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Definition
Compliance audit comprises the assessment of whether activities, financial transactions and information are in accordance with the applicable rules and regulations. These may include budgetary laws or resolutions, other relevant laws, regulations and agreements, or specific rules.
Principles
General objectives of ECA compliance audits
The aim of the compliance audit performed by the ECA is to report to the [link new-window title="discharge" link="https%3A%2F%2Feur-lex.europa.eu%2Flegal-content%2FEN%2FTXT%2F%3Furi%3DCELEX%3A12012E319" icon="external-link" /]
authority and other stakeholders on whether the activities, financial transactions and information are, in all material respects, in compliance with the legal and regulatory frameworks which govern them. The legal and regulatory framework consists of treaties, regulations, directives, decisions, budgets, contracts and other instruments which contain rules on how transactions should be managed and budgets implemented.
Objectives of legality and regularity audits
The general audit objective for an [link title="audit%20of%20the%20legality%20and%20regularity" link="%2Faware%2FGAP%2FPages%2FECA-types-of-audits.aspx" /]
of underlying transactions is to determine whether, in all material respects, the underlying transactions are legal and regular.
The audit should ensure that, in all material aspects:
- the transaction conforms to the relevant requirements of the
[link new-window title="TFEU" link="https%3A%2F%2Feur-lex.europa.eu%2Flegal-content%2FEN%2FTXT%2FPDF%2F%3Furi%3DCELEX%3A12012E%2FTXT%26from%3DEN" icon="external-link" /]
, [link new-window title="Financial%20Regulation" link="https%3A%2F%2Feur-lex.europa.eu%2Flegal-content%2FEN%2FTXT%2F%3Furi%3DCELEX%3A32018R1046" icon="external-link" /]
, specific regulations, implementing rules or any rules internal to the institution required under these regulations;
- the transaction is eligible under the
[link title="double%20legal%20basis" link="%2Faware%2FCA%2FPages%2FConcepts%2FConcept-of-legality-and-regularity.aspx%23Double-legal-basis-and-budgetary-commitment" /]
;
- the budget line to which the transaction was charged has been approved; and
- the transaction has actually occurred and been properly recorded.
Assertions in legality and regularity audits
The specific objectives, or [a-glossary term="audit%20assertions"]assertions[/a-glossary]
, for which the auditor should ultimately draw conclusions are:
- Reality and measurement - underlying operations exist and are accurately determined
- Eligibility of underlying transactions - eligibility criteria are met for the various transactions
- Compliance with other regulatory requirements - other (non-eligibility) criteria are met
- Correctness of calculations - all calculations are correctly undertaken
- Completeness and accuracy of accounting - all transactions are accounted for, are not included more than once, and are recorded in the correct accounting period and at correct value.
Objectives and assertions in selected compliance audits
Objectives and assertions in selected compliance audits will vary, depending on the subject matter.
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[standards]
[link new-window title="ISSAI%20400" link="https%3a%2f%2fwww.issai.org%2fwp-content%2fuploads%2f2019%2f08%2fISSAI-400-Compliance-Audit-Principles-1.pdf" /]
[link new-window title="ISSAI%204000%2F23" link="https%3a%2f%2fwww.issai.org%2fwp-content%2fuploads%2f2019%2f08%2fISSAI-4000-Compliance-Audit-Standard.pdf%23page%3D11" /]
[link new-window title="ISA%20250" link="https%3a%2f%2fwww.ifac.org%2fsystem%2ffiles%2fpublications%2ffiles%2fIAASB-2020-Handbook-Volume-1.pdf%23INTERNATIONAL%2520STANDARD%2520ON%2520AUDITING%2520250%2520(REVISED)" /]
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