ECA types of audit
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ECA types of audit

ECA types of audit

The ECA publishes the results of its audit work in a variety of products, depending on the type of audit and legal obligations.
Financial audit Compliance audit Performance audit
Concept
Ref: 12.130

Principles

Types of audits

The Treaty on the Functioning of the European Union (TFEU), sets out the ECA's legal audit obligations and define the terms of the ECA's tasks in this regard. In particular, according to Article 285 the Court of Auditors shall carry out the Union’s audit. The Article 287 specifies that the ECA shall:

Financial audits

"examine the accounts of all revenue and expenditure of the Union … and of all bodies, offices and agencies set up by the Union in so far as the relevant constituent instrument [i.e. the legislation establishing the body concerned] does not preclude such examination".

Compliance audits

"examine whether all revenue has been received and all expenditure incurred in a lawful and regular manner...In doing so, it shall report in particular on any cases of irregularity. The audit of revenue shall be carried out on the basis both of the amounts established as due and the amounts actually paid to the Union. The audit of expenditure shall be carried out on the basis both of commitments undertaken and payments made".

Performance audits

“examine...whether the financial management has been sound" The following table summarises the main characteristics of the three types of audits performed by the ECA.
Financial Audits Compliance Audits Performance audits
Subject Reliability of the annual accounts Legality and regularity of underlying transactions Compliance with applicable laws and regulations for selected topic Policy, programme, organisation, activities and management systems
Task substance Examine accounts, determine if they give a true and fair view Assess whether a given subject matter is in compliance with applicable laws and regulations Assess whether EU funds have been used with economy, efficiency, effectiveness
Assertions Occurrence; completeness; accuracy; cut-off; classification; legality and regularity; existence; rights and obligations; valuation and allocation. Distinguish between events for the period, those at period end, and presentation Reality and measurement; eligibility of underlying transactions; compliance with other regulatory requirements; correctness of calculations; completeness and accuracy of accounting Depends on the audit objective(s) Depends on the audit objective(s)

Types of audit reports

Annual reports

The TFEU and Financial Regulation oblige the ECA to draw up an Annual report after the close of each financial year: Article 287 of the TFEU states that: "The Court of Auditors shall provide the European Parliament and the Council with a statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions.... This statement may be supplemented by specific assessments for each major area of Union activity". The same Article also states: "The Court of Auditors shall draw up an annual report after the close of each financial year." Article 246(6) of the Financial regulation requires that the final consolidated accounts be published in the Official Journal together with the statement of assurance. Current practice is that this Statement of Assurance is included in the ECA’s Annual report on the implementation of the general budget, which also contains specific assessments of the main Multiannual Financial Framework (MFF) headings. As required by the applicable regulations, a similar Statement of Assurance-type opinion and Annual report is produced for the the European Development Funds (EDFs). The ECA’s annual reports also cover budgetary management and performance aspects.

Specific annual reports

The ECA produces Specific annual reports for its recurrent annual financial and compliance audits of other EU bodies, offices and agencies. The TFEU and regulations establishing such entities require the ECA to audit the reliability of their accounts and the legality and regularity of the underlying transactions.

Special Reports

According to Article 287 of the TFEU, the ECA may also at any time, submit observations, particularly in the form of Special reports, on specific matters selected by the ECA. In practice the ECA’s Special reports present the results of selected performance audits of specific spending or policy areas. They also may cover results of specific compliance audits or reviews. The following table summarises these three main different types of reports:
Annual reports Specific annual reports Special reports
Audit type Financial: Reliability of the annual accounts Compliance: Legality and regularity of the underlying transactions Covers also budgetary management and performance aspects Financial: Reliability Compliance: Legality and regularity Performance Compliance Review
Subject EU budget: Final Consolidated annual accounts of the European Union and the underlying transactions EDFs: Annual accounts of the EDFs and the underlying transactions Annual accounts of other EU bodies, offices and agencies and the underlying transactions Specific topic
Basis Obligation of the ECA stated in the TFEU and EDFs Financial Regulation) Obligation of the ECA stated in the TFEU and regulations establishing the EU bodies, offices and agencies Right of the ECA stated in the TFEU, initiated as a ECA decision
Opinion/ Report content Statement of Assurance Complemented by supporting observations, budgetary management and performance aspects. Statement of Assurance-type Varying structure and content of the report depending on objectives.
Frequency Annual Annual As decided by the ECA

Related documents

Rules TFEU, Art 285 , 287
FR Art 246(6), 258, 259
Last Modified: 11/01/2021 11:41   Tags: