Cooperation with Supreme Audit Institutions
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Cooperation with Supreme Audit Institutions

Cooperation with Supreme Audit Institutions

The cooperation with Supreme Audit Institutions brings benefits in the longer term, through sharing audit methodologies and practices.
Compliance audit Financial audit Performance audit Review
Concept
Ref: 12.800

Principles

The added value of the cooperation with and among Supreme Audit Institutions (SAIs) lies in the promotion of mutual learning, knowledge sharing, benchmarking and the development of best practice. Some SAIs may be interested in cooperating with the ECA in order to gain access to our broad technical knowledge and extensive audit experience. For the ECA, cooperation activities can be a valuable learning experience and, more importantly, with audit obligations extending to areas with European (e.g. financial governance) and worldwide (e.g. climate change) impact, cooperation has become essential. Cooperation has the potential to be a cost-effective way of strengthening audit results. The following are guiding principles contributing to the outcome of any form of cooperation between the ECA and one or more SAIs:
  • It takes careful selection of the most suitable arrangement that would best fit with the ECA’s strategic priorities, the EU context, the legal framework and our institution’s procedures and modus operandi to make cooperation, in practice, materialise and succeed. In this respect, planning early and well is important.
  • Naturally, the likelihood of success would be higher if the selected audit theme as well as the objectives, scope and methodology of the work to be carried out and reported upon are well-defined, appropriate and acceptable to all parties involved, and there is a clear alignment of expectations, particularly given that these initiatives are typically complex and non-routine. This includes a strong commitment to the success of the initiative and the allocation of adequate resources (including the skillset and level of competence of assigned staff and the additional time needed to manage and supervise coordinated activities) to deliver reliable audit and high quality audit results.
  • Other success factors include being compatible in terms of overall timeframes for the initiation and completion of the cooperative tasks; careful planning and scheduling of tasks; a well-defined audit approach; similar/corresponding questions and criteria for evidence collection and analysis; sufficient attention to communication and channels for the sharing of information safely throughout the process; as well as strong leadership and management of the cooperative tasks, with the ECA maintaining the necessary control on all work on which it wants to report being done.
  • All EU SAIs should be given an equal opportunity to cooperate with the ECA.
  • The ECA must keep the overall control over the scope, timing and organisation of its own audit work when working in cooperation with other SAIs, as well as for the contents of its fact-clearing documents and reports.
  • The ECA must keep full control over the exercise of discretion in relation to analysing and assessing evidence, making judgements thereon and formulating its conclusions and recommendations in relation to audit work on which it wishes to report.
  • The ECA’s review and quality procedures should apply to any work to be included in an ECA report.
  • The ECA retains the right not to use work performed by the other auditor, and to repeat that work under its own responsibility if necessary.

ECA’s policy and strategy on audit cooperation

In approving the strategy for international cooperation, the ECA agreed to seek working relationships with EU SAIs willing to consider ad hoc proposals for audit cooperation relevant to the EU budget and other EU policy areas, notably in the framework of selected audit tasks where there is a potential to take into account the audit work and reports issued by national SAIs. A report of the Directorate of the Presidency, endorsed by the Administrative Committee, on the implementation of the international co-operation strategy, provides an account of the ECA’s achievements so far in this area. This includes:
  • audit cooperation as a result of the ECA’s commitment to consider during the audit selection process the possibility of topics worth undertaking in a co-ordinated manner with other EU SAIs;
  • the progress made in relation to the streamlining of processes and cooperation with national SAIs during audits; and
  • the ECA’s active participation in the activities of the Contact Committee of EU SAIs.

Instructions

Forms of cooperation and coordination with SAIs

Option 1: standard cooperation under the Treaty

Whenever we plan to carry out audit work in a member state the SAI of that member state is informed and has the opportunity to take part in the ECA’s audit visit. In certain cases the SAI assists us in the coordination of our visit to their member state, helps undertake the audit work and/or coordinates the national authorities’ replies to our audit findings. SAIs may be invited to provide their views on the national authorities’ replies received or information on their audit work concerning the area covered by the ECA audit. This standard form of cooperation does not require any formal agreement between the ECA and the SAI concerned.

Option 2: using the work of other SAIs as a source of information or evidence for our audit work, including using another SAI to provide direct assistance

This involves using the work of other SAIs to support or limit our own work, thus increasing our audit efficiency and/or strengthening our results. There is no international auditing standard (e.g. ISSAI) which covers this scenario. For this type of cooperation, using the work of other auditors covers some of the key issues that should be considered. Usually, the work of other SAIs can be used during the preparatory and planning phases of an audit as a source of knowledge and risk information. It can also provide supporting evidence for our own audit results, including illustrative examples. A more extensive use of the SAIs’ work may be more complex to implement in practice. The main factors need to be given their due attention. Additional time needs to be assigned for coordinating audit teams to get acquainted with each other and to discuss how to establish a common basis and deal with differences. There are also legal constraints on independence, responsibility and the exclusion of any delegation of audit powers or core tasks that need to be taken into consideration. Depending on the complexity of the task, this type of cooperation may not require a formal agreement and if we would decide to refer (in our audit report) to the work of the other SAI, we should inform that SAI.

Option 3: SAI auditors participating in our audit work

Some SAIs may be willing to participate in our audit work in their member states. This can help to increase the extent of our audit evidence, and can prove to be a valuable learning experience for the participating SAIs. This type of cooperation is covered by the Treaty provisions. SAIs who would wish to have their auditors participating in an ECA audit would permit their auditors to join the ECA audit team and perform specific audit work. The(se) auditor(s) would assist and be part of the ECA audit team and perform tasks in accordance with our normal audit procedures. In this regard, our standard procedures apply, and in particular:
  • the SAI auditor(s) will participate under the supervision of the ECA team leader;
  • the ECA retains the responsibility for the results of the work done by SAI auditor(s);
  • all significant professional judgements involved in the audit work are made under the responsibility of the ECA team leader;
  • the ECA’s clearing procedures of audit observations applies;
  • the ECA’s review (including checking back to the underlying audit evidence for some of the work performed) and quality management procedures are applied as usual;
  • the audit team may decide not to use the work of the SAI auditor(s) and may also decide to perform any additional work in the members state at its sole discretion; and
  • any report produced and published by the SAI on the work they have performed will be entirely at its discretion and under its own mandate.
This form of cooperation can be arranged and formalised by exchange of letters between both parties.

Option 4: working with other SAIs in the context of cooperative audits as defined in GUID 9000

Parallel (or simultaneous) audits
For undertaking the same or similar audits in areas of common interest, the most practical type of cooperation is likely to be parallel audits where different SAIs perform work on the same topic in their country/organisation following similar methods and timing. Parallel audits involve the coordination of the respective audit procedures, such as determining the audit scope and approach, defining and setting methodology, preparing audit programmes and designing reporting formats. The more the audits are coordinated, the more advantageous is likely to be the outcome. However, each participating SAI is free to determine the extent to which they wish to be involved, and has full control and responsibility over their participation in every step in the process. Parallel audits are of particular interest for the audit of issues which transcend national boundaries. By conducting parallel audits we can take a broader view on the situation, consider the challenges and impacts of specific actions, and benchmark and compare data. It is good practice to support parallel audits with a formal agreement (Memorandum of Understanding - MoU) in order to set out the terms for a smooth and effective cooperation between the ECA and the partnering SAI(s). The MoU should include detailed provisions concerning the scope and the implementation of the specific cooperation project (timetable, respective tasks and responsibilities of the participants) which can be set out in an annex to the MoU. The MoU should be signed by the ECA President or by a Member on delegation by the President, following a proposal of the reporting Member. The content of the final draft MoU should be consulted with the DQC, Legal Service and DOP. In practice, parallel audits are the most feasible and practical form of audit coordination between the ECA and SAIs, as they can be more easily aligned to take into account the main factors.
Joint and coordinated audits
Combining forces to carry out joint or coordinated audits with other SAIs on topics or issues of common interest is the closest type of cooperation the ECA can potentially enter into with other SAIs. Joint or coordinated audits can be of interest for the examination of issues related to the implementation of an EU policy and the achievement of policy objectives across member states (e.g. on policies covering the environment, transport or energy), or for comparing the full and effective implementation of general EU principles (e.g. subsidiarity and proportionality) and specific EU regulations and directives across the Union. They could also focus on the coordination of significant EU-wide issues, risks and concerns (e.g. those concerning refugees, security, customs and climate change). The possibility to undertake this form of close cooperation can, however, only materialise if there is a clear mutual interest and a strong commitment and willingness at the highest level within the participating SAIs to cooperate more intensely, build deeper relationships, and work around each other’s capacities, differences and limitations (including time, knowledge base, competence, audit approach, methodology, constraints on the exchange of data, confidential information and documents, the interpretation of results, the adversarial and publication procedures and general practicalities). A pilot exercise, a parallel pre-study, workshop or the secondment of involved staff could be considered before deciding whether to embark on a full cooperative audit. If it is evident that the goals of the cooperation cannot be achieved – perhaps because of insuperable differences between the parties – it would be wise not to proceed. Ideally, such situations should be identified in the early exploratory stages.

Deciding on the form of cooperation

Proposals for any type of cooperative arrangement would require a thorough analysis as well as formal decisions to be taken by chambers or the Court, on a case-by-case basis, before the audits can be launched. The potential for cooperation with SAIs should be identified by the audit teams/chambers when preparing the proposed audit tasks and the contributions to the annual work programme. More concrete details should be included in the task plan. Experience has shown that the exchange of yearly audit plans between SAIs is an important first step for identifying potential audit topics of mutual interest and opportunities for sharing information, methodology and audit results. Audit teams seeking to propose different forms of cooperation are invited to contact the legal service and/or DQC for ad hoc advice. In practice, SAIs tend to carry out cooperative audits of a mixed type because they meet the criteria of more than one category of such audits as defined in the INTOSAI guidance. The degree of cooperation can vary along a range from parallel to joint audits. Audits that fully meet the description of the concept of “joint audits" are rare and in practice are subject to special requirements.

Related documents

Standards Lima Declaration, Section 15
GUID 9000/1.3
Rules Art 287(3) TFEU
Last Modified: 14/07/2022 15:59   Tags: