Communication from the Commission to the European Parliament, the Council and the European Court of Auditors - Report on the Commission action plan towards an integrated internal control framework {SEC(2008) 259}
Date: 2008-02-27
Institutions: European Commission
Subjects: administrative transparency, audit, budgetary control, financial regulation, general budget (EU), report

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 27.2.2008 
COM(2008) 110 final 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN 
COURT OF AUDITORS 

Report on the Commission Action Plan towards an Integrated Internal Control 
Framework 

{SEC(2008) 259} 

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COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN COURT OF 
AUDITORS 

Report on the Commission Action Plan towards an Integrated Internal Control Framework 

1. 

EXECUTIVE SUMMARY 

the  "Action  Plan 

When  it  entered  office,  the  current  Commission  fixed  a  strategic  objective  of  aiming  for  a  positive 
declaration of assurance from the European Court of Auditors. To support this, it adopted in January 
towards  an  Integrated  Internal  Control  Framework”1,  drawing  on 
2006 
recommendations by the Court of Auditors2, the European Parliament's discharge resolution 20033 and 
the ECOFIN conclusions of 8 November 2005. The Action Plan addressed 'gaps' in the Commission's 
then control structures and identified 16 areas for action by end-2007. In its interim progress report in 
March 20074, the Commission outlined progress and announced some additional actions.  

In  the  two  years  since  the  16  actions  were  launched,  7  have  been  completed,  6  are  substantially 
complete and 3 could not be implemented or are being taken forward in other ways. Figure 1 gives an 
overview of the status of each group of actions and a first impact evaluation. The action plan deadline 
was end-2007 for putting measures in place. Detailed progress on the actions is spelt out in the Annex 
to  this  report.  A  first  assessment  of  the  impact  of  the  actions  is  given,  but  reduction  of  errors  and 
increase  in  assurance  will  only  build  over  time  as  the  actions  taken  begin  to  have  an  impact  on 
underlying control systems. 

Figure 1: Implementation and impact of the action plan 

Group of actions 

Status 
March 
2007 

Status 
February 
2008 

Impact 
February 
2008 

Simplification  and  common  control  principles 
(actions 1-4) 

■■□□□  ■■■■■  ■□□□□ 

Management  declarations  and  audit  assurance 
(actions 5-8) 

■■□□□ 

■■■■□ 

■□□□□ 

Single  audit  approach: 
prioritising cost-benefit (actions 9-11) 

sharing  results  and 

■■□□□ 

■■■■□ 

■□□□□ 

Sector-specific gaps (actions 12-16) 

■■■□□ 

■■■■□ 

■□□□□ 

Figure  1  shows  that  the  Commission  has  met  the  ambitious  Action  Plan  timetable,  ending  on  31 
December 2007. The actual impact on error rates will only become perceptible at a later  stage..  

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2 
3 
4 

COM(2006) 9 and SEC(2006) 49. 
Opinion No 2/2004: OJ C107/1 of 30.4.2004 (the ‘Single Audit’ Opinion). 
OJ L196, 27.7.2005, p. 4. 
COM(2007) 86. 

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The Action Plan was designed to provide the foundations for a positive DAS. The completed actions 
have clarified and strengthened the internal control framework for Community programmes.  

Actions not yet closed will be completed in 2008. The principal incomplete actions are: 

•  action  7,  the  development  of  "agreed  upon  procedures"  in  education  and  culture  was 
postponed  to  2008  due  to  updates  of  DG  EAC's  audit  methodology.  This  work  will  be 
completed by December 2008; 

•  action 10, the collection of data on costs of control in agriculture and the structural funds 
has  been  completed  and  analysis  is  underway.  The  results  will  be  reported  in  a 
Communication in October 2008 (see below); 

•  action 11N, modifications to ABAC in February 2008 will allow clear tracking of multi-

annual recoveries from 2008 on; and 

•  action  16,  a  sampling  guide  for  Commission  services,  as  well  as  a  specialist  sampling 
guide  for  the  Structural  Funds,  will  be  made  available  in  Summer  2008.  The  revised 
structural funds audit manual will be completed during the year to take account of the new 
regulations. 

Despite the actions already taken, the Court is still finding too many errors in some areas. In the 2006 
DAS, structural actions delivered through Member States and external aid managed by implementing 
organisations received a "red" assessment from the Court. As the Court indicated in its "single audit 
opinion", a sound understanding of risk and the costs and benefits of control is vital in defining control 
strategies  and  evaluating  their  results.  The  Commission  will  prepare  a  Communication  for  October 
2008  on  the  costs  and  benefits  of  control  systems  and  the  analysis  of  residual  risk  which  DGs  for 
whose policy areas the Court of Auditors' assessment is "red" are required to include in their . 2007 
Annual Activity Reports.  

The  action  plan  was  designed  to  address  gaps  in  the  internal  control  framework  and  to  support  the 
move towards a positive declaration of assurance. As the different actions begin to bite, the impact on 
control  effectiveness  will  become  progressively  more  visible.  This  report  provides  an  overview  of 
actions taken since the previous progress report in March 2007. 

2. 

COMPLETION AND IMPACT OF THE ACTION PLAN 

Progress on each action is described in the sections below and in more detail in the annex. 

2.1. 

Simplification and common control principles (actions 1-4) 

Action 1: Simplification of proposed 2007-13 legislation 

Action  completed:  the  Court  indicated  in  its  "single  audit"  opinion  that  simple,  clear  and 
easily-applied rules are crucial to reduce the risk of error. When the action plan was adopted, 
a  limited  window  of  opportunity  was  left  for  further  simplification  of  2007-13  legislation 
beyond provisions already negotiated. Simplification - a responsibility the Commission shares 
with the Legislative Authority - has not therefore been as extensive as hoped, although, some 
elements  intended  to  reduce  errors  were  introduced  in  specific  sectors,  including  rural 
internal  control  systems  covering  shared 
development  and  structural  actions.  The 

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management, for example, are set out more clearly in the new period legislation and respect 
the single audit principle5. 

Complex rules remain however a significant cause of error. Since its March 2007 report, the 
Commission has clarified rules through guidelines6 on the new Structural Funds legislation. It 
will continue to provide support and further guidance where necessary. The Commission will 
also ensure that future legislative proposals include clear and straightforward rules. 

Impact: Percentage of the budget spent using lump sums. ■□□□□  

Probable evolution: little change expected under current legislation. Further simplification 
will be proposed for the next legislative round.  

Action  2:  Integrate  common  internal  control  principles  in  the  proposal  for  the  revised 
Financial Regulation 

Action  cancelled,  but  achieved  in  another  way:  as  indicated  in  the  March  2007  progress 
report,  this  action  was  cancelled  as  the  legislator  declined  a  specific  principle  on  internal 
control  in  the  Financial  Regulation.  The  objective  of  this  action  has  been  achieved  through 
Article  28a,  which  provides  that  "the  budget  shall  be  implemented  in  compliance  with 
effective and efficient internal control". 

Action  3:  Establish  and  better  harmonise  the  presentation  of  control  strategies  and 
evidence providing reasonable assurance 

Action completed: the annual activity reports form the basis upon which the College accepts 
its responsibility for management by its services. A clear presentation of the internal control 
system is therefore crucial to users' understanding of how assurance is built-up. During 2007, 
"internal  control  templates"  were  developed  for  each  management  mode,  describing  the 
internal control system on a consistent and concise basis and presenting a logical build-up to 
the  Director  General's  assurance  statement.  These  templates  are  built  on  a  common  format 
which leaves some flexibility for adaptation to the needs of the DGs. They will be used in the 
annual  activity  reports  for  2007  and  a  monitoring  and  peer-review  process  will  ensure  their 
consistent  application.  DGs  will  be  challenged  to  provide  a  clear  explanation  of  system 
weaknesses and the actions they are taking to address them.  

Impact: AARs for 2006 were already improved as a result of action 3, reflected by the more 
positive  assessment  from  the  ECA  in  its  annual  report  of  the  quality  of  AARs;  Increase 
understanding of different control systems. ■■□□□. 

Probable  evolution:  Significant  improvements  are  expected  for  2007  AARs  reflecting 
reinforced  Standing  Instructions,  a  stronger  peer  review,  and  –  in  the  area  of  shared 
management – the use of Annual Summaries received from Member States.  

Action 3N: strengthening the link between reasonable assurance and payments 

5 
6 

See COM(2007) 86 for more details on specific simplification initiatives. 
Guidelines on FP7, guidelines on the implementing rules for Structural Funds 2007-13, Guidelines for Education 
Policy 2007-13. 

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Action  completed:  the  Synthesis  Report  on  2006  set  out  clearly  the  reservations  to  global 
assurance, including specific identification of the sectors and/ or Member States concerned. It 
identified the corresponding financial corrections or suspensions of payments. This policy is 
being reinforced. 

Impact:  In  the  area  of  the  Structural  Funds,  the  Commission  Action  Plan  to  strengthen 
supervision under shared management7 has already established a very direct link between 
audit findings, reservations and action plans by regions or Member States thereby ensuring 
that  timely  decisions  on  suspensions  and  financial  corrections  will  be  taken  in  2008. 
■□□□□. 

Probable  evolution:  Implementation  of  the  Structural  Funds  action  plan  will  ensure  that 
the absence of reasonable assurance will lead to either improved systems or suspension of 
payments and financial corrections.  

Action  4:  Initiate  inter-institutional  dialogue  on  risks  to  be  tolerated  in  the  underlying 
transactions 

Action cancelled but to be taken forward in action 10: zero risk is impossible to achieve at 
a  reasonable  cost.  The  Court  has  indicated  that  the  Commission  needs  to  take  action  to 
sufficiently mitigate the risk of error. It stressed the need to define a "tolerable level of risk" 
and  to  adapt  control  systems  to  achieve  this.  While  the  Legislative  Authority  did  not 
incorporate this into the revised Financial Regulation, the Commission is taking forward this 
action with actions 10 and 11 (see below). 

2.2.  Management declarations and audit assurance (actions 5-8) 

Action  5:  Promote  operational  level  management  declarations  and  synthesis  reports  at 
national level 

Action  completed:  shared  management  legislation  for  2007-13  requires  Member  States  to 
provide an annual audit opinion and details of the results of controls. Furthermore, the revised 
Financial Regulation requires an annual summary of available audits and declarations, due for 
the first time by 15 February 2008 (for the year 2007). For agriculture, the heads of paying 
agencies are obliged to provide an annual declaration of assurance. The obligation to produce 
an annual summary was clarified in Article 7(5) of Regulation (EC) No 885/2006 and further 
detailed  guidelines  were  addressed  to  Member  States  in  December  2007.  For  Structural 
Funds,  detailed  guidelines  were  presented  to  the  Coordination  Committee  of  the  Funds  in 
October 2007 and issued in a final form in December 2007. 

The  Commission  has  strongly  underlined  the  importance  of  the  summaries  and  by  the  27 
February  had received summaries on the Structural Funds from 25 Member States. While the 
nature of assurance which can be drawn from these documents can only be assessed following 
a review of their content and quality, the Commission considers this a success that it can build 
on  to  make  further  progress.  As  the  process  evolves  and  the  implementation  of  2007-2013 
programmes begins, the summaries will provide additional support to assurance.  

7  

(COM(2008)97) 

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The Commission will send reminders to those countries from which summaries have not yet 
been received (Austria and Germany) and give them a month to comply. Four Member States 
(Eire-Ireland,  Greece,  Luxembourg  and  the  Czech  Republic)  have  not  provided  information 
on the 2000-2006 programmes. 

Providing summaries is a legal obligation under the existing financial rules. If the situation is 
not remedied for Member States which did not provide any summary, or if the content of the 
summaries  does  not  conform  to  the  obligations  under  the  Financial  Regulation,  the 
Commission is determined to open an infringement procedure. 

For  agriculture,  nearly  all  heads  of  paying  agencies  (75  out  of  83)  provided  their  annual 
accounts  together  with  their  declaration  of  assurance as  well  as  the  certification  report  by  1 
February  2008  (the  remainder  should  be  transmitted  by  end  February).  All  Member  States 
where more than one paying agency is accredited have the obligation of producing an annual 
summary  by  15  February  2008.  All  of  them  respected  the  deadline,  except  one  which  is 
expected by the start of March. 

The  Commission  welcomed  the  voluntary  declaration  by  the  Dutch  government,  and  the 
accompanying  report  and  opinion  of  the  Dutch  Court  of  Auditors.  It  also  welcomed  the 
certification of EU expenditure by the Danish SAI and the intentions announced by the UK to 
take action in this area. The Commission will support similar national initiatives.  

Impact: Increased assurance in shared management ■■□□□ 

Probable  evolution:  A  gradual  improvement  in  control  systems  can  be  expected  as  the 
process  is  embedded  and  Member  States  take  greater  accountability  for  EU  Funds 
(depending on Member States' compliance ). 

Action  6:  Examine  the  utility  of  management  declarations  outside  shared  and  indirect 
centralised management 

Action  cancelled  but  to  be  taken  forward  another  way:  the  extension  of  management 
declarations to external policies was not considered cost-effective nor likely to add assurance 
due to the risk of duplication with beneficiaries' existing contractual obligations on financial 
management.  For  internal  policies  it  was  felt  more  effective  to  increase  assurance  via  audit 
certificates (see Action 7 below).  

Impact: See action 7 below. 

Action 7: Promote best practices for increasing cost-benefit of audits at project level 

Action  partially  completed:  the  Commission's  internal  control  framework  relies  in  many 
cases  on  the  work  of  other  auditors,  including  those  of  Member  State  authorities  in  shared 
management  and  contracted  auditors  in  centralised  direct  management.  The  achievement  of 
effective  results  from  different  levels  of  audit  requires  clear  working  procedures  and 
mandates. 

The  Commission  has  re-examined  its  procedures  for  audit  opinions  and  the  quality  and 
independence  of  auditors.  For  External  Aid  and  for  the  seventh  Research  framework 
programme  it  has  based  its  approach  on  the  international  standard  on  'agreed  upon 

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procedures'.  These,  together  with  accompanying  guidelines,  clearly  define  the  scope  of  the 
assignment, the format and content of reports, the accreditation requirements and the auditor's 
obligations. The approach will be extended to Education and Culture in 2008. 

In  the  Structural  Funds,  the  2007-13  legislation  sets  out  the  roles  of  the  different  Member 
State bodies (including the certification of expenditure claims by the certifying authority and 
annual  audit  opinions  by  an  audit  authority).  The  SF  audit  manual  is  being  revised  to  take 
account of the new regulatory requirements. It will include the sampling guide for Article 16, 
Commission  Regulation  (EC)  No.  1828/2006,  discussed  with  Member  States  in  November 
2007 which will be finalised by mid-2008. 

In agriculture, the annual certification covers, as of financial year 2007, the proper operation 
of the paying agencies' internal control procedures and the certification bodies are required to 
verify and validate control statistics and post-payment checks. 

Impact:  Improved  standardisation  and  quality  of  audit  work  and  improved  reporting  of 
representative error rates □□□□□ 

Probable evolution: Steady reduction in error rates  

Actions 8 and 8N: Facilitate additional assurance from Supreme Audit Institutions 

Action 8 completed: while not part of the internal control framework, independent Supreme 
Audit Institutions, as external auditors of national public spending, play a key role in the audit 
of  public  -  including  EU  -  funds.  The  Commission  has  provided  data  on  payments  made  in 
2005 and 2006 to all SAIs and will continue to provide such information. 

Action 8N almost complete: the Commission has conducted a case study with the Slovenian 
SAI  which  has  enabled  it  to  improve  the  standard  reports.  This  will  facilitate  future  use  by 
SAIs in the context of national audits. 

Impact: Increase number of SAIs using Commission data and reporting on the use of EU 
funds ■□□□□ 

Probable evolution: SAIs are independent but a gradual increase in their involvement may 
be expected as the quality of Commission reports increases. 

2.3. 

Single audit approach: sharing results and prioritising cost-benefit (actions 9-11) 

Actions  9  and  9a1N:  Construct  effective  tools  for  sharing  audit  and  control  results  & 
promote the single audit approach 

Action  almost  complete:  the  Court  proposed  that  audit  results  should  be  encoded  in  a 
common  database8.  The  Commission  has  integrated  audit  data  within  its  financial  and 
accounting  system  to  facilitate  co-ordination  of  audits  and  sharing  of  results  between  DGs: 
over 2,700 audits are currently registered. 

8 

Para 46 & 47 Opinion 02/2004. 

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DGs  in  shared  management  coordinate  audits  with  Member  States  and  audit  progress  is 
monitored via IT systems, regular reporting and the annual coordination meetings. Structural 
Funds legislation for 2007-13 requires the co-ordination of controls between different actors 
in the control chain, and the audit authority must provide an audit strategy for approval by the 
Commission  within  9  months  of  programme  adoption,  which  is  updated  and  reviewed 
bilaterally  each  year.  System  audit  reports  are  exchanged  between  the  Commission  and 
national  audit  services.  Training  workshops  on  the  audit  and  control  provisions  of  the  new 
regulations  were  provided  to  the  Structural  Funds  audit  authorities  of  almost  all  Member 
States during 2007, to promote a common understanding of the new legislative requirements. 

Impact: Better coordination of audit activity and audit methodology. ■□□□□ 

Probable evolution: Improved consistency and quality of audit work. Increased reliance on 
the work of the national audit authorities. 

Actions 10 and 10N: Conduct an initial estimation and analysis in the costs of controls and 
examine the cost-benefit ratio of control 

Action  underway:  the  Commission  is  completing  the  assessment  of  the  costs  of  control  in 
Agriculture,  ERDF  and  direct  centralised  management.  The  results  will  form  the  basis  of  a 
Communication by the Commission in October 2008 which will examine the cost benefits of 
control systems and the analysis of residual risk which DGs for whose policy areas the Court 
of Auditors' assessment is "red" are required to include in their 2007 Annual Activity Reports. 
This  Communication  will  form  the  basis  for  taking  forward  discussion  on  residual  risk  of 
error. 

The  analysis  of  the  impact  of  programme  design  on  risk  foreseen  in  action  10N  has  been 
slower than hoped, mainly due to the lack of appropriate centralised data.  

Impact: Understanding of the levels of residual risk in major policy areas ■□□□□. 

Probable evolution: Depends on follow-up to the October 2008 communication. 

Action 11: Recoveries and benefits of control 

Action close to completion: many benefits of control are difficult to quantify (the deterrent 
and  preventive  effects,  the  impact  of  systems  audit  on  improving  Member  State  or 
beneficiaries' management and control systems). Analysis at this stage is therefore limited to 
readily quantifiable benefits (recoveries and reduction of payments).  

Impact: Quantification of the benefits of control in terms of recovery of amounts in error 
□□□□□ 

Probable evolution: Full information will be collected for 2008 onwards under Action 11N. 

Action 11N: Recoveries of errors 

Action  under  way:  recovered  amounts  have  been  reported  in  the  2005  and  2006  accounts. 
However a direct link between the results of control and recoveries is yet to be established. To 
ensure the financial results of controls can be identified and tracked, from 28 February 2008 

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the  central  financial  and  accounting  system  will  record  information  on  the  control  authority 
and the type of error. This information, to be retroactively encoded for all recoveries launched 
in 2008, will be reported in the 2008 accounts, presented in March 2009. This will allow, inter 
alia, the year in which an error occurred to be compared with the year of detection and will be 
a basis for assessing the effectiveness of multi-annual recovery systems. 

Meanwhile, in October 2007 the Commission included as an annex to the Annual Report on 
the Structural Funds information on Commission corrections and, for the first time, provided 
figures  for  the  execution  of  financial  corrections  at  national  level  through  withdrawals  and 
recoveries by the Member States. The Commission will take action in 2008 to obtain better 
compliance with reporting requirements and will verify the accuracy of the data provided by a 
sample of Member States. 

Impact:  Evidence  that  multi-annual  control  systems  are  effectively  correcting  errors 
□□□□□ 

Probable evolution: Full data on Structural Fund corrections will be collected for 2008 and 
Commission corrections will be recorded directly in the accounting system. 

2.4. 

Sector-specific gaps (actions 12-16) 

Actions 12 and 12N: Address gaps identified by participating services 

Action completed: the Commission will ensure the multi-annual audit strategy continues to 
ensure an adequate balance between risk and representative sampling9. Extensive guidelines 
on  audit  sampling  in  line  with  international  auditing  standards  have  been  prepared  in  the 
Structural  Funds  to  promote  coherence  in  testing  done  by  Member  State  audit  authorities10. 
The Commission has provided guidance on best practice in the management of external audit 
framework contracts to ensure a consistency and high quality of audit results11.  

The  FP6  audit  strategy  based  on  a  detailed  analysis  of  the  beneficiary  population,  in  the 
ECA's  opinion  "represents  a  sound  basis  for  addressing  the  problems  identified  by  the 
Court"12.  While  recognising  that  the  approach  is  not  directly  transposable  to  all  areas,  the 
Commission will issue guidance to its services on sampling strategies by July 2008 based on 
experience with the research audit strategy. 

Compared with the 45 audits done in 2006 for FP6, the Research DGs exceeded the target of 
300 set in the March 2007 progress report13 by performing 378 audits in 2007. The results of 
these audits will be reported in the DGs' annual activity reports. This effort will be continued 
in  2008  and  the  progressive  build-up  of  audit  results  and  the  corresponding  corrections  and 
recoveries will provide a clear overview of residual error in FP6. 

Impact: Progressive reduction of error across all management modes. ■□□□□ 

9 
10 
11 
12 
13 

Para 48 & 49 Opinion 02/2004. 
Para 40 & 49 Opinion 02/2004. 
Para 37 Opinion 02/2004. 
ECA Annual Report on the implementation of the budget concerning the financial year 2006. 
COM(2007) 86. 

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Probable evolution: Increasingly improved evaluation by the Court of Auditors  

Action 13: Analyse controls under Shared Management at regional level and the value of 
existing statements 

Action  completed:  the  Structural  Funds  DGs  report  their  assessment  of  Member  States' 
control  systems  in  their  annual  activity  reports.  This  assessment  will  be  partly  based  on  the 
information  provided  by  Member  States  in  their  annual  summaries  of  available  audits  (see 
action 5 above).  

Impact:  Improved  quality  of  Member  States  control  systems  as  evidenced  by  the  annual 
activity report process and the evaluation of the ECA. ■□□□□ 

Probable  evolution:  Improved  evaluation  by  the  Court,  but  this  is  likely  to  vary  between 
Member States 

Action 14: Provide greater guidance for structural funds on managing the risk of error 

Action completed: In 2007 the Structural Funds DGs issued guidance on audit strategy and 
compliance assessment (documents to be submitted by the audit authorities within 12 and 9 
months respectively of programme adoption), annual summaries and financial corrections for 
public  procurement  irregularities.  During  2008,  guidance  notes  on  sampling,  systems 
assessment  and  revisions  of  the  notes  on  primary  level  management  verifications  and 
certification  will  be  revised  to  take  into  account  the  provisions  of  the  new  regulations.  A 
seminar for managing authorities is planned by mid-2008. 

Impact: Reduced error rates through successful implementation of guidance. □□□□□ 

Probable evolution: Significantly improved guidance issued in 2008 on all key issues. 

Action 15: Promote ‘Contracts of Confidence’ for Structural Funds 

Action  will  not  be  completed  for  all  Member  States  but  will  be  achieved  through 
legislation  for  the  2007-2013  period:  contracts  of  confidence  have  been  signed  with  six 
Member  States:  Austria,  UK  (Wales),  Denmark,  Portugal,  Slovenia  and  Estonia.  Further 
contracts  could  be  signed  during  2008,  where  the  results  of  audit  work  show  that  the 
conditions are fulfilled. Although the Commission has not met the ambitious target of signing 
contracts  with  all  Member  States  (for  2000-06),  the  promotion  of  this  initiative  has  driven 
improvements in the coordination of audit work and has created a bench-marking procedure. 
The fundamental concepts of this initiative are incorporated in the 2007-13 Structural Funds 
legislation. 

Impact: Greater control consciousness in Member States ■□□□□ 

Probable  evolution:  As  the  2007-13  programmes  are  implemented,  improvements  in 
Member  States'  control  systems  are  expected  and  more  will  fulfil  the  requirements  of  the 
"contract of confidence". 

Action 16: Establish common guidelines per policy family 

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Action to be completed: internal guidelines have been prepared on accreditation, training and 
monitoring of external auditors. The research family has established an audit manual for the 
sixth framework programme to promote consistency in audit work. The audit manuals for the 
Structural Funds are being revised in line with the new legislation. 

Common approaches have been developed to representative sampling in research. Progress in 
other areas is slower, but analysis has been carried out and a draft sampling guide prepared, 
inter alia for structural actions, developing the principles established in the 2007-2013 legal 
framework. These will be finalised and made available to services by mid-2008. 

Impact:  Standardisation  of  audit  principles  and  methodology.  For  example,  better 
information on error rates through application of common sampling guidelines ■□□□□ 

Probable evolution: Impact demonstrable in Research for 2008, other sectors will follow. 

3. 

CONCLUSIONS 

Most  of  the  gaps  identified  in  the  Action  Plan  have  been  filled.  Those  actions  not  yet 
completed  will  be  finalised  in  2008  meaning  that  the  integrated  internal  control  framework 
envisaged in 2006 will soon be in place.  

To make progress on risk management and residual risk, the Commission will pursue its work 
on  the  cost-benefit-risk  balance.  It  welcomes  the  interest  of  the  Council  and  Parliament  in 
pursuing the residual risk of error concept, especially as this is heavily influenced by complex 
rules which lead to a high risk of error. For this purpose, a Communication will be prepared 
for  October  2008  to  bring  together  the  results  of  the  evaluation  of  the  costs  and  benefits  of 
control  and  the  analysis  of  residual  risk  which  DGs  for  whose  policy  areas  the  Court  of 
Auditors' assessment is "red" are required to include in their 2007 Annual Activity Reports. 

The Commission can show that it has made concrete progress. However, it is the impact of 
the  actions  which  will  form  the  basis  of  the  evaluation  of  the  success  of  the  action  plan 
through decreasing error rates and improved ratings of systems by the Court. Early in 2009 
the Commission will prepare a further impact assessment as at 31 December 2008. 

EN 

11 

   EN