The Hellenic Court of Audit

1. The Hellenic Court of Audit

2. Greece: Its History – Highlights • Independent state since 1829 • Representative democracy with a parliamentary regime (Constitution in force since 1975) • Full member of the European Union since 1981

3. History of the Constitution (I) • From the Revolution to the establishment of the Crowned Democracy(1821-1864) • The constitutions of the revolution -The first Hellenic Republic (1821-1833) • The period of absolute monarchy(1833-1843) • The period of constitutional monarchy(1843-1864) -CONSTITUTION OF 1844 • The first period of crowned democracy (1864 -1922) • CONSTITUTION OF 1864 • The introduction of the Parliamentary Principle • CONSTITUTION OF 1911

4. History of the Constitution (II) • The second Hellenic Republic(1924-1935) - THE CONSTITUTION OF 1927 • Period 1935-1952 • The reinstatement of the monarchy(1935) • Dictatorship (1936-1941) • Occupation (1941-1944) • Civil War (1946-1949)

5. History of the Constitution (III) • The second period of crowned democracy (1952 -1967) - THE CONSTITUTION OF 1952 • Military dictatorship (1967-1974) • The Third Hellenic Republic (1974 - ) • THE CONSTITUTION OF 1975 • The Revisions of 1986 and 2001

6. Historical Development of the Hellenic Court of Audit

7. Historical Development of the H.C.A. (I) • Established in 1833 and modeled on the French Court of Audit • 1887: The preventive audit of the state expenditures was assigned to the H.C.A. • 1923: Further consideration was given to improvements to its work • Since then: The legislation concerning the work of the H.C.A. has been supplemented by a number of decrees

8. Historical Development of the H.C.A. (II) • 1969: Law on public accountancy • Principle that budget expenditure should be reported in detail • Principle that public money were to be used only for intended purpose • 1972: Judicial audit of public money classified into preventiveand a posteriori • 1975: H.C.A’s competences enhanced by Constitution.

9. Historical Development of the H.C.A.(III) • 1980: Decree covering the Court’s rights and consolidating previous provisions • 1981: Decree on Court’s procedures. Since then some 90 further items of legislation have been voted through, making minor modifications • Decisions of the Plenum govern detailed audit procedures and internal rulings

10. Main features of the H.C.A. • One of the most old institutions of the contemporary Greek State. All Constitutions provided for the Court of Audit • Its mandate derives from the Constitution • It belongs to the Judiciary • Supreme Public Financial Court • Right to impose sanctions following a contradictory procedure

11. The Judiciary in Greece (I) • 3 distinct branches in the Judiciary: • The civil and criminal courts (Supreme Court of Cassation as Supreme Court) • The administrative courts (Council of State as Supreme Court) • Court of Audit • Clear distinction between branches of Judiciary

12. Judiciary in Greece (II) • Constitutionality of legislative acts or their provisions may be examined while dealing with a specific case. Courts may refuse to apply any legislative provision deemed not to conform with the Constitution (diffuse and ex post facto review) • In case of contradictory judgments between the Court of Cassation, the Council of State and the Court of Audit regarding the constitutionality or the meaning of the same legislative provisions which are to be applied in a specific case, a final decision is made by the Special Supreme Court • The H.C.A. participates in the Special Supreme Court through its President

13. President 8 Vice-Presidents 26 Judge-Counselors 44 Second-Rank Judges 45 First-Rank Judges General Commissioner before the H.C.A. Commissioner of the State 3 Vice-Commissioners of the State TOTAL: 128 The hierarchy of Judges within the H.C.A.

14. Independence of Judges • Functional (in relation to the legislative and executive powers) • Judges administer justice only according to laws complying with the Constitution • Personal • Appointment, permanency, official status (judicial councils), emoluments • First - Rank Judges are drawn from the National School of Judges • Judges of the other ranks are drawn from those of the previous rank by promotion following assessment by the competent judicial council • Special Provisions

15. Special Provisions • Judges in high – ranked positions selected by the Cabinet (consistent with popular sovereignty) • The Vice-Presidents are drawn from among the Judge Counsellors and Vice - Prosecutors • The President and the General Prosecutor before the H.C.A. from the Judge Counsellors, Vice –Presidents and Vice – Prosecutors • Organisation of Justice (classified posts, geographical dissemination of the Courts) • Infrastructure • Financial issues (Court’s budget)

16. National School of Judges (I) • Established in 1995 Objectives • Selection, instruction & training of the future civil, criminal and administrative judges, as well as the First – Rank Judges of the Council of State and the H.C.A. • Continuous training of judges, who have already been appointed.

17. National School of Judges (II) Admission • Introductory competition conducted by a committee, composed of three senior judges and a university professor. Course of training • Training in two stages • Theoretical in School premises • Practical in the respective Courts • Graduation exams conducted by a three – member Committee, composed exclusively by senior judges from all branches of jurisdiction. Appointment to the Courts • based on the degree of success

18. Organizational Structure of the H.C.A. • Plenum • 7 Judicial Sections • 7 Judicial Units • 108 Administrative Units (headed by Directors of Audit) staffed by Judicial employees

19. Plenum • President • Vice-Presidents • Judge - Counsellors • General Commissioner before the H.C.A. • Secretary

20. Judicial Sections • Vice-President • 2 Judge Counselors • 2 Second-Rank Judges (Consultative vote) • Vice Commissioner of the State • First-Rank Judges • Secretary

21. Judicial Units • Judge Counselor • 2 Second-Rank Judges or • 1 Second-Rank Judge and • 1 First-Rank Judge • Secretary

22. Administrative Units • Decentralized structure, i.e. 16 Units in ministries, 9 in municipalities and 57 in prefectures • Competence (mainly) for audit • 6 non auditing Units • I.T. • Archives, • Personnel, • Jurisprudence and Publications, • Secretariat, • O&M

23. Distribution of employees • 2/5 in the headquarters (17 Units), i.e. 245 employees (90 in auditing divisions) • 1/5 in 23 Units in Athens, i.e. 160 employees (dealing with a priori audit ) • 2/5 in regional offices, i.e. 245 employees Total: 650 Auditors: 400 Administrative staff: 250 Vacancies: 180

24. Judicial Employees • Qualifications • Classification - Hierarchy • Appointment • Age limit • Official status • Remuneration • Constitutional Independence (special judicial councils)

25. Constitutional Attributions • Article 98 of the Constitution (Section V “ The Judiciary”, chapter 2 “Organization and jurisdiction of the Courts”) provides for the judicial competences of the H.C.A., in an indicative way • These competences may be classified as: • Auditing • Reporting • Consulting and • Jurisdictional

26. Audit of the execution of the State Budget (I) According to our long legal tradition this means: • Distinction between the audit “of the expenditure of the State, the Local Government Agencies and the Public Entities” (ORDINATOR) and “the accounts of the PUBLIC ACCOUNTANTING OFFICER in general” • The Court is authorised to call those who manage Public Funds (both ordinators and public accounting officers) to give an account before it • Trying any disputes arising from the audit • Informing the Legislative of the public money management done by the Executive

27. Audit of the execution of the State Budget (II) • ORDINATOR = official authorized to assume payment responsibilities to the State’s charge and to issue payment orders (a priori audit) • PUBLIC ACCOUNTING OFFICER = anyone proceeding to payments or collecting the public revenue (a posteriori audit)

28. Reporting (Relations of the H.C.A. with the Legislative)(I) Submission to the Parliament of: • Annual Report of findings (a parliamentary debate upon its content exists ‘till this year – Discussion in Parliament’s Plenum - Published in the State Gazette) • Results of the Court’s activities • Observations stemming from its work • Suggestions on reforms and improvements (including relevant laws) • Value – for – money issues from audit work

29. Reporting (Relations of the H.C.A. with the Legislative)(II) • Declaration on the Annual Financial Statement and the Balance Sheet of the State (Discussions in the Parliament’s Plenum)

30. Consulting • The Courts issues (in Plenum) an expert opinion: • upon bills on pensions or on the acknowledgement of service for granting the right to a pension • on any matter submitted to it by a Minister • on any other issue defined by law

31. Jurisdictional Functions • The Court tries legal remedies on cases arising from: • Pension grants • Audit of accounts • Civil liability of public employees

32. General Auditing Principles

33. General Audit Principles (I) • Distinction provided by the Constitution between the audit “of the expenditure of the State, the Local Agencies and the Public Entities” and the audit of “the accounts of the public accounting officers in general” (Distinction between preventive and a posteriori audit) • The result of the preventiveaudit is the approval (visa) or not of the relevant payment orders • The a posteriori audit ends up to a decision taken by a judicial formation, the three-member judicial Unit, in Athens by which the accounts are: • accepted as sound • turned down as illegal and eventually charging the accounting officers with any deficit found

34. General Audit Principles (II) • Audit of legality and regularity (the conditions provided by law have been met in the course of the management of public funds) • The audit may involve the examination of issues concerning the so called “substantial part of the expenditure” in order to ascertain that: • the facts reported in the supporting documents correspond to the real facts and • the administrative acts from which the payment obligations derives have been conducted on the basis of sound financial management In this case the visa is given but the court may report to the relevant Minister

35. General Audit Principles (III) • The Court has the authority to examine all incidentally arisen issues, with the “reserve of the res judicata provision” (examination of the administrative acts’ legality) • The Court’s jurisdiction extends to : • government departments and ministries • local government agencies and • the public sector organisations • Right of access to all documents • Right to carry out on – the – spot audits

36. General Auditing Principles (IV) • Encountering criminal offences (reported to the relevant Minister and taken up by the Public Prosecutor before the criminal courts) • Auditing the purpose of administrative acts does not constitute part of the Court’s auditing competence • Systems examination is not usually carried out as a separate exercise. Evidence about weakness in internal control systems can usually be gained in the course of routine audit work • Performance audit and audit of sound financial management are carried out, although not on a systematic basis • Implementation of International auditing standards

37. The preventive audit

38. The preventive audit (I) • Established in1887 • Is carried out by the Directors of Audit of the Court dispersed in all Ministries, Prefectures of Greece, as well as in some Legal Entities of Public Law and Local Government Agencies • Covers less than 10% of the expenditures of the State budget. Concerning the budgets of all others Legal Entities it depends on different factors (In all the cases covers the high risky domains) • The audit work on each payment order is completed within two days from receipt

39. The preventive audit (II) • Examination of payment orderby Director of Audit • Approval (forwarded to be paid) • Non approval (return the uncertified order with a brief report outlining the grounds for refusal) • In case of non approval, where this judgment is disputed, the initiator of the order can resubmit the payment order with an explanation, which the commissioner may accept (forwarded to be paid) • If the Director does not accept the ordinator’s remarks, he is obliged to submit the whole file of the case with a report to the competent Section of the Court, which settles the financial dispute arisen

40. The preventive audit (III) • The Director of Audit ceases to have any competence on the case • The General Prosecutor before the Court provides his opinion upon the case in writing • The chairman of the Section (Vice-President) assigns the whole file to one of the judges composing it • The judge reports on the specific case before the Section, which, with a fully justified act, settles the dispute definitively, deciding either in favor of, or against approval • The judicial act of the Section is binding for both parties • The file of the case is returned to the competent Director of Audit in order to execute the Section’s Act

41. Preventive audit (IV) • The ordinator • The beneficiary of the expenditure • The Section itself ex officio may apply within a reasonable period of time for the revocation of the Section’s Act due to misjudgment: • either of the legal issues • or of the facts of the case

42. Preventive audit (V) • Approval of a payment order on the Minister’s own responsibility, provided that: • the Director of Audit has denied the approval of the payment order • the competent Section of the Court has issued a definitive act, according to which the payment order is deemed to be illegal • the Parliament consent to this initiative of the Minister

43. Relations with other auditors • In carrying out its work the Court does not place reliance on other auditors • However, the Directors of Audit have contacts with the officers of the General Accounting Office Units (Ministry of Finance), which are located in each ministry and in every prefecture • Every administrative authority having carried out a financial investigation (internal auditors) is obliged to notify the relevant findings to the Court of Audit

44. Relations with the European Court of Auditors (I) • Article 248 (former article 188C) of the E.C. Treaty constitutes the legal basis for the cooperation between H.C.A. and E.C.A. • Basic principles governing this cooperation: • The principle of independence in the activity of each institution • The principle of collegiality in the H.C.A. decision making • The principle of complying with the requisitions of article 10 (former article 5) of the E.C. Treaty • The principle of complying with what is provided in articles 246, 247 and 248 of the E.C. Treaty

45. Relations with the European Court of Auditors (II) • No legal restriction in relation to possible forms of cooperation (combined interpretation of articles 10 and 248 of E.C. Treaty) • Officials and formations of the H.C.A. involved in various aspects of this cooperation • Liaison Officer and participants in E.C.A. audits • Fourth Judicial Unit • Plenum

46. SPECIAL AUDIT ASPECTS • The audit of European Community Expenditure • Common Agricultural Policy • Structural Funds • The audit of public contracts prior to signature • Environmental audit • A priori audit of Local Government Agencies (L.G.As.) • Audit of State revenue

47. The audit of the European Community Expenditure (I) • E.A.G.G.F.-GUARANTEE • In Greece, a “Special Account of Agricultural Products Guarantee” has been established in order to finance the Common Agricultural Policy • The term “expenditure” covers all payments made to farmers, under the Community legislation for various agricultural activities • Sample audit carried out, due to enormous number of payments (+/-24.000 annually). Application of generally accepted methods. • Financial audit. Since 1995 the H.C.A. examines issues, directly related to the sound financial management.

48. The audit of the European Community expenditure (II) B. PROJECTS CO-FINANCED BY THE STRUCTURAL FUNDS • The audit is carried out by the competent administrative Unit • The H.C.A. applies, as much as possible the methods of the E.C.A. This means that the audit team is responsible for: • interviewing competent officials • examining existing documentation • carrying out on-the-spot audits • performing financial audit on the relevant transactions • examining matters related to the soundness of the financial management • drafting the audit report

49. Audit of public contracts prior to signature • The Court (3 Judicial Units) carries out an examination of the legality of the public works, supplies and services contracts made by the State, Public Entities or Public Enterprises where the cost exceeds a certain amount • A file containing all relevant documentation, as well as a draft of the contract to be signed is submitted to the Court • Where the audit is not concluded within forty days from its submission, the contract may be signed • If the Judicial Unit refuses the legality of the contract, then the contract is not signed

50. Audit of State Revenue • The H.C.A. “monitors the State revenue” through the annual and monthly accounts, that the public accounting officers submit to the Court. • These accounts are accompanied by the relevant supporting documents (defined by the Court’s Plenum) and justify the corresponding entries. • The accurate collection is also ascertained on a sample basis. • The accuracy and the correctness of their certification is not carried out by the accounting officers.