1. Audit of the EU Pre-Accession Funds (PHARE, SAPARD, ISPA) Eva Lätti Audit Manager of the Performance Audit Department The State Audit Office of Estonia

2. INTRODUCTION The objective of the presentation: to give a short overview of the Estonian approach to the audit of the pre- accession instruments

3. The amounts of the pre-accession funds State budget for 2001 – 1 985 736 666 EURO PHARE (budgeted for 2001) - 18 785 625 EURO ISPA (in average per year) - 28 600 000 EURO SAPARD (in average per year) - 14 300 000 EURO Pre-accession funds form ca 3.1 % of the annual state budget.

4. Auditing of the EU-funds in Estonia General principle Auditing relationships in the audit of the EU-funds in Estonia Special focus on EU- funds through cooperation

5. General principle During the audits of the State Audit Office of Estonia, the EU-funds are covered in our audits in the same way as the state budget money as the principles of sound financial management should be followed for both

6. Auditing relationships in the audit of the EU-funds

7. The results of the audit of the Financial Control Department (1) As a result of their audits they shall: – form an opinion as to the authenticity and comprehensiveness of the reports of the National Fund and the implementing agency;

8. The results of the audit of the Financial Control Department (2) As a result of their audits they shall: – form an opinion as to the adequacy of the internal control and management system of the National Fund and the implementing agency, their capability to ensure the legality and accuracy of the payments

9. The results of the audit of the Financial Control Department (3) As a result of their audits they shall: – provide the National Fund with authorisations to start, continue or suspend making payments by the respective implementing agency and the wrongly paid sums

10. Special focus on EU- funds through cooperation Joining the European Court of Auditors during their audits in Estonia: – at the moment our auditors are assigned to the ECA audit team leader and follow the ECA’s audit planning memorandum. They are assessing the management of PHARE and ISPA funds in the environment sector

11. Challenges for the future Forming a team who will assess the administrative capacity of the government agencies who have an important role in implementing the acquis; taking part in the Audit Activities working group of the EU candidate countries and the ECA; training people to perform high quality audits.