseen by UK Member Phil Wynn Owen.

For me, working on this audit as Phil’s attaché meant a journey back to my life before the ECA. Observing contracting authorities trying to manoeuvre themselves through the complex legal framework, and managing authorities developing actions on how to decrease public procurement errors, reminded me of my role as the head of the managing authority for structural funds in my home region of Burgenland, Austria. Raising awareness of and respect for public procurement rules was one of the principle challenges in that job in Burgenland. It was, therefore, very interesting for me to go with a team of experienced ECA Statement of Assurance auditors and see what had changed in this area both in Spain and in the UK.

But one does not have to work with structural funds for very long to know that public procurement in cohesion policy is problematic. In fact, to any readers of the ECA’s annual reports, it is no secret that compliance with the EU and national public procurement rules in cohesion policy is a perennial

1 Special Report 10/2015 was published on 23 September 2015. The full text of the report in 23 EU languages can be found on our website eca.europa.eu

Special Report N°10/2015Public procurement – Taking a look from the other side By Katharina Bryan, private office attaché

and significant source of error.2 The Special Report 10/2015 therefore offered the ECA a chance to take a closer look at where and how errors occur, and what the Commission and Member States were doing to address this challenge.3 Highlights of the main findings are presented below.

Where do errors occur?

In this audit, the ECA made extensive use of its database on procurement related errors stemming from its Statement of Assurance audits in the period 2009 to 2013. In this period, the ECA examined more than 1 400 transactions co-financed from the EU budget through the European Regional Development Fund, Cohesion Fund and European Social Fund, including verifying public procurement procedures relating to nearly 700 projects4. Errors relating to public procurement were detected in around 40 % of all of these projects, with nearly a third of these errors were “serious”, meaning that the error was such that competition was impeded and/or contracts not awarded to the best bidder.

2 For example, over the 2009-2013 period, serious errors accounted for 48 % of the Court’s estimated error rate for the European Regional Development Fund and Cohesion Fund and 16 % for the European Social Fund.3 This includes the European Regional Development Fund, the Cohesion Fund and the European Social Fund . A previous Court report addresses procurement errors in rural development expenditure: Special Report No 23/2014 ‘Errors in rural development spending: what are the causes and how are they being addressed?’ (eca.europa.eu). The Court is currently carrying out a performance audit on public procurement in EU Institutions. 4 Generally, one transaction relates to one project. But, in certain cases, several transactions can relate to one project.

Katharina Bryan, private office attaché

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The main phases of public procurement procedures & location of most serious errors

Source: European Court of Auditors.

How do errors occur?

To answer this question was a particularly methodological challenge. While it might be easy to identify inherent reasons (e.g. complexity), softer factors such as “lack of knowledge”, “human error” or the highly sensitive subject of fraud are more difficult to tackle. Accordingly, the audit approach was to rely on several sources and methods: data analysis, survey results, audit interviews and professional experience of ECA staff.

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Box 1: Various causes of public procurement errors

• Complexity, lack of administrative capacity and insufficient planning

• The EU directives are not always correctly transposed by Member States

• Interpretation of the legislation is sometimes inconsistent

• Member States sometimes complicate the framework with additional regulation

• Fraud can be a cause of error in the public procurement arena

Are the Commission and Member States adequately addressing the problem?

A basic premise of the audit was that adequate responses to procurement errors need to be based on a sound and systematic analysis of the nature and extent of the problem. The audit found that such systematic analysis is very limited both on a Commission and Member State level. In fact, a lack of sufficiently detailed, robust, and coherent data has precluded a comprehensive analysis of the underlying causes.

Despite the lack of comprehensive analysis of the problem, the Commission and Member States have started to implement actions to address the problem. We identified some encouraging developments and interesting examples of good practice which feature in our report. Member States are starting to collect data in a systematic way and are setting up networks involving different stakeholders involved in public procurement. The Commission has set-up an internal working group and drawn up an action plan on public procurement.

Recommendations and issues for the future

For the managers on the ground, the next few years will be critical for getting the basic set-up right, so that errors in this area can be prevented in the future. Several factors will influence this basic set-up. How the new public procurement directives will be implemented in the Member States is important. Likewise, how the transformational potential of information technology is exploited to detect and prevent errors.

A crucial element could also be the newly-introduced “ex ante conditionality” on public procurement. Ex-ante conditionalities are conditions which are regarded as necessary prerequisites for the effective and efficient use of such funds. These conditions need to be fulfilled by Member States, by 31 December 2016 at the latest.

Special Report N°10/2015Public procurement – Taking a look from the other side continued

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At the beginning of 2015, the Commission had assessed that twelve Member States5 had not yet fulfilled these conditions regarding public procurement. In this regard, the Court’s recommendations and the Commission’s reply are worth noting. The Court recommended, that, if these conditions are not fulfilled by the end of 2016, the Commission should use its powers consistently to suspend payments to those Member States concerned until they have rectified the shortcomings. In its reply, the Commission included a commitment to a proactive and preventive approach, while at the same time it “will not refrain from using this tool of suspension if the targets and milestones of the actions plan are clearly not met”. The attention in the media to this recommendation since the report’s publication highlights that such a recommendation and the Commission’s reply have sent an important signal.

Marketing the report

Having produced a report, we are all keen to see it continue to make an impact. In Phil’s Cabinet we are currently looking forward to the report’s presentation in the European Parliament’s Budgetary Control Committee and in the Council. In addition, we plan a presentation to interested SAIs in the Working Group on Structural Funds, who conducted an analysis in this area, and we are working together with the Commission to explore further arenas to maximise the report’s impact. Several team members are also actively including the report in their presentations at external events on public procurement. And, if you yourself know of other opportunities to present this report, we would be happy to hear from you.

From left to right: Johanne Vermer, lawyer; Gareth Roberts, head of private office; Ildikó Preiss, private office attachée; Anastassios Karydas, principal auditor; Remus Blidar, auditor; Katharina Bryan, attaché in private office, Milan Smid, Team leader, Laura Zanarini, auditor; Niels-Erik Brokopp, head of unit; Phil Wynn Owen, ECA reporting Member

The ECA's audit scope and approach: Surveys, Member State visits and data analysis

The audit covered actions taken by the Commission and Member States from 2009 to 2014 to address the problem of non-compliance with public procurement rules. The approach featured a survey of 115 Audit Authorities in 27 Member States (not including Croatia) responsible for ERDF, ESF, and CF operational programmes and a short survey sent to the 28 SAIs in the EU. Auditors visited four Member States (Czech Republic, Spain, Italy, and the United Kingdom), in which high numbers of public procurement errors had been detected in the Court’s 2009-2013 Statement of Assurance audits.

5 Bulgaria, Czech Republic, Greece, Croatia, Italy, Latvia, Hungary, Malta, Poland, Romania, Slovenia and Slovakia.

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DID YOU KNOW?

…that you may produce around 100 litres of waste water each day?

…that the antibiotics or hormone-active substances you take can be traced back in the waste water you produce?

…that the micropollutants proceeding from food additives and personal care products you use can equally be traced back in the waste water you produce?

Special Report N°2/2015 EU funding of urban waste water treatment plants in the Danube river basinBy Marion Colonerus, task leader

The Court recently published Special Report 2/2015 which looked at the effectiveness of EU spending on waste water treatment in four Member States of the Danube river basin. In particular the Court assessed the performance of 28 urban waste water treatment plants in four Member States (the Czech Republic, Hungary, Romania and Slovakia).

DID YOU KNOW?

… that if you are NOT connected to a waste water treatment plant or if you do NOT have an individual treatment system (e.g. septic tank) your waste water will go untreated into the environment?

… that waste water is cleaned to different extent depending on the location?

The 1991 Urban Waste Water Treatment Directive1 requires Member States to ensure by a certain deadline that agglomerations are provided with collecting systems for urban waste water and that the collected waste water is subject to appropriate treatment (i.e. reducing pollution to an appropriate level):

- in all agglomerations above 2 000 population equivalent2 waste water has to undergo secondary treatment by a treatment plant (or if - for example - connection to a treatment plant is too costly, an individual system can be installed). The aim is to reduce organic pollution so that the effluents from waste water treatment plants can respect concentration limits for biochemical oxygen demand (BOD5), chemical oxygen demand (COD) and total suspended solids (TSS);

- in sensitive areas (i.e. those where due to high nitrogen and phosphorus concentrations there is a risk of eutrophication3) in all agglomerations above 10 000 p.e. waste water has to undergo more stringent treatment so that the effluents from waste water treatment plants can respect concentration limits for total nitrogen (Ntot) and total phosphorus (Ptot).

For smaller agglomerations (below 2000 p.e.) treatment is only required in certain situations. All four Member States occurred delays with regard to the deadlines for their agglomerations to comply with provisions mentioned.

1 Council Directive 91/271/EEC of 21 May 1991 concerning urban waste water treatment (OJ L 135, 30.5.1991, p. 40).2 Quantitative expression of the pollution load of waste water in terms of the number of ‘equivalent’ people that would create a waste of the same strength. One p.e. corresponds to the pollution load of sewage generated by one inhabitant and represents the organic biodegradable load having a 5-day biochemical oxygen demand of 60 g of oxygen per day.3 Eutrophication is the enrichment of water by nutrients especially compounds of nitrogen and phosphorus, causing an accelerated growth of algae leading to the reduction of water oxygen levels and to the disappearance of native aquatic plants, fish and other aquatic animal life.

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…that most waste water treatment plants are not yet equipped for reducing the level of pharmaceutical and other micropollutants?

Additional investment is required for treatment plants to be able to deal with micropollutants.

...that the waste water related infrastructure is a very cost-intensive infrastructure?

For example, the cost for the new waste water treatment plant of Budapest-Csepel (able to treat on average 300 000 m3 a day) as declared to the EU under the 2000-2006 programming period was € 438.5 million.

For the four Member States audited a budget of around € 5 billion of EU funds was allocated to investments in the field of waste water under the 2007-2013 programming period.

…that the four Member States had difficulties in taking up the EU funds available?

Due to the slow implementation pace in the four Member States and considering the rules in place for the use of EU funds there is a risk that EU funds available under the 2007-2013 programming period will be lost.

…that the urban waste water treatment plants are sometimes oversized?

Investing in plants with significant excess capacity is not an efficient use of scarce financial resources whether EU or national. Nine of the 28 plants examined (32 %) operate at less than 50 % of their capacity. A further nine plants (32 %) operate at between 51 and 60 % of their capacity.

…that in periods of heavy rainfall the sewage networks and waste water treatment plants may not be able to cope with the extra amount of water?

In periods of heavy rainfall when the network and/or treatment plant cannot cope with the excessive stormwater so-called overflows occur whereby not only the rainwater but also untreated waste water is directly discharged into a water body, which has a negative impact on water quality. According to the Directive, Member States were to decide on measures to limit water pollution from overflows. Out of the four Member States audited only Slovakia has requirements which determine the size of the overflow chambers. By determining the size one can influence the dilution ratio (i.e. the relation between waste water quantity and the less polluted rain water quantity).

For all four Member States there was a general lack of information on the number of overflows and of their pollution parameters.

20Special Report N°2/2015 EU funding of urban waste water treatment plants in the Danube river basin continued

…that an important by-product of the waste water treatment process is sewage sludge?

…that sewage sludge contains heavy metals and other pollutants and that operators of waste water treatment plants have to find ways how to get rid of this waste?

According to the Waste Directive41, reuse, recycling and recovery of waste is to be preferred to the disposal of waste through landfilling, incineration or permanent storage. Sewage sludge is reused rather than disposed of in three of the four Member States: the sludge was mostly used for compost production, recultivation or biogas production. The exception is Romania where most of the sludge is landfilled.

As sludge contains pollutants the EU set concentration limits in case sludge is used on agricultural fields and for landfilling. The absence of limits for sludge and compost for certain types of use (recultivation, non-agricultural soil) can pose a threat to soil quality and subsequently to water quality through run-off and drainage. Moreover, the absence of EU-wide criteria for compost to be marketed as fertiliser implies that an equivalent protection of the environment cannot be ensured throughout the EU.

4 Directive 2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste and repealing certain Directives (OJ L 312, 22.11.2008, p. 3).

…that in an ideal world the waste water tariff should cover the cost of operation and maintenance of the plant and sewage network as well as the cost of infrastructure?

…that it is commonly accepted that the total water bill (cost for drinking and waste water) can represent up to 4% of household income?

…that when costs are not fully recovered from the users of the waste water services, the uncovered part will have to be paid by others which will mostly be the public at large on the basis of taxes paid?

In the majority of cases audited by the Court the recovery of costs via the tariff charged to the users of the service was only partial. And in the majority of these cases the tariff had not yet reached the affordability level of 4% of household income (i.e. the tariff could have been higher).

Generally the water tariff can include a profit element. This is a precondition for the operators to be able to accumulate financial reserves. These funds could contribute to financing the renewal of the infrastructure provided that the reserves are not withdrawn by the owners of the operating companies for needs other than water management. Note that for 26 of the 28 plants examined the operating companies were publicly owned.

However, considering the legal provisions in the four Member States limiting in one way or another the degree of cost recovery, even in cases where owners and/or operators of the infrastructure are able to build up financial reserves, these will not be sufficient to ensure future renewal of the infrastructure. There is also a risk that operators may cut down on current maintenance which will shorten the economic lifetime or the assets and/or worsen the treatment quality.

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…that the costs of operating a waste water treatment plant vary from one plant to another with some being more efficient than others?

…that the operating costs of a plant play a role in setting the water tariff and in the amount of public money required to assure the service?

Operating costs are influenced by the treatment type provided (more stringent treatment implies a higher cost) and by the size of the plant. However, the comparison of 28 plants shows that there are important differences amongst the plants. Two cost elements for which there are important variations amongst plants are: sludge transport and disposal cost and energy cost. The share of energy represents on average around 30 % of the total cost for the 28 plants examined. In half of the cases the treatment plants were using sewage sludge for producing energy, generally via anaerobic digestion. In most of these cases the share of energy in the total cost was below the average of 30 %.

The participation of plant operators in benchmarking exercises is an opportunity for identifying where the operational efficiency can be improved.

This special report was published on 7 August 2015. The full text of the report can be found on our website eca.europa.eu in 23 EU languages.

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The background

The previous issue of the ECA journal (no 7) included a colourful article by ECA auditor Jussi Bright on the parallel performance audit project which took place during 2014 – 2015 among six enlargement countries with the support of ECA and the Swedish SAI. Performance auditing is indeed an important part of every SAIs activity and especially for the SAIs in the countries aspiring to become members of the EU.

They are required to become “INTOSAI compliant” and develop the full range of governmental auditing – i.e. both financial (regularity and compliance) and performance auditing. Luckily all SAIs in Western Balkans are currently in the process of building up a capacity for performance auditing. Although most of the SAIs in the region are relatively new, they have already produced performance audit reports. As regards Turkey there seems to have been some backtracking.

The promotion of the idea of performance auditing

To promote the idea of performance auditing, DG Enlargement organized a multi-country seminar in in May 2013 in Brussels. As part of the preparations of the seminar, a questionnaire was sent to all participating SAIs. It emerged from the questionnaire that all institutions have or will have a clear mandate to carry out performance auditing.

How to carry out a parallel performance audit projectBy Mose Apelblat, former official at DG Enlargment ( now DG Near)

This article is a response to the article published in the ECA Journal N°7 by Jussi Bright, ECA principal auditor, on the parallel performance audit project with the candidate countries. Mose Apelblat was involved in initiating this project when he worked as a policy coordinator in DG Elarg (European Commission) for public administration reform in the candidate countries.

ECA and SAIs with experience of performance auditing were invited to the seminar to share their experiences of performance auditing.

We understood however that a theoretical seminar was not enough. That’s how the idea of a practical collaborative audit was born. It was inspired by the increasing trend of cooperation between SAIs in the form of joint or parallel audits. Statistics released by EUROSAI listed more than 100 such audit projects over the years – however with hardly any participation of the SAIs in the enlargement countries.

Which are the benefits of audit cooperation between SAIs? According to INTOSAIs guide on collaborative audits, drafted by its capacity building committee in 2008, such audits enhance existing bilateral cooperation and enable the participating SAIs to learn good audit practice. They help them to identify solutions to common problems and to pilot new methods. All this will increase their auditing capacity.

A parallel performance audit project

From the beginning it was clear that what we wanted to do together was a parallel performance audit project with focus on a significant problem in the public administration. By parallel audit we mean a project by a number of SAIs on the same audit topic, with a shared audit approach and resulting in

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separate national reports. It becomes a coordinated audit if also a joint report is produced.

Quickly a follow-up workshop on cooperation in performance auditing was organized by the Commission in September 2013 in Tirana, in cooperation with the Albanian SAI and JWGAA. INTOSAIs guide was presented, outlining the steps in the audit process and including a useful template for a formal agreement. As regards management structure, a coordination committee is desirable, with responsibility for providing quality assurance of the project and the reports.

The focus at the workshop was on presenting a number of case studies, incl. the Swedish experiences of collaborative audits. Directly after the workshop another questionnaire was sent to all SAIs in Western Balkans and Turkey exploring their preferences as regards choice of audit topic and their availability for a coordinated parallel audit. A number of assumptions were listed:

- The parallel audit would be carried out by national audit teams of 2 – 3 auditors and financed by SAIs own resources.

- Each SAI participating in the parallel audit would be asked to sign a formal agreement based on the template in INTOSAI´s guide.

- The parallel audit would be coordinated by one of the participating SAIs, with close logistical and methodological support by JWGAA and the Swedish SAI.

- 2 – 3 joint working group meetings with all participating SAIs would take place during the course of the audit, preferably in the planning, execution and reporting phases. These meetings would be funded by external assistance.

- The parallel audit would result in country-specific audit reports and possibly a joint audit report, drafted by the coordination committee and highlighting common findings, recommendations and good practices.

- Preferably all SAIs should agree to audit the same audit topic but the scope with regard to selected audit questions or sub-topics and limitations with regard to included audited bodies could vary by country.

The objective might have been ambitious but based on INTOSAI’s guide and allowing for a flexible approach it was considered as realistic, in particular as all SAIs expressed their interest in participating in the audit. In practice it turned out difficult to ensure the required funding and to fit the project into the existing annual audit planning of the SAIs. Three of them were only observers and according to the Swedish SAI no audit report has been finalised yet.

A “parallel light” project

Apparently a decision was taken to carry out a “parallel light” project, without following the “correct” procedure according to the guide. That said, Jussi Bright describes a useful learning experience, with lively discussions and peer feedback. The project surely contributed to an exchange of good audit practice and to regional cooperation which is an important end in itself.

As Jussi writes - “Long may the initiative continue!“ For next round of the project – and there are already plans for such a round – let’s learn the lessons from the first round. The majority of SAIs indicated in 2013 that they intended to increase the level of performance audits or give priority to performance auditing according to their audit development strategy plans. A new parallel performance audit project would surely contribute to achieving that objective.

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The ECA says:

Hello to: Francisco Javier DE MIGUEL RODRIGUEZGuido FARAMirko IACONISIAino KILJUNENMichail KONSTANTOPOULOSGueorgui MANOILOVRaluca-Elena SANDU

Goodbye to: Bénédicte CLAUDEThierry COZIER Maria FARRUGIAMaria Ofelia SAN JOSE GUASCHNiels SORENSEN Kardi TENNOIulian URSU

Nous avons le regret d' annoncer le décès de Mme Charlotte Bintner, survenu le 16 août 2015. Elle a travaillé à la Cour de 1977 à 1997.

In Memoriam

FocusEFOCUS

A

Failure to comply with public procurement rules has been a perennial and significant source of error in EU Cohesion expenditure. Serious errors resulted in a lack, or complete absence, of fair competition and/or in the award of contracts to those who were not the best bidders. We found that the Commission and Member States have started to address the problem, but there is still a long way to go and efforts need to be intensified (see also page 14).

This report was published on 23 September 2015 and is available on our website eca.europa.eu in 23 EU languages.

The EU is strongly committed to prevent and eradicate all forms of torture and other ill-treatment as well as to abolish the death penalty throughout the world. The Court assessed the effectiveness of the European Instrument for Democracy and Human Rights, which provides grants to civil society organisations for implementing projects that pursue these objectives.

The Court concludes that the support provided was only partially effective. Although the Commission made appropriate needs assessments, it did not optimally target the funding. Because of this and also due to unfavourable political contexts, the overall impact of the projects funded was not optimal. The Court makes a number of recommendations for the Commission that concern the selection of project proposals, the coordination with other EU efforts, the performance measurement framework and the sustainability of beneficiary organisations (see also page 11).

This report was published on 28 September 2015 and is available on our website eca.europa.eu in 23 EU languages.

Efforts to address problems with public procurement in EU Cohesion expenditure should be intensified

EU support for the fight against torture and the death penalty

Special Report N°10/2015

Special Report N°9/2015

© European Union, 2015 Reproduction is authorised provided the source is acknowledged/Reproduction autorisée à condition de mentionner la source

EUROPEANCOURTOF AUDITORS

ISSN 1831-449X

For more information and paper copies :

European Court of Auditors12, rue Alcide De Gasperi1615 LuxembourgLUXEMBOURG eca-journal@eca.europa.eu

eca.europa.eu

EUAuditorsECA

QJ-A

D-15-009-2A-N

Main Contents

02 INTERVIEW WITH BETTINA MICHELLE JAKOBSEN, NEW ECA MEMBER

05 ENTRETIEN AVEC M. VASSILIOS SKOURIS, PRÉSIDENT DE LA COUR DE JUSTICE DE L’UNION EUROPÉENNE

07 SPECIAL REPORT N° 8/2015 IS EU FINANCIAL SUPPORT ADEQUATELY ADDRESSING THE NEEDS OF MICRO-ENTREPRENEURS?

11 SPECIAL REPORT N° 9/2015 EU SUPPORT FOR THE FIGHT AGAINST TORTURE AND THE ABOLITION OF THE DEATH PENALTY

14 SPECIAL REPORT N°10/2015 PUBLIC PROCUREMENT – TAKING A LOOK FROM THE OTHER SIDE

@EUAuditorsECA