EN
OPINION OF THE EUROPEAN CENTRAL BANK
of 2 September 2002
at the request of the Swedish Ministry of Finance
on a draft legislative proposal establishing  th e National Audit, including proposed amendments
to the Sveriges Riksbank Act (1988:1385)
(CON/2002/22)
1. On 4 July 2002, the European Central Bank (ECB) received a request from the Swedish
Ministry of Finance for an opinion on a legislative proposal concerning the establishment of anational audit authority, the National Audit ( Riksrevisionen ), including proposed amendments to
the Sveriges Riksbank Act (1988:1385) (the legislative proposal).
2. The ECBs competence to deliver an opinion is based on Article 105(4) of the Treaty
establishing the European Community and the third indent of Article 2(1) of Council Decision98/415/EC of 29 June 1998 on the consultation of the European Central Bank by nationalauthorities regarding draft legislative provisions
1, as the legislative proposal contains provisions
concerning Sveriges Riksbank. In accordance with the first sentence of Article 17.5 of the Rulesof Procedure of the European Central Bank, the Governing Council of the ECB has adopted thisopinion.
3. The legislative proposal intends to replace the existing Parliamentary auditors with a single
audit body under the Swedish Parliament ( riksdagen ), the National Audit, through the adoption
of a proposed Act on the audit of State activities etc. ( förslag till lag om revision av statlig
verksamhet m.m.)  (the proposed Audit Act) and other legislative changes, including certain
amendments to the Sveriges Riksbank Act ( förslag till lag om ändring i lagen (1988:1385) om
Sveriges riksbank) . The proposed Audit Act and the other legislative amendments are scheduled
to enter into force on 1 July 2003.
4. The National Audit is intended to assume responsibility for the states financial and
performance auditing previously performed by the Office of the Parliamentary Auditors(Riksdagens revisorer )
2. The tasks of the National Audit will comprise inter alia  the annual
                                                
1OJ L 189, 3.7.1998, p. 42.
2Through the repeal of the Act on the audit of the Parliaments administration and authorities ( förslag till lag om
upphävande av lagen (1988:46) om revision av riksdagens förvaltning och riksdagens myndigheter m.m. ).
2financial audits of the annual reports of Sveriges Riksbank3. This opinion only addresses the
proposed audit arrangements for the Riksbank and does not extend to other general aspects ofthe legislative proposal.
5. The statement of reasons in the legislative proposal concerning the audit of Sveriges Riksbank
considers the role of the National Audit in relation to Sveriges Riksbank4. A reference is made
in this connection to Article 27 of the Statute of the European System of Central Banks and ofthe European Central Bank with regard to the auditing of the ECB and the national centralbanks (NCBs). Article 43.1 of the ESCB Statute clarifies that Article 27 does not apply toMember States with a derogation and, hence it does not apply yet to Sweden. This will,however, change once Sweden adopts the euro and Sveriges Riksbank becomes a fullyintegrated part of the Eurosystem, and it may therefore be useful to note the application ofArticle 27 to the current members of the Eurosystem.
6. One explicit change pursuant to Article 27 of the ESCB Statute once Sweden adopts the euro
will be the manner in which external auditors are appointed for Sveriges Riksbank. TheGoverning Council of the ECB will recommend, for approval by the EU Council, theindependent external auditors that will audit Sveriges Riksbank. Article 27 of the Statute of theESCB does not contain detailed specifications with respect to the auditors that can be appointedto perform this function, but it requires such auditors to be independent and external. Thepractice established for the current members of the Eurosystem provides further guidance in thisregard. In particular, the concepts of independence and externality require that the auditors beindependent from and external to the ECB, the NCBs and the NCBs' respective shareholders.The existing independent external auditors appointed for the audit of national central banksunder Article 27 are engaged on the basis of private contracts with the central bank concerned.Their opinions concern the true and fair presentation of the financial situation. Whilst theSwedish National Audit will be a public independent authority under the Parliament, chargedwith the review of the Annual Repo rt of Sveriges Riksbank, the current external auditors of the
participating NCBs and of the ECB appointed under Article 27 are private auditors or firms ofauditors with a specific independent audit mandate given for a certain period of time asspecified in the contracts. The legislative proposal clarifies that the National Audit is to bemanaged by three auditors appointed by the Swedish Parliament, who can each decideindividually on audit plans and on the content and conclusions of reports on both financial andperformance audits. It is not clear, however, whether the members of the National Audit will berequired to be authorised, registered and certified as chartered or public accountants. Such
                                                
3Article 3 of the proposed Audit Act. According to Chapter 10, Article 3 of the current Sveriges Riksbank Act, the
Riksbanks Annual Report consists of a profit and loss account, a balance sheet, an administration report and an
account of foreign exchange and monetary policies and on how the Riksbank has promoted a safe and efficient
payment system. Article 5 of the proposed Audit Act defi nes the focus and direction of the audit by the National
Audit, with Article 5, third paragraph referring specifically to the audit report for the Riksbank.
4Section 5.4.2 at pp. 69 - 71 of the legislative proposal.
3qualifications have hitherto been a prerequisite for auditors proposed by the ECB to the Council
under Article 27 of the ESCB Statute. In accordance with the application of Article 27 of theESCB Statute with regard to the current members of the Eurosystem
5, another party than the
Swedish National Audit would need to be appoin ted under Article 27 as external auditor for
Sveriges Riksbank in the future. However, this would not exclude the National Audit fromcontinuing to perform a control function on behalf of the Swedish Parliament, provided that theRiksbanks independence is not jeopardised. Indeed, similar public bodies exist in otherMember States that have adopted the euro. In this context, it is noted that the ECB and severalNCBs of the Eurosystem are subject to such additional external audits outside the scope ofArticle 27 of the ESCB Statute. In the case of the ECB, this is performed by the European Courtof Auditors, whereby the audit is specifically  limited to the operational efficiency of the
management of the ECB
6.
7. Section 5.8 of the legislative proposal addresses internal audit, including the internal audit of
Sveriges Riksbank by its internal Audit Unit managed by the Riksbanks General Council. Itproposes introducing a new Article 2a into Chapter 9 of the Sveriges Riksbank Act. Accordingto this proposal, the activity of the internal Audit Unit will involve an independent audit of theRiksbanks internal management and controls and the fulfilment of financial reporting duties bythe Riksbank
7. The audit is to be conducted in accordance with generally accepted internal
auditing standards. The second paragraph of the proposed new Article 2a provides that theRiksbank will decide on an audit plan for its operations after consulting the National Audit. 
8. The current organisation of the internal audit function of Sveriges Riksbank is explained in the
legislative proposal8. Two audit units currently perform the internal audit of the Riksbank. One
audit unit performs a supervisory role over the Riksbanks Executive Board9 on behalf of the
Riksbanks General Council, mainly in the form of compliance checks. Furthermore, this unitalso deals with certain other issues under the competence of the General Council, such as thedischarge of duties by Executive Board members and proposals for distribution of profits. Theother audit unit reports to the Riksbanks Executive Board and ascertains whether the ExecutiveBoards decisions are being implemented effectively and efficiently. This latter audit unit alsoscrutinises those parts of the Riksbank's operations covered by the prohibition against
                                                
5Compare in particular the case of the Irish Comptroller and Auditor General. The Iri sh Comptroller and Auditor
General was nominated for recommendation as external auditor for the Central Bank of Ireland before the start ofStage Three of EMU, but rejected as not being an independent external auditor within the meaning of Article 27 ofthe ESCB Statute.
6Article 248 of the Treaty and Article 27.2 of the ESCB Statute.
7It may incidentally be noted that the IIA standards dete rmine the nature of internal  audit work as follows: The
internal audit activity evaluates and contributes to the improvement of risk management, control and governancesystems (IIA standard 2100).
8At pages 101  102.
9The independent decision-making body of the Riksbank responsible for monetary policy, other ESCB-related mattersand all other matters not to be decided by the Riksbanks General Council.
4instructions on issues relating to monetary policy10. Moreover, the Executive Boards audit unit
handles the audits related to the ESCBs audit pl an as prepared by the ESCBs Internal Auditors
Committee (IAC)11.
9. In view of this organisational structure of the Riksbanks internal audit function, an important
distinction is made under the present regime between the audit plan for the audit unit of theGeneral Council of the Riksbank, on the one hand, and the audit plan for the audit unit of theExecutive Board, on the other hand. The General Council approves the audit plan for theGeneral Council's audit unit after consulting the Parliamentary Auditors. The audit plan for the
Executive Board's internal auditing unit, which is determined to some extent by the IACs auditplan, is instead approved by the Executive Board without consultation with the ParliamentaryAuditors. In order to ensure the Riksbanks independence, this distinction needs to bemaintained and, in case the proposed Article 2a is adopted, this should be made clear. In view ofthe apparent general application of the proposed Article 2a, such clarifications would seemnecessary with regard to the division of responsibilities and tasks between the two existing auditunits. It should also be clarified that the consultation process with the National Audit concerningaudit plans would not apply to the audit unit of the Executive Board considering that this unitparticipates in audits undertaken at the level of the ESCB and under instruction from the ECBsGoverning Council. Moreover, the amendments to the Riksbank Act should be general in natureand the Riksbank should be allowed to continue to define further details in its own internalworking order.
10. In view of the current late stage in the legislative procedure, the ECB notes and appreciates that
the Swedish Government will forward this opini on to the Parliament. The ECB has no objection
to the competent national authorities making this opinion publicly available at their discretion.
Done at Frankfurt am Main on 2 September 2002.
The President of the ECB
[signed]
Willem F. DUISENBERG
                                                
10Compare Chapter 9, Article 12 of the Constitution Act ( regeringsformen ).
11The IAC consists of audit representatives of each central bank of the ESCB and is established under the Governing
Council of the ECB to perform audits of systems common to the ESCB/Eurosystem.