Compliance audit

1. 20 October 2015 Compliance audit Reporting

2. SAIs: common objectives and varied tools • Compliance (legality and regularity) audit – conducted by most SAIs • Depends on the mandate of the SAI • Some have judicial powers • Direct reporting – most SAIs • Some provide opinions/ conclusions • Supported by long reports

3. SAIs producing an Opinion / Conclusion • Office of the Auditor-General - Namibia • National Audit Office - UK • National Audit Office - Estonia • Auditor General of South Africa • European Court of Auditors

5. Department for Work and Pensions 2014-15 Accounts The Comptroller and Auditor General’s audit opinion 12 In respect of the 2014-15 financial statements of the Department for Work and Pensions, I have therefore qualified my opinion on regularity due to the material level of fraud and error in benefit expenditure, other than State Pension where the level of fraud and error is significantly lower. For State Pension, the Department estimates that fraud and error in 2014-15 resulted in gross overpayments of £0.13 billion (2013-14 – £0.11 billion), which is 0.2 per cent of related expenditure (2013-14 – 0.1 per cent), and gross underpayments of £0.15 billion (2013-14 – £0.12 billion), which is 0.2 per cent of related expenditure (2013-14 – 0.1 per cent).

6. Accuracy of Annual Report 2013 and regularity of transactions of the stateReport of the National Audit Office to the Riigikogu,, Tallinn, 12 August 2014

7. ECA - Statement of Assurance 2013 Legality and regularity of the transactions underlying the accounts Basis for adverse opinion on the legality and regularity of payments underlying the accounts All policy groups covering operational expenditure are materially affected by error. The Court’s estimate for the most likely error rate for expensed payments underlying the accounts is 4,7 %. The supervisory and control systems examined were partially effective in ensuring the legality and regularity of payments underlying the accounts. Adverse opinion on the legality and regularity of payments underlying the accounts In the Court’s opinion, because of the significance of the matters described in the basis for adverse opinion on the legality and regularity of payments underlying the accounts paragraph, the payments underlying the accounts for the year ended 31 December 2013 are materially affected by error.

8. SAIs having a Court of Accounts structure • The Federal Court of Accounts of Brazil • The Court of Auditors – Spain • Court of Auditors – Portugal • Court of Accounts - Italy • Court of Accounts - Tunisia

9. ECA Reporting process

10. Types of reports published by ECA

11. Users of the ECA’s reports

12. Challenges Keeping it interesting ! Requirements from stakeholders for more and relevant information

13. The Opinion • Standard wording • A code not easily understood by all stakeholders • Not providing enough information • Financial audit: New structure and new elements required from 2016

14. Long form reports - challenges • Identifying and matching stakeholders’ expectations • Including more visual elements • Improving the understandability • Analysing the causes for the errors found during the audit

16. ECA 2013 Annual Report Financial corrections for agriculture and cohesion reported by the Commission in the years 2007 to 2013 by period 2013 total general government expenditure of the European Union Member States and EU spending in 2013 (million EUR) Evolution of accumulated outstanding commitments for cohesion The Court’s estimate of the most likely error (2007-2013)

17. EU audit in brief - 2013

18. EU audit in brief - 2013

19. The relationship between transaction type, risk, and estimated level of error in EUtransactions (2013) Reduce complexity Member States run reimbursement projects Complexity risk Rural development area related entitlements European Commission run reimbursement projects Grants to research and education Improve systems Area related payments Administrative costs Grants to third countries Systems risk