European Court of Auditors Peer Review

The European Court of Auditors (ECA) was established in 1975 in Luxembourg to audit the accounts of European Union (EU) institutions. The Court is composed of one member from each EU member state.

McLeod Governance recently read an interesting report released by the ECA – it was not an examination of a particular event but rather a peer review of the ECA itself.

The ECA invited three Supreme Audit Institutions (SAI) – or that jurisdiction’s Auditor General office – to carry out the peer review.  The review was undertaken by representatives of France, Germany and Sweden.

As an aside – should the practice of internal audit become more accommodating of other audit shops reviewing in house processes.

Back to the peer review.

The first objective of the peer review was to assess the extent to which the ECA’s performance auditing practice provides objective and relevant information to stakeholders in line with the Court’s own – and internationally recognised – standards and good practices.

The second part deals with the implementation of the recommendations of the previous peer review. That review was performed in the year 2008 by the SAIs of Canada, Austria, Norway and Portugal.

The report is a good example of what a peer review should cover.

Three areas worthy of immediate note are:

  • In the past, ECA focused on compliance and regularity audit, but during the last decade more efforts have been devoted to conducting performance audits. To promote this development the ECA has developed guidelines and training programmes. It is natural that it takes time to build up capacity for advanced performance audits and the peer review team has found that some of the performance audits under review are still largely influenced by compliance audit methodology. However, the ECA makes efforts to increase the number of performance audits projects. The peer review team believes that efforts need to be further strengthened to meet ECA’s objectives to develop sustainable capacity in conducting performance audits.
  • On average, the ECA’s performance audits including a preliminary study take two years. The ECA has recognised the duration of performance audits as a problem and is looking for ways to speed up processes.
  • The peer review team found that sometimes ECA recommendations are vague.  In developing audit recommendations, the ECA could more systematically consider whether they are convincing and how they can be implemented. The peer review team believes that the ECA would add value to the stakeholders by putting more emphasis on analysing the causes of problems, errors and weaknesses, for instance when performance is poor or varies between Member States.

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