Journal. No 01 January 2017.
Date: 2016-12-23
Institutions: European Court of Auditors
Subjects: European Court of Auditors, audit, auditing, operation of the Institutions, serial publication

Journal

European Court of Auditors

No01

January  2017

PRODUCTION

Rédacteur en chef / Editor in Chief: 
Rosmarie Carotti 

Tél. / tel.:  
00352 4398 - 45506

E-mail :  
rosmarie.carotti@eca.europa.eu

Mise en page, diffusion /  
Layout, distribution :  
Direction de la Présidence - 
Directorate of the Presidency

Photos :   
Reproduction interdite / 
Reproduction prohibited 
© ECA

Past editions of the Journal  
can be found on ECA’s website:  
http://eca.europa.eu/en/Pages/ 
Journal.aspx

© European Union, 2017 
Reproduction autorisée à condition 
de mentionner la source/ 
Reproduction is authorised provided 
the source is acknowledged

The contents of the interviews and 
the articles are the sole responsibility 
of the interviewees and authors and 
do not necessarily reflect the opinion 
of the European Court of Auditors

FOR MORE INFORMATION  
AND PAPER COPIES :

European Court of Auditors 
12, rue Alcide De Gasperi 
1615 Luxembourg, LUXEMBOURG 
eca-journal@eca.europa.eu

eca.europa.eu

@EUAuditors

EUAuditorsECA

 
 
TABLE OF CONTENTS

3

02  

08 

13 

ECA was active in XXII INCOSAI in Abu Dhabi
Directorate of the Presidency

CIPFA international seminar 
Beyond base camp
By Rosmarie Carotti

Special Report No 29/2016: “Single Supervisory Mechanism - Good  
start but further improvements needed”
Based on the speech given by Neven Mates, ECA Member, Press brief, Brussels,

16 

Special Report No 24/2016: 

  More efforts needed to raise awareness and enforce compliance  
  with State aid rules in cohesion policy

By Margit Spindelegger, head of private office of Oskar Herics and Gert Rammeloo, head of  task

19 

21 

25 

26 

28 

29 

Presentation of the 2015 ECA Annual Report in Lithuania
By Aušra Maziukaitė, secretary in Rimantas Šadžius‘ private office

Braced to meet the challenges ahead: Presentation of 2015 annual  
report to key Maltese stakeholders
By Leo Brincat, ECA Member

“Design Thinking”  
By Rosmarie Carotti

Fête (Faites) de la Formation – Training Day 2016: 
a day dedicated to knowledge
By Maria Evangelia Thymaki, for Professional Training

FOCUS
Special reports  No  28 & 32/ 2016

Subject brief
The ECA’s Special Reports
By Rosmarie Carotti

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4

ECA was active in XXII INCOSAI in Abu Dhabi

Directorate of the Presidency

The ECA delegation, led by President Klaus-Heiner Lehne, Danièle Lamarque and Bettina Jakobsen, 
participated in various plenary sessions and sub-sessions at the 22nd International Congress of 
Supreme Audit Institutions (XXII INCOSAI) that was held between 7 and 11 December 2016 in 
Abu Dhabi in the United Arab Emirates (UAE). INCOSAI was attended by more than 600 delegates 
from all over the world, representing the 194 members of INTOSAI and stakeholders.

INCOSAI, the highest organ of INTOSAI - International Organization of Supreme Audit 
Institutions - is held once every three years.  The congress offers all INTOSAI members an 
opportunity to share experiences, discuss issues, and approve resolutions and recommendations 
to improve government accountability worldwide. Participants include delegations of member 
Supreme Audit Institutions (SAIs) as well as representatives of the United Nations, the World Bank 
and other international and professional organisations.

Key outcomes of the congress

This year’s congress was a milestone event as it was an opportunity for several crucial 
developments to be discussed and for the INTOSAI community to reflect and decide on the 
way forward. 

The congress adopted the revised INTOSAI statutes which are more closely aligned to the 
current structure, strategy and objectives of the organisation. 

Member SAIs adopted INTOSAI’s next strategic plan for 2017-2022 which aims to increase 
the contribution the organisation makes to improving accountability and transparency in 
public management around the globe. The Standing Committee on Emerging Issues will 
assist the INTOSAI Governing Board in monitoring progress in achieving the strategic plan. 
An accountability report will be presented to the members at the next INCOSAI in 2019, 
reporting on activities and the extent to which the established cross-cutting priorities, goal 
and objectives are being achieved. 

 
ECA was active in XXII INCOSAI in Abu Dhabi continued 

5

At the end of XXII INCOSAI, member SAIs adopted the Abu Dhabi Declaration which 
sets out the key outcomes of the congress and how they will guide INTOSAI in the 
years to come.  Standard setting, capacity building and knowledge sharing remain the 
cornerstones of INTOSAI’s activities. INTOSAI will continue to provide a global pubic 
voice and seeks ways to strengthen collaboration with the United Nations and other 
stakeholders.  The INTOSAI community will also actively seek to make a meaningful 
contribution to the United Nation’s 2030 Agenda for Sustainable Development and 
agreed to set up an expert group to drive and support the process. In parallel, the 
congress expressed its commitment to use all bodies, regions and tools of INTOSAI 
to further advance its core ambition to enhance standard setting and professional 
support to SAIs.

ECA involvement: PSC, FIPP, SDGs and peer reviews 

The ECA successfully played a key role in both the preparation of the Abu Dhabi 
Declaration and in the process leading to its adoption, working closely with the SAI of 
the UAE and the other SAIs involved. 

In addition, the ECA was considerably involved in the preparatory work leading to the 
discussions at the congress on how the INTOSAI community can make an effective 
contribution to the United Nations’ 2030 Agenda for Sustainable Development with its 
seventeen Sustainable Development Goals (SDGs). 

President Lehne delivered a keynote speech on this 
theme during the opening plenary session. Klaus-Heiner 
Lehne challenged participants to reflect on how they will 
maintain momentum on the SDGs after the congress and 
how new insights and acquired knowledge on the main 
challenges and best practices can be shared among the 
INTOSAI community and to the wider world. 

Klaus-Heiner Lehne, ECA President

ECA was active in XXII INCOSAI in Abu Dhabi continued 

6

ECA Member, Bettina Jakobsen, moderated a sub-session on 
reviewing the preparedness of governments to implement 
the SDGs. SAIs and stakeholders discussed the challenges and 
opportunities they faced, including: the level of commitment of 
governments in their countries to the 2030 Agenda; SAIs’ ability 
to start reviewing SDG preparedness; and ways of how to 
carry out the work and optimise collaboration and knowledge 
sharing among SAIs. Bettina Jakobsen also presented a 
summary of these issues during the closing plenary session of 
the congress.

At the congress, the ECA formally took over as vice-chair 
of the Professional Standards Committee (PSC) along with 
the Brazilian SAI as the chair. This prestigious appointment 
comes at a critical time, with INTOSAI reviewing its 
framework for standard-setting processes in order to further 
improve and strengthen this core activity. 

After  the  symbolic  ceremony  of  the  passing  of  the  baton, 
ECA Member Danièle Lamarque, outlined together with the 
President of the SAI of Brazil (Tribunal de Contas da União / 
TCU), Aroldo Cedraz de Oliveira, the priorities that the PSC will 
pursue in the coming years in terms of role, structure, process, 
framework and standards.

Bettina Jakobsen, ECA Member

Taking over the PSC baton

Danièle Lamarque, ECA Member

ECA was active in XXII INCOSAI in Abu Dhabi continued 

7

The new Forum for INTOSAI Professional Pronouncements 
(FIPP) and the revised INTOSAI Framework of Professional 
Pronouncements (IFPP) were also the subject of one of the 
breakaway sub-sessions of the Congress.  ECA Director Neil 
Usher gave an overview of the terms of reference and the 
changes being envisaged as part of the new framework.

In another session, ECA Director Geoffrey Simpson gave a 
presentation on peer reviews. The ECA is an active member of 
the Subcommittee on Peer Reviews, one of the work streams 
of INTOSAI’s Capacity Building Committee (CBC), and one of 
the main contributors of the revised ISSAI 5600 (the INTOSAI 
guideline for peer reviews). In his presentation, Geoffrey 
Simpson spoke about the ECA’s recent peer review experiences 
at the SAIs of Latvia, Spain and Switzerland, highlighting 
differences in the objectives, scope, approach and results. 
He also shared some insights on the ECA’s last peer review 
of 2013 and the outcomes of this exercise, as well as on the 
overall lessons learned from being an active peer reviewer and 
reviewee.  

Neil Usher, ECA Director

Geoffrey Simpson, ECA Director

CIPFA international seminar 
Beyond base camp

8

From left to right: David Walker, Nenad Pacek, Drew Cullen, Claus-Heiner Lehne, Ian Ball, 
Lazaros S. Lazarou, Lewis Hawke

By Rosmarie Carotti

Welcoming address: Klaus-Heiner Lehne, ECA President   
Opening address: Ian Ball, CIPFA International; Lazaros S. Lazarou, 
Chair, ECA Member

President Lehne welcomed CIPFA to the ECA’s premises in 
Luxembourg. He underlined how the title of the seminar “Beyond 
Base Camp” marks the crucial challenge public financial management 
is facing today. The available financial resources have to be used in 
the most effective and efficient way. This is money that citizens have 
entrusted to public institutions. But taxpayers have to a certain degree 
lost trust in these institutions. The EU must make sure that financial 
rules are correctly applied, it must deliver value for money and it must 
provide transparency and assurance. “We have to create a financial 
system for regaining the trust of citizens”, President Lehne said.

The CIPFA International Seminar 
is a key event for finance 
professionals and auditors 
working in the public sector. 
President Klaus-Heiner Lehne 
gave the welcome address and 
Lazaros S. Lazarou, the Member 
responsible for the ECA’s Annual 
Report, moderated and concluded 
the seminar. ECA Member Kevin 
Cardiff participated in the panel 
session on “Scrutiny and audit 
in an uncertain world”. Peter 
Welch, the Director of Chamber 
5, contributed to the session 
on “Accountability and good 
governance in public services”, 
discussing how the CIPFA/IFAC 
framework on good governance 
was used in our recent Special 
Report No 27/16.

CIPFA international seminar continued 

9

Ian Ball, Chair of CIPFA International referred in his opening address 
to the changing environment as one which has increased social and 
economic pressures on communities and on the public sector. CIPFA 
shares values with the ECA and campaigns actively for good financial 
management and governance, and assists governance around the 
world on public sector issues.

The move from cash to accrual accounting is a very substantial 
shift. There has been significant progress in the last decade, but 
there are serious challenges ahead for many countries, including 
having the capacity to run the financial system. Another problem is 
that governments are insufficiently focused on long-term issues of 
sustainability. That short-term thinking can have a very damaging 
effect on trust. There also is a backlash against globalization and 
reluctance to enter into free trade agreements, and not just in the US. 

CIPFA is engaged in the re-launching of the whole systems approach 
(WSA) to public financial management (PFM). The original version of 
PFM was developed in 2010 through CIPFA in the UK. It is now time for 
an update. The whole systems approach takes a holistic view to public 
financial management where the various parts have to cooperate 
in an integrated and coordinated fashion. It applies to four levels of 
governance and to all the stages in the financial management process.

Keynote speech: Delivering financially sustainable public services 
in an uncertain world

Nenad Pacek, President, Global Success Advisors GmbH; Co-Founder, 
CEEMEA Business Group

The uncertainty in the global economy and what it means for many 
governments around the world, the frequency of economic crises and 
the volatility in developing markets due to commodity prices were the 
subject of the keynote speech delivered by Nenad Pacek.

Something is failing with economic policies around the world, Nenad 
Pacek says, if you allow a small group of individuals to be the sole 
beneficiaries, thus ignoring societies. This is a complete failure of 
economics.

Quantitative easing to pro-actively inflate the US economy 2010-2014 
was a good fiscal stimulus, but about half of that printed money ended 
up in financial institutions. Instead of lending to individuals who might 
be risky customers these financial institutions started to lend bonds to 
governments and buy governments securities in developing markets.

Governments were easily able to raise money during that time. A lot 
of cash went into emerging markets assets inflating the values of their 
currencies. A lot of products were imported. It was a good period for 
economic growth. But when this trend stopped, a sort of panic settled 
in and big funds started to take money out of the emerging markets.

Nenad Pacek sounds a warning that nobody is controlling capital 
inflows and outflows. Developing markets are forced to open up their 
capital accounts in the name of free markets and liberalization. Big 
financial institutions are playing the game and volatility will remain for 
many years to come.

Nenad Pacek

CIPFA international seminar continued 

10

Financial institutions also used the freshly printed money to 
buy futures of various commodities. Interestingly, the pricing of 
commodities has shifted away from physical markets to futures’ 
markets. Today 97.3% of all oil futures made in transactions do not 
result in a trader taking the physical possession of the commodity. 
And again, nobody is controlling the figures. When commodity prices 
go down, governments have no money and have to go to financial 
institutions to borrow. Suddenly there is an economic crisis.

Another failure of economic development is that we are living in a 
world where large parts of the planet are unable to produce anything 
of added value. Many countries remain impoverished because they 
have not been given proper advice on how to develop.

We will help this mega volatility to continue happening in the future: 
inflows of cash going into developing markets and then leaving in 
panic, and then enthusiasm about commodity prices which, after a 
while, fall again. Many governments in emerging countries are not 
ready when the outflow happens.

While the US Federal Reserve, the Bank of England, the Bank of Japan 
were inflating growth into their markets, the ECB was not allowed to 
do so. In 2015 a loophole in the ECB Charter was found. The idea was 
not to buy freshly issued government bonds but to go to commercial 
banks and buy the bonds from them. Later this was expanded to also 
buying corporate bonds. In absolute value, the ECB has printed more 
than € 1 trillion, and the programme will probably run beyond March 
2017.

The positive impact of the ECB’s quantitative easing) on European 
growth, the economies, and the government finances was that it 
helped the European exporters. More people in Europe could find a 
job. A very important point for government finances is that because 
the ECB is creating so much demand for government bonds  in the 
open market, the euro has gone down and countries can borrow 
money at low. All of this is beneficial and at the moment the EU is 
growing at around 1.5% this year.

Panel session 1: Reaching your peak in 
improving public financial management

Lewis Hawke, Head of the Secretariat, PEFA  
Ian Ball, Chair, CIPFA International

CIPFA international seminar continued 

11

Panel session 2: Scrutiny and audit in an 
uncertain world 

David Walker, Senior Strategic Advisor, PwC, 
Former US Comptroller General 
Tim Gilling, Deputy Chief Executive, Centre for 
Public Scrutiny 
Kevin Cardiff, ECA Member

Linking to the issue on how to deal with the volatility of government 
finances, the PEFA document “Framework for assessing public 
financial management” was presented to the seminar. PEFA is a tool 
for assessing the status of public financial management. A PEFA 
assessment provides a thorough, consistent and evidence-based 
analysis of PFM performance at a specific point in time. The PEFA 
methodology can be reapplied through successive assessments 
to track changes over time. PEFA has so far been used by 150 
countries and looks in particular at performance. It is a standardised 
methodology which can be applied to all countries.

SAIs can learn lessons from the Whole System Approach (WSA) and 
from PEFA. The WSA was developed in 2010 with the aim of supporting 
governments in improving the function of PFM systems. The revised 
WSA is a highly integrated system with useful lessons for SAIs, and 
PEFA is an important diagnostic tool. 

The session “Scrutiny and audit in an uncertain world” touched upon 
the issue of globalisation and gaps between those who have and those 
who have not. There are increasing intergenerational challenges there. 
There also is a real need to transform current financial reporting and 
auditing around the world. From a financial reporting perspective, 
accruals need to be adopted at world-wide basis; international 
accounting and reporting standards have to be applied.

Where money is important, performance is too. The public wants 
value for money to be assessed. Another hot issue is the long-term 
sustainability of audit policies, how to guarantee oversight, insight and 
foresight.

Work experience was contributed by the Centre for Public Scrutiny and 
by the ECA.

 
CIPFA international seminar continued 

12

Panel session 3: Accountability and good governance in public services 

Cathal Long, Research Officer, ODI 
Peter Welch, Director, ECA

Panel session 4: Financial and performance reporting developments 

Ian Carruthers, Chair, IPSASB 
Thomas Müller-Marqués Berger, Partner, EY, Chair of IPSASB Consultative Advisory Group 
Arman Vatyan, Financial Management Sector Leader for Central Asia Governance, World Bank 

Panel session 5: Integrated reporting – the new kid on the block 

Philippe Peuch-Lestrade, Deputy CEO, IIRC 
Gillian Fawcett, Head of Governments Faculty, CIPFA

In the first part of session 3 the Uganda Budget Transparency Initiative was 
discussed. Uganda has reached a good international transparency ranking, 
although the corruption perception index for Uganda remains high. The message 
is that transparency in isolation does not change much. We need to think how to 
invest in feedback loops.

Peter Welch from the ECA talked about assessing good governance in the public 
sector framework in the ECA’s audit on Commission governance. 

The panel discussed governance trends and key PFM indicators from the World 
Bank’s perspective and the IPSASB achievements and future plans. 2017 is in fact 
the 20th anniversary of the start of the IPSAS programme. This led then to discuss 
the development of EPSAS, the starting point of which had been the sovereign 
debt crisis and the lack of comparability of Member State accounting approaches. 
The plan is for  EPSAS to be cast into a legal framework by 2019; it foresees a 
transition period of 5 years.

The panel discussed integrated reporting, which means transforming management 
for both  the public and the private sector. Integrating reporting is a market led 
initiative, it was said. Better dialogue and not just more information is needed to 
rebuild trust. The stakeholders need to be associated with this process. Auditors 
cannot just list facts retrospectively, but also have to anticipate decisions in order to 
be able to take into account changing situations. There is a case for change. Value 
creation is very much the new kid on the block for the public sector. And integrated 
reporting allows thinking in the short, the medium and the long term.

Lazaros S. Lazarou thanked CIPFA on behalf of all participants for the interesting 
event and Ian Ball closed the meeting on behalf of CIPFA. The event has provided 
delegates with tools, insights and useful experience for the challenges public 
management has to face.

Philippe Peuch-Lestrade

Gillian Fawcett

 
 
 
Special Report No 29/2016: 
“Single Supervisory Mechanism - Good start but 
further improvements needed”

13

Based on the speech given by Neven 
Mates, ECA Member, Press brief, 
Brussels, November 17, 2016

Background 

In response to the global financial crisis, in 2012 the EU leaders decided that euro-area 
banks should be brought under micro-prudential supervision of the newly established 
Single Supervisory Mechanism (SSM). 

This decision was motivated by the severe disruption in financial systems in many EU 
economies. After years of supervisory forbearance and excessive risk-taking, many 
lending institutions were forced to turn to governments for financial support, which 
had to be shouldered by taxpayers. 

To reduce such risks in the future, the EU policy-makers decided to establish the SSM. 

In this system, the ECB would host and play a pivotal role. It would directly supervise 
almost 130 largest banking groups, which comprise about 1200 supervised entities, 
and manage the micro-prudential supervision of the euro-area banking sector as a 
whole. National Competent Authorities (NCAs) would also perform many functions in 
this system, including supervision related to consumer protection and anti-money-
laundering controls, and they would provide resources for the micro prudential 
supervision performed by the ECB. Under the guidance of the ECB, the NCAs would be 
in charge of micro-prudential supervision of smaller banks. 

Special Report No 29/2016: 
“Single Supervisory Mechanism - Good start but further improvements 
needed” continued

14

Given the importance of this project, ECA decided to audit (i) how the ECB 
set up the complex system of the SSM, (ii) how it organized its work, (iii) 
what governance structures it has established, (iv) how it addressed the 
accountability arrangements  and (v) finally, how the ECB has organized and 
provided resources for both off-site supervision and on-site inspections. 

What the ECA found

The ECA found that a complex supervisory structure was established 
relatively quickly. The new supervision mechanism was put in place in only 13 
months, and about 1000 new staff were recruited, which was a unique task. 
However, the ECA also found that the complexity of the new system proved 
to be a challenge in many respects. For example, the new mechanism relies 
to a high degree on coordination and communication between ECB staff and 
staff appointed by participating Member States.

Organizationally, the SSM Supervisory Board does not exercise control over 
the budget for supervisory activities and human resources, which have 
remained under the authority of the Governing Council of the ECB and its 
Executive Board. Moreover, while the ECB is bound by legislation to observe a 
clear separation between its monetary and supervisory functions, some ECB 
departments provide services to both functions without conducting a risk 
analysis that would minimize possible conflicts of objectives.

Most importantly, the ECB did not properly analyse its staffing needs in 
advance, and thus seems to be currently suffering from staff shortages.

Moreover, in performing direct supervision of the largest banking groups, 
the ECB has to rely very much on staff resources provided by NCAs. Only 
12% of all on-site inspections so far have been led by ECB staff, while 92% of 
all inspection team members have come from NCAs. To some extent, it was 
surprising that the Supervisory Manual stipulates that inspections are as a 
rule headed by NCA staff, which might put at risk the legislators’ intention of 
placing responsibility for full and effective supervision of large banks on the 
ECB.

Similarly, the ECA found several indications, confirmed by a recent 
communication of the Supervisory Board, that current staffing levels for Joint 
Supervisory Teams (JST) and inspection teams are insufficient.

 The ECB also lacks a system for evaluation of the suitability and performance 
of staff provided by NCAs in terms of conducting off-site and on-site 
supervision. 

However, in our report we were only partially able to assess the operational 
efficiency of the ECB management in running off-site and on-site supervision, 
given that the ECB declined to share with us many documents necessary 
for the audit. The ECB reasoned that the auditors’ requests went beyond 
their mandate, which is defined as the audit of “operational efficiency of the 
management”. The ECA considers that it is the auditors’ prerogative to define 
which documentation is necessary to carry out the audit and is currently 
considering its options for addressing this issue. 

Special Report No 29/2016: 
“Single Supervisory Mechanism - Good start but further improvements 
needed” continued

15

The auditors’ experience from this audit confirms the assessment by national 
Supreme Audit Institutions (SAIs), which have warned that an audit gap 
has emerged since the introduction of the SSM owing to the fact that ECA’s 
mandate does not cover the full scope of previous national mandates over 
supervisory authorities in some Member States. The ECA’s report provides 
information on international practice in this area.  

On a positive note, it has to be stressed again that the very complex SSM 
mechanism was set up and made operational within a very short timeframe. 

Moreover, the ECB has accepted 12 out of 13 recommendations provided 
in the report, whereas the last one was accepted partly. The part that was 
not accepted relates to the influence of SSM Supervisory Board officers over 
the ECB’s budget for supervisory activities, and the issue of shared- services. 
The ECB view is that the Supervisory Board cannot exercise control over the 
supervisory budget or human resources, as it is not a decision-making body 
of the ECB but rather a body added to the ECB institutional structure by the 
SSM Regulation, which is a secondary legislation. On shared services, the ECB 
considers that strict implementation of this principle would increase costs 
and decrease efficiency. However, the ECA notes that its recommendation did 
not ask that the use of shared services be excluded but rather, that resultant 
risks need to be recognised and assessed.

Finally, except for the access issues, the ECA found that the ECB’s 
management and staff were very cooperative in the production of the report 
and attentive to concerns we raised.

Special Report No 24/2016: 
More efforts needed to raise awareness and enforce 
compliance with State aid rules in cohesion policy

By Margit Spindelegger, head of private office of Oskar Herics and Gert Rammeloo, head of task

16

From left to right: Angelika Zych, head of task, Ildiko Preiss, attachée, private office of Henri Grethen, Gert Rammeloo, head of  task, 
Niels-Erik Brokopp, principal manager, Margit Spindelegger, head of private Office of Oskar Herics, reporting Member

Introduction / audit scope and approach

According to the Commission, total State aid spending in the 2007-2013 
programme period amounted to € 504 billion . The Commission estimates 
that € 139 billion  of State aid spending, or over 25% of the total, was spent 
in cohesion policy. Chamber II therefore carried out an audit to examine the 
extent to which Member States were aware of State aid rules in cohesion 
policy, comparing their rate of State aid error detection to the one of the 
Commission and our own. At the level of the Commission, the audit team 
looked in addition to the Commission’s analysis of errors - its awareness of 
which categories of error in which Member States were most problematic 
– as well as the actions taken when errors were detected. With an eye in 
particular on the 2014-2020 programme period, the team analysed key 
actions taken by the Commission that impacted the State aid policy and 
legal framework.

Special Report No 24/2016: More efforts needed to raise awareness 
and enforce compliance with State aid rules in cohesion policy 
continued

17

Audit findings

Upon analysing the ECA’s previous annual compliance audits the auditors 
found, first of all, that State aid errors were a significant source of errors. 
On average they contributed 13.5% to our annual estimated level of 
error in cohesion policy for the 2010-2014 period (which amounted to 
5.7%). The errors with the highest financial impact were those where 
the beneficiary received too much State aid, for example because it was 
awarded a bonus for being an SME while not actually being an SME, or 
where there was no incentive effect, meaning the beneficiary was not 
able to demonstrate that the aid was necessary to carry out the project. 
Almost 20% of audited State aid-relevant projects were affected by State 
aid errors in that same period. An analysis of a sample of audit reports 
from the Directorate-General for Regional and Urban Policy (DG REGIO) 
revealed a similar rate of detection. The auditors found that at Member 
State level, however, based on evidence from a questionnaire addressed 
to the audit authorities and corroborated by an analysis of their yearly 
audit reporting to the Commission, audit authorities detected State aid 
errors in fewer than 4% of State aid-relevant projects – a detection rate 
which is five times lower than at EU level. 

Weaknesses in analysing State aid errors and in internal coordination 
affected the Commission’s ability to support Member States and ensure 
compliance with State aid rules, according to our auditors. They found 
that in the 2007-2013 programme period, DG REGIO and the Directorate-
General for Employment, Social Affairs and Inclusion (DG EMPL) did not 
have a comprehensive overview of State aid errors across categories 
of error or across Member States; though the DGs started to develop a 
database called MAPAR (Management of audit processes, activities and 
resources) towards the end of this period which should allow this kind of 
analysis for the 2014-2020 programme period. The auditors also noted 
that DG REGIO did not systematically consult the Directorate-General 
for Competition (DG COMP) on State aid issues related to major projects 
until the end of 2012, following the Leipzig Halle judgment of the 
General Court in March 20111. There is a risk that some of the 440 major 
projects approved before that time (out of a total of 918 approved for 
the 2007-2013 programme period representing over € 75 billion  of EU 
contributions), are not compliant with State aid rules. Still, in November 
2012 the Commission issued a guidance note to Member States stating 
that it did not intend to examine systematically compliance of major 
infrastructure projects which it had already approved beforehand. 

According to the auditors, the Commission issued few financial 
corrections following non-compliance with State aid rules. For example, 
the yearly monitoring exercises carried out by DG COMP during the 2009-
2014 period, whereby it examined the design and implementation of aid 
schemes in the Member States, led to only one recovery order of just € 0.3 
million , while the 220 aid schemes with reported aid expenditure (out of 
about 2 400 aid schemes with reported aid expenditure per year) which 
were monitored during that time accounted for almost € 50 billion . This 
was despite DG COMP finding different kinds of problems in over 35% of 
the monitored schemes, more than 20% of which affected

1 Joined cases T-443/08 and T-445/08, Leipzig Halle.

Special Report No 24/2016: More efforts needed to raise awareness 
and enforce compliance with State aid rules in cohesion policy 
continued

18

compatibility (in which case DG COMP can issue recovery orders). More 
specifically, problems were found in 32.9% - slightly below average - 
of schemes designed under the General Block Exemption Regulation 
(GBER), although fully 37.5% of them affected compatibility. DG REGIO, 
for its part, issued 18 financial corrections with a State aid component 
covering seven Member States in the 2010-2014 period, as a result of its 
own audits, audit authorities’ reporting and the ECA audits, comprising 11 
financial corrections of € 38.4 million  in total which were solely related to 
State aid and 7 financial corrections which were partially related to State 
aid, where the State aid component is impossible to quantify. 

The auditors found that several initiatives taken by the Commission 
have the potential to address non-compliance with State aid rules. 
Most significantly, our auditors say, the Commission has launched a 
State aid action plan in March 2015, strongly increasing training courses 
provided to Member States, it has introduced ex ante conditionalities, 
including on State aid, which further promote administrative capacity, 
and it has significantly increased the scope of the GBER. According to 
the auditors, aid measures designed under the GBER are simpler and 
less administratively burdensome than notified aid schemes, although 
more responsibility is shifted to Member States, as the Commission is not 
notified for these schemes. Member States getting more responsibility 
however risks increasing the number of State aid errors.

Recommendations

We have made a number of recommendations to the Commission to raise 
awareness of and improve compliance with State aid rules in cohesion 
policy. Most of our recommendations were accepted and for several of 
them the Commission has already started implementation.

Presentation of the 2015 ECA Annual Report 
in Lithuania
By Aušra Maziukaitė, secretary in Rimantas Šadžius‘ private office

19

Rimantas Šadžius, as a newly appointed ECA Member from Lithuania, 
presented the 2015 ECA Annual Report in Lithuania for the first time. The 
presentation took place just after the 2015 Annual Report was presented 
in CONT. 

The presentation included the key findings and the main observations of 
the 2015 Annual Report, as well as the results on the ECA’s latest financial 
and performance audits carried out in Lithuania such as special reports 
‘EU nuclear decommissioning assistance programmes in Lithuania, 
Bulgaria and Slovakia: some progress made since 2011, but critical 
challenges ahead’ and ‘Implementing the EU budget through financial 
instruments – lessons to be learnt from the 2007–2013 programme 
period’.

Furthermore, Rimantas Šadžius gave short overview of the Court's 
position on the 2014–2020 Multiannual financial perspective mid-term 
review, briefly presented results of the Court’s performance audits in 
economic and financial management as well as new organisation of the 
Court and its audit priorities for 2017. 

Rimantas Šadžius meeting with 
Algirdas Bukevičius, Prime Minister 
of the Republic of Lithuania

Presentation of the 2015 ECA Annual Report 
in Lithuania continued

20

During his visit, Rimantas Šadžius  gave presentations  to all important 
stakeholders – Parliament, Government, President’s Office, National 
Audit Office and Media. 

Overall, the presentation of the 2015 Annual Report received high 
attention and great exposure due to several press publications, 
interviews in radio and participation in the Lithuanian TV  “Good 
morning, Lithuania”. 

Rimantas Šadžius presenting the 2015 Annual 
Report to Dr Arūnas Dulkys, Auditor General of the 
National Audit Office of the Republic of Lithuania

In light of new elections for the Lithuanian Parliament, Rimantas Šadžius 
intends to present the 2015 Annual Report and other relevant Court’s 
audit results to the newly elected Parliament’s members and to the 
various parliamentary committees as well as the new Government.

Braced to meet the challenges ahead:
Presentation of 2015 annual report to 
key Maltese stakeholders

By Leo Brincat, ECA Member 

21

Leo Brincat's courtesy meeting with the 
President of Malta, Marie-Louise Coleiro Preca

The message conveyed to the stakeholders addressed in Malta primarily 
Government, the National Audit Office and parliamentarians when 
presenting the Audit Report 2015 was that transparency and sound 
financial management are key for reforms to succeed. In doing so, such 
a process will be helping each and every individual Member State to feel 
braced to meet the challenges ahead. 

In all my meetings I came across a deep interest in the source of budgetary 
funds, how they are spent, what is the present financial situation, whether 
the accounts represent a true and fair view and how the EU is ensuring 
value for money for the actual spend of the EU budget.

It was evident that all stakeholders were eager to find out whether the 
European institutions are transparent in the way in which they manage 
these finances, even more so at a time when public interest and awareness 
are becoming increasingly evident as to the determination of whether 
there were errors, waste and/or potential fraud during the past financial 
year. 

There was much interest in the need for the Commission to produce 
cash flow forecasts that would enable stakeholders to anticipate future 
payment requirements and budgetary priorities.

Braced to meet the challengesahead: Presentation of 2015 
annual report to key Maltese stakeholdersneeded” continued

22

Leo Brincat’s official meeting with the Minister 
for Finance Prof. Edward Scicluna

I took every occasion to explain and provide an indicative list of the 
increasingly growing number of Special Reports produced by the Court 
in the past months; as well as of the Landscape Reviews that depict a 
panoramic view of the topical issues and priorities through a cross-cutting 
approach.

Much interest was shown in specific issues: primarily the increasing use 
of financial instruments; the EU disbursement of development aid to 
third countries; the need for benchmarking in value for money audits; 
Brexit; the monitoring of corrective action taken on past irregularities; as 
well as the practical measures envisaged to ensure that genuine trust is 
generated through the practical application of citizen based policies and 
strategies.

There was general consensus that the stakeholder base should be 
widened as much as possible in a manner whereby ordinary citizens and 
taxpayers can feel the difference of the changes underway. 

Leo Brincat with the Deputy Speaker of the 
House of Representatives Censu Galea

Braced to meet the challengesahead: Presentation of 2015 
annual report to key Maltese stakeholdersneeded” continued

23

Leo Brincat presenting the ECA AR 2015 to  
members of relevant Parliamentary Committees

It was nevertheless very clear that a strengthened communications 
strategy will go a long way towards enhancing public awareness of the 
scope and remit of the ECA itself as ‘the financial conscience’ of the EU. 

The presence of Alberto Gasperoni, the Principal Manager of Chamber 
V, who delivered a presentation on Chapter IV Revenue to both the 
NAO and the Joint Parliamentary Committees on Public Accounts, 
Foreign & European Affairs as well as Economic Issues, added much 
value to the sessions held. 

Fruitful meetings were held: with the President of the Republic of 
Malta, Marie-Louise Coleiro Preca, who showed much interest in the 
Court’s work programme particularly vis-à-vis third countries; with the 
Deputy Speaker of the House of Representatives; the Prime Minister 
Joseph Muscat; as well as the Minister for Finance Prof. Edward 
Scicluna, with whom enhanced interinstitutional issues were discussed 
with a view to strengthen the outreach of the ECA itself.  

Leo Brincat’s official meeting with 
the Senior Mangement of the 
National Audit Office Malta

Braced to meet the challengesahead: Presentation of 2015 
annual report to key Maltese stakeholdersneeded” continued

24

In my interventions, I emphasised the need for all Special Reports to 
reach the relevant authorities, ministries, entities and departments 
to ensure that the best practices recommended were given due 
consideration and attention. 

During my intensive visit I was interviewed on how the ECA is putting its 
mission statement into practice on the programme Il-Pjazza on OneTV as 
well as on the future challenges ahead in the prime time news bulletin 
on TVM.

Leo Brincat with staff of the 
National Audit Office Malta

25

Dr Ivanka Visnjic from ESADE Business School’s department of Operations, 
Innovation and Data Sciences in Barcelona gave a presentation at the ECA on 
Design Thinking. Dr Visnjic also teaches an executive education programme on 
«Strategic Innovation and Design-Thinking» at the Luxembourg School of Business.

“Design Thinking”
   14 December 2014

By Rosmarie Carotti

Zacharias Kolias, HR Director, introduced Dr Ivanka Visnjic who in her work 
focuses on business model innovation and in particular innovation with 
product innovation.

Design Thinking applies as much to the public sector as to the private 
sector. In Singapore, for example, Design Thinking is already used to 
improve public services. But public innovation can go even further than 
a theoretical analysis on how to improve services, making them more 
effective and efficient through implementing new solutions.  Innovation 
labs like the Danish Design Centre favour collaboration as a tool (see article 
on “Better Policy through Design” in ECA Journal 12 2015). Innovation labs 
are used to facilitate the process of innovation the world over, including 
within the European institutions.

Dr Ivanka Visnjic recalled how in the last ten years companies have shifted 
from problem-solving to a solutions based business model. Creative and 
entrepreneurial skills have become more and more important. Unlike 
analytical thinking, design thinking includes stimulating as many ideas as 
possible.

Dr Ivanka Visnjic focused on the five-stage model proposed by the 
Institute of Design at Stanford.  The five stages are as follows: Empathise, 
Define (the problem), Ideate, Prototype and Test.

Design Thinking is a user-centred innovation method which implies 
understanding the user to uncover insights that will give direction to 
create innovative solutions. The first step is empathising, which means 
gaining an understanding of the problem the stakeholder faces. The next 
step is to define the problem and collect as many ideas as possible to solve 
it. Then follows prototyping, and finally testing and refinement. But the 
five stages can also occur in parallel and the cycle may be repeated many 
times.

Design Thinking seems on the face of it an easy tool. But it also requires 
rules. Who sets these? This might well be a hierarchical issue, as the 
ensuing discussion brought to the fore.

26

The Professional Training team and other members of staff that assisted them for the Training Day

Fête (Faites) de la Formation – Training Day 2016: 
a day dedicated to knowledge 

By Maria Evangelia Thymaki, 
for Professional Training

The ECA’s Training Day, or Fête (Faites) de la Formation, is an annual event that 
was first launched in 2014. It offers an extensive programme of activities to 
promote lifelong learning by focusing on what it involves and what it can do 
for ECA staff, both professionally and in the private sphere.

The third annual Training Day was held on 17 November 2016 and welcome 
speeches by the ECA President, Klaus-Heiner Lehne, the ECA Secretary-
General, Eduardo Ruiz García, and the Vice President of the European 
Investment Bank (EIB), Román Escolano, marked the start of the event. Román 
Escolano gave a presentation entitled ‘The EIB: The EU bank - supporting EU 
objectives’, providing an overview of the bank’s activities and how its funding 
of eligible projects hinges on the EU’s political priorities.

As has been the case since 2014, a wide range of training options were 
offered for different profiles and tastes. There were workshops targeting 
auditors, managers (organised by the European School of Administration) and 
assistants, as well as for staff interested in improving their soft or IT skills.  

Fête (Faites) de la Formation – Training Day 2016: 
a day dedicated to knowledge continued

27

As part of the ECA’s key strategy of knowledge development and exchange, this 
year an Audit Fair was organised for the first time where colleagues from other 
SAIs and NGOs presented their audit methodologies to ECA staff. In total, six 
different audit presentations were given by colleagues from Spain, Denmark, 
Norway, Lithuania, Germany and Switzerland. The presentations concerned 
benchmarking, real-time audits, surveys of end-users, joint audits, programme 
evaluation, and ways to keep track of cash flows. Each presentation was followed 
by a Q&A session, enabling ECA staff to benefit fully from the external experts’ 
expertise and to exchange experiences with them.

Within the framework of the ECA’s reform which was implemented earlier this 
year, transforming the institution into a task-based organisation, workshops for 
managers were also part of the programme. The trainers elaborated on how 
management skills could be improved through personal development, despite 
changes or limited resources. They also demonstrated how interpersonal relations 
and interaction, as well as authority and power perception within the institution’s 
organisational culture, are a sine qua non in achieving successful partnerships 
with one’s hierarchy.

Different training approaches were used for the various activities, all of which 
took place in a relaxed atmosphere. For example, participants were encouraged 
during a workshop to play the Bamboleo game as a means of identifying the 
impact of decision-making within a team and of understanding how specific 
factors can ensure the success of a team that is undergoing constant changes. 
Dancing or following the rhythm of music were also original methods used for 
team-building in other activities. For those interested, different ways of handling 
stressful situations by means of proper dietary habits, specific daily exercises and 
breathing techniques were also presented.

As well as specialised or general knowledge-based training activities and those 
concerned with well-being, there were also workshops on the ‘Threat of terrorism’ 
and how staff can best prepare for the eventuality of a terrorist attack, and on 
the precautions to take to prevent such situations from occurring. This workshop 
enabled participants to familiarise themselves with the steps to follow in the 
event of an attack, and stressed the importance of keeping calm.

For staff interested in obtaining more information about training possibilities, 
tools and services, the European School of Administration and the National 
Institute for the Development of Continuing Vocational Training (Institut national 
pour le développement de la formation professionnelle continue, INFPC) 
presented their programmes at stands on the ECA’s premises and answered 
participants’ questions.

In conclusion, 25 workshops took place on the day, only some of which have been 
described in this article. However, mentioning all of them is not the aim here. 
What is important is whether, in the end, the event was of interest to the ECA’s 
staff and whether they could benefit from it. The statistics about the day provide 
an answer to this question: a total of more than 530 registrations were submitted 
and 375 members of staff participated in the activities offered, with an overall 
satisfaction rate of 80%, proving that the ECA’s Training Day was a success. Henry 
Ford, the founder of the Ford Motor Company, once said: «The only thing worse 
than training staff and having them leave, is not training and having them stay». 
This shows why training is an integral part of the European Court of Auditors, as 
the annual Training Day is an event where learning is not simply encouraged but 
celebrated.

E
FOCUS
A

Focus

28

Special  
Report 
N°28/2016

Published on 
8 December 2016

Dealing with serious cross-border threats to health in the EU: important steps taken 
but more needs to be done?

A key milestone in building a stronger EU health security framework was the adoption in 2013 
of a Decision on serious cross-border threats to health. The EU Health and Research Framework 
Programmes also support actions related to this framework. The audit found that the decision 
on serious cross-border threats to health indeed represents an important step for dealing better 
with such threats in the EU, but that significant weaknesses affect the implementation of the 
health security framework. More needs to be done to address these weaknesses for the Union 
to take full benefit from the established mechanisms. The ECA therefore makes a number of 
recommendations mainly aiming at accelerating and strengthening the implementation.

Click here for our full Special Report

Special  
Report 
N°32/2016

EU assistance to Ukraine

In this report the ECA examines whether Commission and European External Action Service 
assistance was effective in supporting the transformation of Ukraine into a well governed state 
in the areas of public finance management and the fight against corruption, as well as in the 
gas sector during the 2007-2015 period. 

Published on 
7 December 2016

Overall, EU assistance to Ukraine has been partially effective in these three domains. Until 2014, 
EU assistance had limited impact. Despite the new impetus for reform since 2014, the results 
achieved so far remain fragile. This report sets out five recommendations for improving EU 
assistance.

Click here for our full Special Report

Subject brief
The ECA’s Special Reports

By Rosmarie Carotti

29

Special reports focus mainly on performance issues

The special reports of the European Court of Auditors (ECA) on selected 
audit topics cover a wide range of audit subjects which assess whether 
the EU’s intervention was managed in accordance with the principles 
of sound financial management and/or compliance with the rules 
governing them . Like the annual reports, they form an integral part of 
the discharge procedure for the EU budget.

The ECA’s special reports are mainly performance audits. They involve 
an examination of programmes, operations, management systems and 
procedures of bodies and institutions that manage EU funds, to assess 
whether they are achieving economy, efficiency and effectiveness in the 
use of those resources.

The objectives, scope and content of special reports have evolved over 
the decades. Who were the addressees: the Commission or the Member 
States? Were Member States addressed individually or as a whole? What 
trends arose? How were the recommendations received by the auditees? 
There is no straightforward answer to these questions. The ECA has 
undergone major changes over the years and continues to reform and 
develop as it responds to new challenges and stakeholders’ expectations.

A list of special reports is available at the ECA’s library

The special reports were in the first years often directed to the 
institutions and bodies of the former Community and not to the public. 
The ECA produced its first special report in 1978 “Observations on the 
functioning of the European Association for Cooperation (E. A. C.)”. The 
report was never published. Neither were two other reports in 1979, one 
on the mission expenses of the Members of the Commission and another 
one on STABEX. 

In its early days the ECA mainly criticised Community legislation. The 
special reports on the application of regulations often did not contain 
recommendations as such, rather an analysis and description of the 
management of a programme directed at the Community as a whole. 
Member States however were individually named when inadequacies 
were detected. 

It is interesting to note that in preparing for its “Special Report of 1981 on 
the securities, deposits and guarantees furnished in respect of operations 
that give rise to expenditure from the EAGGF, Guarantee Section”, the 
ECA sent on 4 September 1979, through the national Courts of Auditors, 
a questionnaire to all Member States on the application of the Regulation 
in 1978. 

Subject brief
The ECA’s Special Reports continued

30

In its “Report in response to the conclusions of the European Council 
of 18 June 1983”, the ECA  not only drew attention to the weaknesses 
which it considered were undermining the financial management of 
Community affairs, but  also offered specific suggestions as to how 
the situation might be improved. The document covered Community 
revenue, Community expenditure,EEAGF-Guarantee, Structural Funds 
and Development Aid.

The ECA also stressed for the first time that in spite of the Commission’s 
responsibility under Article 205 of the EEC Treaty for implementing the 
budget, tasks were in practice shared between the Commission and 
national administrations or management committees which effectively 
represented the Member States. 

A clear statement was made by the ECA in SR 1/86 on the contract 
measures for the expansion of markets for milk and milk products 
financed by proceeds of the coresponsibility levy in its conclusions on the 
dual management system, where the ECA stated that the Commission 
should not directly be involved in the direct management of this 
expenditure.

Special reports are made on the ECA’s own initiative but it is worthwhile 
to mention that SR 1/85 on the common organisation of the market 
in olive oil was made in response to a letter from the President of the 
European Parliament, requesting the ECA to make a report on the olive oil 
sector. The audit involved an examination of the system of management 
and control of the chief measures having an impact on the Community 
budget.

The policy fields

It is not surprising that from the start the Common Agricultural Policy has 
accounted for the biggest share of special reports. The ECA’s objective has 
been to carry out a systematic evaluation of both Community (or EU) and 
national procedures.

With  the Special Report 4/86 on financial and technical cooperation 
with India, the ECA focused for the first time in its special reports on the 
EU’s external policy field asking for a better definition of the aims of the 
Community’s cooperation with India. This report was followed by others 
on food aid supplied to India and the management of counterpart funds 
in respect of food aid on the Indian market.

In the nineties it became more and more relevant that the communities’ 
activities were carried out in conformity with environmental criteria and 
requirements. An example is the Special Report N°3/92 concerning the 
environment. 

Information systems gained particular significance in audits of European 
Union activities where they had been explicitly established by regulation. 
In February 1994, the ECA published Special Report N° 6/93 concerning 
the European research and development programmes in the field of 
information technology (the ESPRIT programmes). The ECA’s aim was 
not only to audit the quality of the administrations’ management of 
the ESPRIT programmes, but also to assess the extent to which these 

Subject brief
The ECA’s Special Reports continued

31

programmes were, in fact, a “strategic” instrument to achieve the 
objectives assigned to them by the Treaty, the framework programmes 
and the Council decisions in which the specific programmes were 
adopted.

The other major policy fields covered in special reports were Cohesion 
policy, Structural Funds, External Aid and EDF . Susanne Neheider, a 
2008 ECA grant recipient, wrote in November 2011 on the ECA’s special 
reports (1979 – 2008): “The Common Agricultural Policy easily accounts 
for the biggest share of special reports published by the European Court 
of Auditors, with 94 reports appearing between 1979 and 2010. The 
Court compiled a total of 262 special reports between 1978 and 20101. 
The large number of reports on agricultural policy is put into perspective 
somewhat when related to the share of agricultural expenditure in the 
EU budget. To this end, Figure 1 shows the expenditure shares of four 
fields compared to the share of special reports in the respective fields. 
The comparison is divided into three periods of equal length (1979-1988, 
1989-1998, 1999-2008). Only special reports on budget expenditure 
topics are taken into account. Special reports on budget revenue topics 
have therefore not been included. The fields of research, energy and 
transport have also been excluded. The total figure of 16 special reports 
on these three themes throughout the period precludes any meaningful 
comparison with the share of expenditure. In total, 205 special reports 
were included in the analysis. The external aid field also covers the fields 
of enlargement and development, including the European Development 
Fund (EDF). Although the EDF is not part of the normal EU budget, special 
reports on these themes also deal with EDF issues.

Between 1979 and 1988 a disproportionately large number of reports 
dealt with administrative expenditure. In the remaining two reference 
periods the share of reports corresponds more or less to the share of 
administrative expenditure. The share of special reports on agriculture 
is somewhat lower at all times than the high share for agricultural 
expenditure. In all three periods, proportionally far fewer reports on 
structural themes were compiled than funds deployed for structural 
purposes. This might suggest that the Court of Auditors, in terms of 
the comparative analysis of the two major areas of expenditure, i.e. 
agricultural policy and structural policy, views agricultural policy as 
more problematical than structural policy. Based on this conclusion, the 
comparison also shows an unchanged pattern over time.

It is noticeable that themes involving the EU’s external policy fields are 
the subject of a great many special reports. With 76 reports during the 
whole of the period 1978 to 2010, they rank second behind agricultural 
policy in terms of the most common themes. Their respective share of 
special reports in all three reference periods is three times higher than 
the share of expenditure for external aid and the European Development 
Fund. EU expenditure on humanitarian aid and development aid and 
expenditure within the enlargement framework such as pre-accession 
aid therefore give rise to special reports by the Court of Auditors with 
particular frequency. 

1 Not including special reports on the European Coal and Steel Community.

Subject brief
The ECA’s Special Reports continued

32

Figure 1: Comparison of shares of expenditure for different policy fields with the share of special 
reports on the respective fields

Sources: own calculations based on (European Commission 2008), (European Commission 2010), historical archives of 
the European Union, European Court of Auditors.

By itself, the share of special reports produced by the Court of Auditors cannot be regarded as 
an approximate reflection of the problems in a field. There are many other factors which may 
influence the activities of the Court of Auditors.

Subject brief
The ECA’s Special Reports continued

33

Assessing and measuring the impact of the ECA’s performance audit 
reports

In 2006, the ECA launched an initiative to enhance its audit practice. A 
broad self-assessment was undertaken and the results from this review 
formed the basis for the development and implementation of a strategic 
plan and action plans in key areas. The peer review of 2007 was the next 
step in the initiative. The team consisted of experienced auditors from 
the supreme audit institutions of Austria, Canada, Norway, and Portugal. 
One of the recommendations to the ECA was to place greater emphasis 
on performance audits. 

It was also noted that assessing and measuring the impact of the 
ECA’s performance audit reports was a necessary element in the 
cycle of accountability. The peer review team  highlighted that the 
recommendations made in special reports, as well as those set out in the 
Statement of Assurance, should be followed up and reported on in order 
to inform external stakeholders on the measures taken in response to 
the ECA’s audit work.

The ECA’s performance audit methodology did require that a follow-
up audit should take place two to three years after the publication of 
a special report. The peer review team noted however that over the 
previous two years only four of the 20 published special reports had 
been followed up.

Obstacles to an overall picture of performance in the EU

Comparison between Member States

The aim of special reports is to reach a valid conclusion on EU 
expenditure but often there is a lack of information about what was 
actually achieved, and the benefits this brings, because the information 
available concerns individual countries. This does not allow an overall 
picture of performance in the EU, nor allow comparisons to be made 
between member states.

In order to make a valid, statistically significant, comparison among 
member states, beneficiary states and/or regions, it would be necessary 
to sample a much larger number of projects.

Naming of third parties in the ECA’s reports 

Regarding the naming of third parties in the ECA’s reports, the judgment 
in the Ismeri case2 was that “The Court might in certain cases be 
required to give the names of third parties directly involved in serious 
malfunction of the EU institutions”. 

It is however important to note that the third party cited also has a right 
of reply.

2 Case T-277/97 Ismeri Europa v ECA concerning criticisms made by the ECA in Special 
Report N° 1/96 on the MED programmes.

Subject brief
The ECA’s Special Reports continued

34

EU added value not easily recognisable

EU added value is the value resulting from an EU intervention which 
is additional to the value that would have been otherwise created by 
Member State action alone. In the past the EU often remarked that the 
added value of a programme was not easily recognisable. An example 
was the ECA’s report 2009 on Public Health. 

There was also a recurrent failure to set out and establish how Union 
spending expected to achieve the intended objectives. This was the 
message of the report N°8/2009 on “Networks of excellence” and 
“Integrated projects” and the report on “Intelligent energy” of the same 
year.

Securing EU added value is however fundamental to the achievement 
of sound financial management and more and more at the centre of 
the ECA’s concerns. Of the 19 special reports adopted in 2013, seven 
addressed the issues of EU added value and/or deadweight. Examples are 
the ECA’s special report on the LIFE programme, the ECA’s special report 
on the European Globalisation Adjustment Fund.

Deadweight

A linked concept, negatively affecting EU added value, is that of 
deadweight: when applied to EU grants, this refers to the extent to which 
a beneficiary would have undertaken the project even in the absence of 
the EU support.

The ECA concluded that the likelihood of deadweight was high in its 
audit of EU support to the food-processing industry, in the field of 
agriculture, in the Marco Polo programme, as well as in certain financial 
instruments.

Focus on absorption rather than on results

When spending EU funds in the 2007-2013 programming period, 
the focus was on absorption. The Commission has put in place new 
arrangements for the 2014-2020 period with the aim of increasing its 
focus on results.

Furthermore, in the ECA’s view, the lack of focus on performance 
demonstrated  a more fundamental problem. The principle of shared 

management relies on trust: that Member States – who part-fund 
projects – manage EU funds as carefully as they do their own resources. In 
practice, however, Member States’ highest priority is to ensure that their 
allocations are spent in full.

The ECA’s contribution

ECA contributes to better law-making

The ECA’s reports can have impact at various stages of the legislative 
process such as primary legislation, secondary legislation (such as 
implementing regulations) and revisions.

Subject brief
The ECA’s Special Reports continued

35

Better regulation is a responsibility of all EU institutions involved in the 
legislative process. In its Special Report 3/2010 “Impact Assessments in 
the EU institutions: do they support decision making?” the ECA examined 
in particular whether the Commission’s impact assessment procedures 
appropriately supported the development of the initiatives it took, and 
whether the content and the presentations of the Commission’s impact 
assessment reports were appropriate.

The period under examination was 2003 – 2008 and the audit by the ECA 
involved inter alia an international comparison of impact assessment 
systems, an analysis of a sample of Commission impact assessments, 
interviews and surveys with people involved in performing, reviewing 
and using the Commission’s impact assessments, both within and 
outside the Commission.

The findings and the recommendations of the ECA’s special report were 
taken into account in the 3133rd Competitiveness Council meeting on 5 
and 6 December 2011. The ministers stressed the need for EU institutions 
to improve the use of impact assessments and enhance the presentation 
and quality of assessments, so as to allow for better evidence-based 
decision-making and high quality legislation.

The ECA’s contribution to EU financial accountability in times of crisis

The financial crisis which started in 2007 and the resulting changes 
in the economic policy set-up of the Union raised new challenges 
for accountability and transparency. The public sector in Europe had 
to take on huge financial costs. The new measures and institutional 
arrangements introduced were sometimes complicated and with unclear 
responsibilities. The ECA established the FEG project team responsible 
for the performance audit in the domain “Financial and Economic 
Governance”.

The ECA has since produced a significant number of special report on 
the work of this project team. The latest is on the Single Supervisory 
Mechanism (see page 13).

Quoted sources 

European Commission (2008) 
EU budget 2007, Financial Report 
Luxembourg: Publications Office of the European Union 
European Commission (2010) 
EU budget 2009, Financial Report 
Luxembourg: Publications Office of the European Union 
Strasser, Daniel (1991) 
The finances of Europe 
Luxembourg: Office for Official Publications of the European Union 
(European Perspectives collection) 

EDITION HIGHLIGHTS

02 

ECA active in XXII INCOSAI in Abu Dhabi 

08  CIPFA international seminar 

13 

 Special Report No 29/2016  on the Single 
Supervisory Mechanism 

16 

 Special Report No 24/2016 on State aid 

Cover: 
- XXII INCOSAI in Abu Dhabi: Eca President Klaus-Heiner Lehne 
- ECA Member Rimantas Šadžius meeting with Algirdas Bukevičius, Prime Minister of the Republic of Lithuania
- ECA Member Leo Brincat’s Courtesy Meeting with the President of Malta Marie-Louise Coleiro Preca

I

S
S
N
1
8
3
1
-
4
4
9
X

Q
J
-
A
D
-
1
7
-
0
0
1
-
2
A
-
N