1 Homologues Group Meeting Slovenia, October 2009 Republika SlovenijaEuropean Union Ljubljana, October 2009 Implementation of Article 73 Ljubljana, October 2009 Mark Schelfhout Androulla Ioannou DG Employment, Social Affairs DG Regional Policy and Equal Opportunities Mark Schelfhout Androulla Ioannou DG Employment, Social Affairs DG Regional Policy and Equal Opportunities

2 Homologues Group Meeting Slovenia, October 2009 Republika SlovenijaEuropean Union Ljubljana, October 2009 Content  Practices  Inventory of information sources  Approach for implementation of Art 73  Single Audit Concept  Joint Audit Strategy for Structural Actions  Conclusions

3 Homologues Group Meeting Slovenia, October 2009 Republika SlovenijaEuropean Union Ljubljana, October 2009 Practices Approaches –System audits and audits of operations –Reliance from other Commission/ECA audits –Reliance on information from national audit activity –Contract of confidence

4 Homologues Group Meeting Slovenia, October 2009 Republika SlovenijaEuropean Union Ljubljana, October 2009 Practices Difficulties –No ex-ante control of systems –Non-standardized audit strategy and/or unclear risk assessment –Absence of common audit methodology –Lack of timely exchange of information

5 Homologues Group Meeting Slovenia, October 2009 Republika SlovenijaEuropean Union Ljubljana, October 2009 Information sources Compliance assessment of MCS Audit strategy National audit reports Annual control reports and opinions Annual summaries Coordination meetings

6 Homologues Group Meeting Slovenia, October 2009 Republika SlovenijaEuropean Union Ljubljana, October 2009 Implementation of Article 73 Regulation- « …Commission may..rely principally… » if: –…compliance of systems…is without reservations –…audit strategy of audit authority is satisfactory –…reasonable assurance…that management and control systems function effectively… –…on the basis of..audits by Commission and Member State

7 Homologues Group Meeting Slovenia, October 2009 Republika SlovenijaEuropean Union Ljubljana, October 2009 Implementation of Article 73 Step-by-step approach –(1) Annual control report and opinion indicate assurance level Works well, only minor improvements needed (unqualified opinion) Works, but some improvements needed (qualified opinion) - ONLY on a case-by-case basis –(2) Combined with low error rate resulting from the audits of operations –(3) satisfactory results from the review and re- performance of AA audit work

8 Homologues Group Meeting Slovenia, October 2009 Republika SlovenijaEuropean Union Ljubljana, October 2009 Implementation of Article 73 Step-by-step approach (con’t) –(4) sufficient coverage of audit universe –(5) official notification by the Commission of its conclusion to put into effect Article 73(3) –(6) increased coordination –(7) if there is evidence of shortcomings…

9 Homologues Group Meeting Slovenia, October 2009 Republika SlovenijaEuropean Union Ljubljana, October 2009 Single audit concept Coordination with Member States: technical meetings, annual bilateral meetings, and Homologues Common standards: guidance-ARM, standard models and internationally accepted audit standards Financial Regulation –Internal Control Standards –Annual Summary

10 Homologues Group Meeting Slovenia, October 2009 Republika SlovenijaEuropean Union Ljubljana, October 2009 Joint Audit Strategy for Structural Actions Priorities for period: –to obtain assurance on functioning of systems by (1) assessing reliance that can be placed on audit authority and (2) conducting systems audits and substantive testing of operations, where applicable

11 Homologues Group Meeting Slovenia, October 2009 Republika SlovenijaEuropean Union Ljubljana, October 2009 Joint Audit Strategy for Structural Actions (1) assessing reliance that can be placed on audit authority Initial audits : selection of OPs with highest risk and responsible AA –Desk work to review procedures of AA –On-the-spot visits to review audit files –Re-performance of systems audits –Re-performance of audits of operations : Selection of OPs with lower risk and responsible AA

12 Homologues Group Meeting Slovenia, October 2009 Republika SlovenijaEuropean Union Ljubljana, October 2009 Joint Audit Strategy for Structural Actions (2) conducting systems audits and substantive testing of operations, where applicable based on risk assessment and/or focus on bodies which will not be immediately subject to national audit

13 Homologues Group Meeting Slovenia, October 2009 Republika SlovenijaEuropean Union Ljubljana, October 2009 Conclusions Greater responsibility on audit authority Reliance by the Commission – subject to conditions for Article 73 being met Greater coordination, less Commission audits Reconsideration of Article 73

14 Homologues Group Meeting Slovenia, October 2009 Republika SlovenijaEuropean Union Ljubljana, October 2009 Thank you for your attention! Tel: Tel: