The new role for national audit bodies of checking the legality and regularity of spending under the Common Agricultural Policy (CAP) is a positive step but the current framework set up by the European Commission has significant design weaknesses, according to a report from the European Court of Auditors published on Thursday 4 May.
“…although the CBs’ (certification bodies’) new role is a positive step towards a single audit model, the Commission could take very limited assurance from the CBs’ work on legality and regularity”, note the conclusions of the report. Auditors conclude that the framework designed by the Commission for the first year of implementation of the new work of the CBs has significant weaknesses. “As a result, the CBs’ opinions do not fully comply with the applicable standards and rules in important areas”, the report states.
Examination of the compliance of the Commission’s guidelines with the applicable regulations and internationally accepted audit standards identified the following weaknesses: - with regard to the risk assessment procedure, the Court observed that the Commission required CBs to use the accreditation matrix, “which creates the risk of inflating the level of assurance that the CBs can derive from (paying agencies’) internal control systems”; - the CBs’ sampling method for transactions based on the payment agencies’ lists of randomly selected on-the-spot checks entailed a series of additional risks that were not overcome; - the Commission required CBs for their substantive testing, only to re-perform the paying agencies’ initial checks; - the CBs’ opinion on the legality and regularity of expenditure was based on an understated total error.
The Court says the Commission should use the CBs’ results, when the work is defined and performed in accordance with the applicable regulations and internationally accepted audit standards, as the key element of its assurance model regarding the legality and regularity of expenditure.
With a budget of €363 billion (in 2011 prices) for the 2014-2020 period (around 38% of the total amount of the multiannual financial framework 2014-2020), the common agricultural policy is under shared management between the Commission and the member states. While the Commission delegates the implementation of the budget to paying agencies designated by member states, it retains ultimate responsibility and is required to ensure that the EU’s financial interests are protected.
For this purpose, certification bodies appointed by member states have been entrusted with the role of being the paying agencies’ independent auditors since 1996. They have been required, since the 2015 financial year, also to provide an opinion, prepared in accordance with internationally accepted audit standards, stating whether the expenditure for which reimbursement has been requested from the Commission is legal and regular. (Original version in French by Lionel Changeur)