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 the National Audit, including proposed amendments to the Sveriges Riksbank Act (1988:1385) (CON/2002/22)
Date: 2002-09-02
Institutions: European Central Bank
Subjects: Sweden, audit, central bank, financial audit, national law, performance audit

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  the 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 a

national 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 Decision

98/415/EC  of  29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national

authorities regarding draft legislative provisions1, as the legislative proposal contains provisions

concerning Sveriges Riksbank. In accordance with the first sentence of Article 17.5 of the Rules

of Procedure of the European Central Bank, the Governing Council of the ECB has adopted this

opinion.

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

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2

OJ L 189, 3.7.1998, p. 42.
Through  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.).

                                                
financial  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 of

the 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 of

the  European  Central  Bank  with  regard  to  the  auditing  of  the  ECB  and  the  national  central

banks  (NCBs).  Article  43.1  of  the  ESCB  Statute  clarifies  that  Article  27  does  not  apply  to

Member  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  fully

integrated  part  of  the  Eurosystem,  and  it  may  therefore  be  useful  to  note  the  application  of

Article 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.  The

Governing  Council  of  the  ECB  will  recommend,  for  approval  by  the  EU  Council,  the

independent external auditors that will audit Sveriges Riksbank. Article 27 of the Statute of the

ESCB does not contain detailed specifications with respect to the auditors that can be appointed

to  perform  this  function,  but  it  requires  such  auditors  to  be  independent  and  external.  The

practice established for the current members of the Eurosystem provides further guidance in this

regard. In particular, the concepts of independence and externality require that the auditors be

independent 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  banks

under 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  the

Swedish  National  Audit  will  be  a public independent authority  under  the  Parliament,  charged

with the review of the Annual Report of Sveriges Riksbank, the current external auditors of the

participating NCBs and of the ECB appointed under Article 27 are private auditors or firms of

auditors  with  a  specific  independent  audit  mandate  given  for  a  certain  period  of  time  as

specified  in  the  contracts.  The  legislative  proposal  clarifies  that  the  National  Audit  is  to  be

managed  by  three  auditors  appointed  by  the  Swedish  Parliament,  who  can  each  decide

individually on audit plans and on the content and conclusions of reports on both financial and

performance audits. It is not clear, however, whether the members of the National Audit will be

required  to  be  authorised,  registered  and  certified  as  chartered  or  public  accountants.  Such

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Article 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  defines  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.
Section 5.4.2 at pp. 69 - 71 of the legislative proposal.

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qualifications 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 the

ESCB  Statute  with regard  to  the  current  members  of  the  Eurosystem5,  another  party  than  the

Swedish  National  Audit  would  need  to  be  appointed  under  Article  27  as  external  auditor  for

Sveriges  Riksbank  in  the  future.  However,  this  would  not  exclude  the  National  Audit  from

continuing to perform a control function on behalf of the Swedish Parliament, provided that the

Riksbank’s  independence  is  not  jeopardised.  Indeed,  similar  public  bodies  exist  in  other

Member States that have adopted the euro. In this context, it is noted that the ECB and several

NCBs  of  the  Eurosystem  are  subject  to  such  additional  ‘external  audits’  outside  the  scope  of

Article 27 of the ESCB Statute. In the case of the ECB, this is performed by the European Court

of  Auditors,  whereby  the  audit  is  specifically  limited  to  the  operational  efficiency  of  the

management of the ECB6.

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.  It

proposes introducing a new Article 2a into Chapter 9 of the Sveriges Riksbank Act. According

to this proposal, the activity of the internal Audit Unit will involve an independent audit of the

Riksbank’s internal management and controls and the fulfilment of financial reporting duties by

the  Riksbank7.  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  the

Riksbank 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 unit

also deals with certain other issues under the competence of the General Council, such as  the

discharge of duties by Executive Board members and proposals for distribution of profits. The

other audit unit reports to the Riksbank’s Executive Board and ascertains whether the Executive

Board’s decisions are being implemented effectively and efficiently. This latter audit unit also

scrutinises  those  parts  of  the  Riksbank's  operations  covered  by  the  prohibition  against

5

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7

8
9

Compare  in  particular  the  case  of  the  Irish  Comptroller  and  Auditor  General.  The  Irish  Comptroller  and  Auditor
General  was  nominated  for  recommendation  as  external  auditor  for  the  Central  Bank of  Ireland  before  the  start  of
Stage Three of EMU, but rejected as not being an independent external auditor within the meaning of Article 27 of
the ESCB Statute.
Article 248 of the Treaty and Article 27.2 of the ESCB Statute.
It  may  incidentally  be  noted  that  the  IIA  standards  determine  the  nature  of  internal  audit  work  as  follows:  “The
internal  audit  activity  evaluates  and  contributes  to  the  improvement  of  risk  management,  control  and  governance
systems” (IIA standard 2100).
At pages 101 – 102.
The independent decision-making body of the Riksbank responsible for monetary policy, other ESCB-related matters
and all other matters not to be decided by the Riksbank’s General Council.

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instructions on issues relating to monetary policy10. Moreover, the Executive Board’s audit unit

handles the audits related to the ESCB’s audit plan 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  the

General Council of the Riksbank, on the one hand, and the audit plan for the audit unit of the

Executive  Board,  on  the  other  hand.  The  General  Council  approves  the  audit  plan  for  the

General 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 audit

plan, is instead approved by the Executive  Board  without  consultation  with  the  Parliamentary

Auditors.  In  order  to  ensure  the  Riksbank’s  independence,  this  distinction  needs  to  be

maintained and, in case the proposed Article 2a is adopted, this should be made clear. In view of

the  apparent  general  application  of  the  proposed  Article  2a,  such  clarifications  would  seem

necessary with regard to the division of responsibilities and tasks between the two existing audit

units. It should also be clarified that the consultation process with the National Audit concerning

audit plans would not apply to the audit unit of the Executive Board considering that this unit

participates in audits undertaken at the level of the ESCB and under instruction from the ECB’s

Governing Council. Moreover, the amendments to the Riksbank Act should be general in nature

and  the  Riksbank  should  be  allowed  to  continue  to  define  further  details  in  its  own  internal

working 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 opinion 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

10
11

Compare Chapter 9, Article 12 of the Constitution Act (regeringsformen).
The 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.

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