Big Ticket Auditing: A Revierw of the Structure of the European Court of Auditors

Abstract

The audit report published by the European Court of Auditors (ECA) in November 2006 on the financial statements of the EU Commission has, for the twelfth successive year, failed to give a clean audit opinion. The ECA gave assurance for less than 10 per cent of the annual budget. The chief EU accountant, Marta Andreasen, who has blown the whistle on the EU accounting systems, has been suspended since mid-2002. Against the background of increasing standards in auditing and moves towards greater transparency in auditing in the private and public sectors, this paper describes a study undertaken to assess the structures of the ECA and to consider recommendations to enhance the audit function of the European Union (EU). The research concludes that the structure of the ECA is no longer appropriate in the current environment which requires professional assurance within a corporate governance model. This is especially so for a complex, multi-state organisation like the EU. The conclusion of the study, described in this paper, is that the ECA should adhere more closely to the fundamental principles of auditing in its structure. In particular, it is concluded that the structure of membership of the ECA should be professionalised; that five Auditors General should replace the current membership; that their appointment should be competency based rather than politically based; that the EU should move towards uniform and high quality standards of accounting and auditing (including value for money); that there should be greater collaboration among the public audit organs and between them and the audit research community; and that a system of peer review should be introduced.