Intosai internal control standards committee François-Roger Cazala The French Cour des comptes and governance issues : a work in progress. Intosai internal control standards committee Vilnius, 27-28 May 2014 François-Roger Cazala frcazala@ccomptes.fr

The Cour des comptes Cour des comptes or Court of audit is the French SAI Dates back to 1807 in its current shape, but has much more antique origins Initially conceived as a judicial body Has kept in its general organization, status and mandate some elements of this nature, at various degrees

The Cour des comptes However most of the work is of a non-judicial nature and encompasses : The financial (attestation) audit of the state accounts with the production of an audit opinion Dto for the social security system The audits of various state organizations, covering all components of the public sector (except local government). The conduct of performance audits focusing on a specific aspect of a public policy (e.g. : Investment in high-speed trains, the funding of research)

Governance in the public sector No standard, clear and shared definition of “governance” A very broad issue or a more restrictive definition ? Sound governance in the public sector : a priority area in the Court’s strategic planning

The Cour des comptes and governance issues The case of state-owned companies Abide to the provisions of the commercial code Rules applicable to both private and public sector Need for more transparency, risk awareness and management, fight against fraud and collusion, and in general for appropriate checks and balances. Types of obligations regarding corporate governance that the Court will have to check : lines of reporting and accountability between management and board, roles and responsibility of the board members, existence and functioning of auxiliary bodies such as audit committees, accounts committee, appointment committees, procurement or tender committees

The Cour des comptes and governance issues Other public bodies (e.g. state agencies) Not governed by the commercial code but by dedicated provisions, addressing governance issues at varying degrees Enhancing of good governance practices and procedures taken into account by the Court in its audit approach and objectives.

The Cour des comptes and governance issues Good governance : example of audit items The compliance with the legal framework regarding governance, when required The existence and bearing of internal governance procedures of the entity considered and the compliance therewith (this may differ depending on the nature of the audited entity) The composition of the board, the role of the board’s members, in particular of those representing the state administration

The Cour des comptes and governance issues Good governance : example of audit items (ctd) The mandate of the board vs. mandate of the management The frequency of the meetings The quality of the minutes The management’s accountability to the board : frequency of reporting, contents of reporting (transparency, quality) The follow –up within the board on the management’s reports and the decisions made

The Cour des comptes and governance issues Good governance : example of audit items (ctd) The recruitment/appointment procedures for senior management (existence of and compliance with criteria, open and competitive process ) The existence, composition and status of supporting bodies such as audit, accounts, appointment, compensation, risk, procurement and tender committees etc. The conditions of reporting to the board.

The Cour des comptes and governance issues Current limits of the Court’s approach to governance issues Not a concern for central ministries with few exceptions Lack of common understanding of the notion internally and externally No common reference in terms of standards and very little guidance to base the work on governance upon. The approach is therefore still piecemeal

MERCI BEAUCOUP ! LABAI AČIŪ ! DZIEKUJE BARDZO ! THANK YOU VERY MUCH !