The recent jointly organised NAO/ECA Seminar on ‘Addressing key emerging issues through public audit’ to which senior NAO and IAID officials were invited together with the members of the Public Accounts Committee, gave me the opportunity to discuss ‘Public sector audit: forward planning in an ever-changing environment’.
I emphasised that one key issue is undoubtedly the Recovery and Resilience Fund (RRF). The fund will form an integral part of the NextgenEU, which coupled with the new MFF – Multi Annual Financial Framework, is making available to all EU member states double the amount of what was previously allocated; even if part of these funds will be relying on new mechanisms and financial instruments.
I made the point that we are talking of something that, if one pardons the cliché, is: ‘Too big to fail’.
Previously it used to be said that we had to do whatever it takes. Now we are committed to do whatever is necessary.
We are talking of a package that is not only very robust and ambitious but that in pre-pandemic times would have been unthinkable; and unlikely to win overall member states’ support.
Reluctantly or enthusiastically, the EU realised that to achieve financial stability, the only way forward was to stabilise the unstable and unequal debts of the euro area, by sharing all or part of them.
This was what triggered several calls in March last year for a common debt instrument to fund a pan-European crisis response; a budget that ended up being funded by debt issued by the EU itself rather than member states.
All those that thought that this was just a rescue package were mistaken; everything is linked to milestones and targets with structural reforms as the main thrust of these generous packages.
Even though these programmes can be developed over a period running until 2026, it is important for every European and national public audit organisation or entity to gear itself to address such challenges in a proactive manner rather than in a reactive way.
While ensuring that it can mobilise and draw on the right and necessary resources to be able to carry out such tasks in an optimal manner – where increased reliance on risk prevention, anti-fraud and anti-corruption measures are in place to ensure increased transparency and accountability at each other’s end.
I took the liberty to explain that the RRF differs from the MFF in its set-up as checks are done based on achieving milestones and targets, and not on costs.
In my intervention I shared with participants some reflections on what RRF implementation will be challenging.
Member states will need to define and justify priorities- Leo Brincat
Member states will need to define and justify priorities, propose concrete reforms and investments as well as related clear measurable targets and milestones, thus leading to different performance benchmarks.
I also made the following points:
• Milestones as compliance criteria might create discussions on when they are sufficiently achieved. Similar issues were observed by the ECA in previous economic adjustment programmes;
• They rely heavily on the absorption and reform capacity of member states in a very short time – which might pose challenges for certain member states;
• Member states are responsible for an adequate management and control system;
• Building new governance and control arrangements can be burdensome and often causes start-up difficulties.
Right throughout my keynote speech I emphasised that the situation overall remains very fluid and thus we must constantly look upon thematic subjects and key emerging issues as a constant work in progress rather than as a static set of priorities.
The same applies to the need to be future oriented even though by nature as auditors we base ourselves on auditing the past.
From our end we are constantly trying to see if lessons have been learned, once the COVID-19 pandemic demonstrated the need for coordinated EU level action to respond to health emergencies. It had revealed gaps in foresight, including demand/supply dimensions, preparedness, and response tools.
Various topical subjects are under the lens at our end at the European Court of Auditors and are expected to be reflected in our Annual Work Programme once it is finalised and will be published shortly.
In my concluding remarks I stressed the following:
• When it comes to public audits one should ideally prioritise the subjects to be audited since the wrong choices can undermine the relevance of the auditing bodies themselves;
• Ultimately it should remain the prerogative of the auditing body as to what to audit and when;
• To let others to set one’s agenda would undermine the auditing body’s independence, authority and integrity;
• The more relevant our work turns out to be, the more we can enhance trust amongst our stakeholders.