SESAR Joint Undertaking | SESAR and the Court of Auditors

Apr. 22, 2013

SESAR had the pleasure of interviewing Mr Bertrand Albugues, Head of Unit, Administrative Expenditure of the EU Institutions, European Court of Auditors. The purpose of this interview was to clearly highlight the importance of the European Court of Auditors, provide an overview of the audit process and give an overview of SESAR Joint Undertaking’s audit opinion to date.

Why does the European Court of Auditors exists?

In democratic societies, there is a need for complete and accurate publicly available information as a basis for debate and decision-making, both to improve financial management and to ensure public accountability and transparency. The external audit function is one of the elements ensuring that the activities of the public sector are conducted democratically. Since 1977 it is the European Court of Auditors (ECA), the external audit institution of the European Union that carries out the audit of EU finances, as the independent guardian of the financial interests of the citizens of the Union.

The added value of the European Court of Auditors is to contribute to effective improvement of EU management and to enhanced accountability in the management of EU funds. Through its reports and opinions, the European Court of Auditors makes its findings and recommendations public.

How many audits do you perform per year?

In 2012, the ECA’s auditors spent 6816 days auditing on the spot, of which 6054 days were in Member States and 762 outside the EU, for obtaining audit evidence for the annual and selected audit tasks. As a result of this audit work, a number of reports were published:

2 annual reports - presenting the results of financial and compliance audits in the form of Statements of Assurance on the EU budget and the European Development Funds;
50 specific annual reports - presenting the results of financial audits on the EU’s agencies and decentralised bodies and on European research (Joint Undertakings such as SESAR JU);
25 special reports - presenting the results of selected performance and compliance audits. Special reports can be published at any time during the year; and
10 opinions on proposals for new or revised legislation with financial impact.

There has been a substantial increase in the number of specific annual reports and special reports produced by the ECA and the significant increase in opinions produced is due to the ECA being consulted on the large volume of legislative proposals related to the new financial framework period 2014-2020.

Which institutions do you audit?

As the external audit institution of the EU, the ECA’s task is to audit the collection and spending of EU funds, the management of which is the responsibility of the European Commission. The ECA has the power to audit any recipient of EU funds, until the final beneficiaries all around the world. Thus, the ECA carries out audits in the EU Member States and in any third countries receiving EU aid, in agencies (43 in total) or decentralised bodies, such as the JU’s (7 in total), and in any other organisation managing EU funds. Indeed, in practice the management of over 80 % of expenditure is shared with national authorities in the EU Member States. The ECA is, of course, also responsible for auditing the execution of the administrative budget by other EU institution, such as the European Commission, Parliament, Council, Court of Justice and the European Central Bank.

How many auditors are you in total?

Since its founding in 1977 the ECA has also grown as an organisation, from nine Members and 120 staff to 27 Members and nearly 900 staff in 2012, split between auditors, translators and administrators recruited from all EU Member States and they are subject to the EU’s staff regulations.

Are you organised by area of specialisation?

The Court organises itself around five Chambers, to which the 27 Members and its audit staff are assigned: Chamber I: Preservation and management of natural resources, Chamber II: Structural policies, transport and energy. Chamber III: External actions, Chamber IV: Revenue, Research and internal policies, and European Union's institutions and bodies, which is the one that is in charge of auditing the Joint Undertakings. The CEAD Chamber deals with Coordination, Evaluation, Assurance and Development.

Practically speaking, which approach is used and which questions are asked?

The ECA’s audits are carried out in line with international standards and the Court takes an active part in the development of international auditing standards.

In practical terms, the ECA sets out an annual work programme, with the audits it intends to perform. The financial and compliance audits must be carried out each year for the bodies where the Court has the mandate to audit the accounts (e.g. “Statement of Assurance” audit). The Court selects specific areas for its performance audits, on the basis of criteria such as risk of poor performance, potential for improvement and public interest.

For financial and compliance audits, the ECA examines two aspects in order to arrive at its audit opinion in each case:

The reliability of the accounts, i.e. do the accounts present fairly the financial position and the operations of the audited entity?
The regularity of the transactions underlying the accounts, i.e. has the revenue and expenditure been incurred in a compliance with legal requirements?

Financial and compliance audits therefore involve checks of the accounting records and testing the conformity of samples of financial transactions with the applicable rules and regulations.

For performance audits, the ECA uses a variety of audit methodologies to assess management and monitoring systems, such as desk reviews, interviews, surveys, on-the-spot inspections, based on criteria derived from legislation and from the principles of sound financial management i.e. whether funds have been used in line with the principles of economy, efficiency and effectiveness. Recently published special reports have covered performance audit subjects such as the management of conflict of interest in selected EU agencies, the cost-effectiveness of Cohesion policy investments in energy efficiency or the European assistance to Kosovo related to the rule of law.

Why do you audit the SJU?

The competence of the ECA arises from the regulations that set up the SESAR Joint Undertaking. According to article 287 of the TFEU, the Council Regulation N° 219/2007 of 2007, amended in 2008, on the establishment of a joint undertaking to develop the new generation European air traffic management system (SESAR), establishes that the ECA will audit the annual accounts of the SESAR JU.

Europe is facing great challenges, such as achieving energy efficiency, climate change and sustainable development. These challenges are putting pressure on public finances everywhere; meeting them will require us to spend our resources wisely. The importance of the objectives of the SJU, that will give Europe a high-performance Air Traffic Management infrastructure, such as reducing the CO2 emissions, or the fuel and time saving, make essential the involvement of the ECA.

The SJU is a private/public partnership; does that influence your work?

Not as such. The ECA audits hundreds of beneficiaries of EU funding around the world each year, covering all the policy areas of the Union. These beneficiaries include various types of entities, such as private companies, public bodies, private persons and public/private partnerships such as the SJU. The auditors take into account the specific nature of the SESAR JU, including the involvement of private sector partners but the overall audit approach is the same as that of other audits leading to the expression of an audit opinion.

What has your experience been so far with SJU audit?

The ECA’s experience has been very positive even though the SESAR project is very complex. Complexity arises from the nature of the project itself and the number of partners involved and also from the numerous processes that ensure its management is on track. This complexity is also reflected in the financial and administrative operations. But the ECA’s auditors have established a very good working relationship with all stakeholders in the SESAR JU and this helps a lot to obtain the information needed to perform the audit work.

Finally, the ECA has delivered a positive audit opinion on SESAR since its establishment.

What happens with the report you write?

Who uses it?

The ECA’s work provides an important basis for the annual discharge procedure whereby the European Parliament, basing its decision on recommendations from the Council, decides whether the Commission and the other institutions and bodies have met their responsibility for the execution of the previous year’s budget. In the case of SESAR, the ECA’s report is used by the Parliament as a basis for granting the discharge to the Executive Director for the implementation of the budget.

The results of the ECA’s work are also used by the Commission, the Parliament and the Council as well as by the authorities in the EU Member States, to improve the financial management of the EU budget. These results are essential on the discussion of the following financial framework of the EU.

Do citizens have access to your report?

The ECA informs the citizens of the results of its work through the publication of its reports and opinions on its website at www.eca.europa.eu in all the official EU languages, starting from July 2013 including in Croatian. Many of its audit reports are also followed up by the European and national media across the Union.

The ECA has recently made some efforts to increase also its presence in social networks, with its dedicated account in Twitter or YouTube. Its YouTube account EUAuditorsECA, contains short videos about the functioning of the institution in 23 languages as well as short interviews on the key points contained in its most recent audit reports. An example is the interview of Mr Ville Itälä, Member of Chamber II, on the need for the EU to reconsider the temporary accommodation rules after the Abruzzi earthquake in Italy.