EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Europaudvalget 2018-19 (1. samling)
EUU Alm.del Bilag 15
Offentligt

On the road

to the Union?

Special theme

EU Pre-accessıon Aid

Journal

08/09

AUGUST/SEPTEMBER 2018

“

Political will means everything!

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Table of contents

NUMBER 08/09

August/September 2018

INTERVIEW

Bettina Jakobsen, ECA Member

INTERVIEW

Christian Danielsson, Director-General of DG NEAR of the European Commission

Perspective of EU membership important

Political will is

driver for progress and reconciliation in

essential for

accession progress Western Balkans

EDITORIAL

Political will is essential for accession

progress

Interview with Bettina Jakobsen

By Gaston Moonen, Directorate of the

Presidency

important driver for progress and

reconciliation in Western Balkans

Interview with Christian Danielsson,

Director-General of DG NEAR of the

European Commission

By Gaston Moonen, Directorate of the

Presidency

Lining up for EU Membership: current

candidate countries and potential

candidates

By Philipp Dette and Barbara Ojeda Corominas,

Directorate of the Presidency

Retrospective reflections on the ECA

meta-audit on the Western Balkans

By Marton Baranyi, Investment for Cohesion,

Growth and Inclusion Directorate

Auditing Turkey: from EU pre-

accession to migration management

By Alejandro Ballester Gallardo, Directorate

External Action, Security and Justice

A man, a dog and an EU-funded four-

wheel drive: auditing in the field

By Jussi Bright, Investment for Cohesion,

Growth and Inclusion Directorate

SIGMA fostering strong public

institutions towards EU membership

By Bianca Brétéché, SIGMA Programme at the

OECD

EIB in the Western Balkans: how the

EU Bank helps countries towards

accession and EU integration

By Matteo Rivellini, Lending Operations

in Slovenia, Croatia and Western Balkans,

European Investment Bank

The EBRD and the road to EU

accession

By Zsuzsanna Hargitai, Western Balkans

Directorate of the EBRD

‘Enlargement process as occasion for

the EU to reinvent and reform itself’

Interview with David McAllister, Member of

the European Parliament

By Gaston Moonen, Directorate of the

Presidency

Capacity building in EU candidate

countries in the area of financial

control: some personal experiences

and thoughts

By Jan Pieter Lingen, expert on capacity

building in EU candidate countries

The Western Balkans parallel

performance audit project: boosting

regional cooperation between national

audit offices

By Jussi Bright, Investment for Cohesion, Growth

and Inclusion Directorate

‘How EU Pre-accession

Aid helped our SAI to shape its future

Interview with Bujar Leskaj, President of

ALSAI, Albania’s Supreme Audit Institution

By Derek Meijers, Directorate of the Presidency

Perspective of EU membership

DIRECTOR'S CUT

How to make pre-accession aid a

success?

Interview with Philippe Froidure,

ECA Director of the External Action,

Security and Justice Directorate

By Gaston Moonen, Directorate of the

Presidency

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

PRODUCTION

Editor in Chief:

Gaston Moonen

Tel.:

+352 4398 - 45716

Auditing Turkey: from EU pre-accession

to migration management

By Alejandro Ballester Gallardo,

External Action, Security and Justice Directorate

INTERVIEW

David McAllister, Member of the European

Parliament

E-mail:

[email protected]

Layout, distribution:

Directorate of the Presidency

Photos:

Reproduction prohibited

Reproduction is authorised

provided the source is

acknowledged

‘Enlargement process as occasion

for the EU to reinvent and reform

itself’

Capacity building in EU candidate

countries in the area of financial

control: some personal experiences

and thoughts

By Jan Pieter Lingen, expert on capacity

building in EU candidate countries

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:

REACHING OUT

The Summer School in public

auditing and accountability -

auditors and academics exploring

data analytics continued

By Gilberto Moggia, Information, Workplace

and Innovation Directorate

Audit authority on IPA funds:

helping the country to move towards

accessions

Interview with Adem Curi, Director of the

Audit Authority for the audit of IPA in the

former Yugoslav Republic of Macedonia

By Gaston Moonen, Directorate of the

Presidency

ECA’s contribution to capacity

building in candidate country SAIs:

providing internships to share good

practice

By Michael Pyper, Translation, Language

Services and Publication Directorate

ECA traineeship for auditors of

candidate countries: a portal for

professional development and…

a return to the ECA

By Jolita Korzuniene, Investment for Cohesion,

Growth and Inclusion Directorate, and Tomas

Mackevičius, Private Office of Rimantas Šadžius,

ECA Member

Roots of the cooperation between

ECA and candidate countries’ SAIs:

it all started in the mid-1990s

Interview with Dirk Pauwels,Private Office

of Danièle Lamarque, ECA Member

By Gaston Moonen, Directorate of the

Presidency

European Court of Auditors

12, rue Alcide De Gasperi

1615 Luxembourg,

LUXEMBOURG

[email protected]

Past editions of the Journal

can be found on ECA’s website:

eca.europa.eu/en/Pages/Journal.aspx

FOCUS

ECA

Publications in

July-September 2018

eca.europa.eu

@EUauditors

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Editorial

Accession and what the EU stands for

Growing together: enlargement – a key ingredient of the EU peace project

a positive sum

game.

This kind of illuminating messages appears when you search on the European

Commission’s website for information on enlargement. From a historical perspective, the

EU enlargement process is indeed impressive. It has resulted in a Union of Member States

that have almost doubled in number since 2004, with the last accession – Croatia – dating

back to five years ago. This ‘doubling’ also required new approaches for assisting and

guiding this enlargement process, not only because of the sheer size of the enlargement

but also because of the different situations many of the (potential) candidate countries

of 2004 faced compared with previous accessions. The EU developed pre-accession

instruments to help these countries on their path to democracy and a functioning market

economy, with stable institutions guaranteeing certain rights and a private sector able

to compete properly. Instruments that had to be accounted for, ensuring that these

countries arrived where they were meant to be and the intended effects were achieved in

a sustainable way.

I participated as an auditor in on-the-spot visits which contributed to this accountability

process. I recall that, during one of my visits to Montenegro, in 2003, a major concern

was in the area of corruption and organised crime. In 15 years, things have changed to

the positive. Nowadays the news about Montenegro is much more appealing:

Welcome

to Montenegro and enjoy. Where all good things come in small packages.

And this small

country on the Mediterranean coast seems to be the first candidate country in the line to

join the EU, having risen through the ranks of ‘third country,’ ‘potential candidate country,’

‘candidate country,’ to eventually become – envisaged for the future - ‘EU Member State.’

What makes it so appealing for a country to move up in that ranking? Or, as I heard it put

more bluntly during an audit visit to Serbia about 15 years ago: ‘Why change the old five-

year plans from communist times for seven-year plans from Brussels?’ The question is all

the more pertinent in the light of the Copenhagen criteria, referred to regularly elsewhere

in this Journal, which are not easy to meet. These criteria represent conditions which many

countries strive to fulfil one way or the other. As I see it, these criteria stand for certain

values. Apparently, many citizens feel that these values are better protected under an EU

umbrella than only by a national constitution… and national actions. Because, no matter

how well these values may be reflected in a constitution, will and stamina are needed to

live up to them. This is what citizens expect from politicians when they elect them and

express their choice in favour of EU accession.

How important this political will is comes out clearly in a number of reports, by the ECA

and the European Commission, and in analyses by other experts in the field. The political

will to accomplish the actions required to meet the Copenhagen criteria is a key element,

if not THE key element on the road to accession. Such political will is not always easy to put

into practice. But as Nelson Mandela once put it: ‘Real leaders must be ready to sacrifice all

for the freedom of their people.’

We have made EU Pre-accession Aid the main theme of this Journal. Not least because

looking into this topic also reveals which core values the EU stands for and what efforts

(potential) candidate countries undertake to meet the expectations the EU has of potential

Member States. The EU‘s Pre-accession Aid not only relates to tangible issues, like building

roads and bridges, which are relatively easy to address. Building the political infrastructure

to meet and uphold the Copenhagen criteria is significantly more challenging. Creating

a market economy that really works and institutions which have the status, means and

independence to meet the Copenhagen obligations towards citizens takes time and

perseverance. In the end, the strength of a democracy depends on the political and

economic freedom of its citizens. The ambition to achieve that freedom is something

political leaders should keep in mind in their efforts towards accession, while taking

comfort in the examples provided by the history of EU enlargement. After all, it always

seems impossible until it is done.

Gaston Moonen

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Political will

is essential

for accession

progress

Interview with

Bettina Jakobsen,

ECA Member

By Gaston Moonen,

Directorate of the Presidency

During the past few years, the ECA has published several reports assessing the results and impact

of EU Pre-accession Aid. The most recent one, special report 7/2018 on pre-accession assistance

to Turkey, published in March, has received considerable public interest. Bettina Jakobsen was the

ECA’s reporting Member for this report. In this interview, she gives her views on accession in general

and in particular on auditing the topic, and on the ECA’s role, as the EU’s external auditor, in the

accession process.

Pre-accession aid compared with other EU external actions

Bettina Jakobsen joined in the ECA in 2015. Earlier this year, she

became the Dean of the chamber responsible for auditing EU external

action, security and justice. Referring to the increasing importance

of external action, she says: ‘You can see that in the proposals for the

next Multiannual Financial Framework (MFF), the areas audited by the

chamber are getting really high on the political agenda. Our audit tasks

are going into new areas, such as cyber security and defence, making it a

very interesting chamber to work in.’

In speaking about EU Pre-accession Aid, she makes clear what she sees as

the key issue: ‘I think pre-accession aid is an investment in other countries

as well as an investment in Europe. In the EU we would like to screen

the countries we invite into the EU project and make sure they reach

a certain level of development, making them fit for EU membership.

The investment we make in the candidate countries not only benefits

the citizens of these countries, it also aims at preserving the present

Members’ interest in the continuous commitment to and proliferation of

fundamental ideas about human rights, rule of law, freedom of speech,

transparency, administrative capacity, etc. I think it is an important

process – assessing whether they are in line with the Copenhagen

criteria, and then inviting them into ‘good company’, if I may say so.’

“

In the EU we would like

to screen the countries

we invite into the EU

project and make sure

they reach a certain

level of development,

making them fit for EU

membership.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Interview with Bettina Jakobsen, ECA Member

continued

The Copenhagen criteria, defined in 1993, are the rules that define whether a country

is eligible to join the European Union. They start with political criteria for guarantees for

democracy, human rights and the rule of law. Another key criteria is to have a functioning

market economy. The final key criteria is to have the administrative and institutional

capacity to take on the obligations of EU membership.

ECA and assessing the readiness of candidate countries

When asked about the ECA’s role in assessing compliance with the

Copenhagen criteria, the ECA Member is clear: ‘The ECA does not provide an

opinion on whether candidate countries meet the accession criteria. Whether

new EU Members are ready to be admitted is a political decision. As auditors,

we provide information to the Parliament, the Commission and the Council

on the status of development. In the end, the political authorities at both EU

and national level take the decision on enlargement.’ She adds, referring to the

recent report on pre-accession assistance to Turkey: ‘Of course, you will find

polite audit language in our reports. But if you read carefully, we say that the

situation does not look good. We indicate that most chapters have not been

closed, that fundamental requirements have often not been met. And that

there is a risk of backsliding.’ She observes that closing only one chapter is not

much progress, adding: ‘There is actually not much to tick off as done.’

On a more positive note, she mentions that the various audit reports

published on pre-accession aid do show that the European Commission has

become more and more skilled in terms of setting up the accession criteria,

knowing what to measure and the conditions that are key to the process. ‘We

have helped them – I hope - and the budgetary authority to better focus EU

support.’

Administrative capacity often depends on political will

A red thread running through several of the ECA reports on pre-accession

aid iA recurring theme running through several of the ECA’s reports on

pre-accession aid is administrative capacity, or sometimes the lack thereof.

However, how does one audit something that is much less tangible than, for

example, an infrastructure project? Bettina Jakobsen underlines the need for

educated policy officers, informed and independent judges and points out

that several ECA reports conclude that, in relation to administrative capacity,

measurable indicators (needed to measure performance) have not always

been well developed. ‘But we also find the same thing in many reports on EU

actions within the EU. Lack of clear objectives and measurable indicators are

typical findings in our reports in general, not only in relation to the Instrument

for Pre-accession Assistance (IPA).’

For Bettina Jakobsen, administrative capacity and political will are often

interlinked in the ECA’s reports on pre-accession. ‘Political will is a common

thread and a pre-condition for building up administrative capacity. With

the latter comes also the ability to initiate and absorb funding required for

further changes. In our special report 7/2018 regarding pre-accession aid to

Turkey, this was an important finding.’ As regards ways the Commission can

use its influence to stimulate change in the candidate countries, to bring

about political will, she refers to conditionality as one means. ‘Sometimes,

the Commission has used the tool of suspending payments or asking for

improvements before it releases funding. And in some cases, for example in

“

The ECA does not

provide an opinion

on whether candidate

countries meet the

accession criteria.

Whether new EU

Members are ready to

be admitted is a political

decision.

... if you read carefully,

we say that the situation

does not look good.

Lack of clear objectives

and measurable

indicators are typical

findings in our reports

in general, not only

in relation to the

Instrument for Pre-

accession Assistance

(IPA).

Political will is a

common thread

and a pre-condition

for building up

administrative capacity.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Interview with Bettina Jakobsen, ECA Member

continued

relation to Turkey, the Commission has followed our recommendation and

decided not to pay out the performance award. In addition, it can use political

dialogue to advocate certain principles. But as several of our reports have

shown, establishing rule of law is very difficult if there is no political will.’

As regards the ECA’s recent special report on Turkey, she stresses that it has

received a lot of interest from the media. ‘And we have just received the

draft conclusions from the Council, which are also very supportive of our

recommendations. Let’s hope this somehow translates into concrete actions.’

The European Parliament (EP), too, has shown great interest in the report:

‘I gave a presentation to the Budgetary Control Committee (CONT), and

Members of the European Parliament, such as Claudia Schmidt, were very

positive, particularly in the support of our critical findings. She has clearly got

the message on ‘backsliding’. The ECA Member adds that the special report

will be taken into account in the discharge process. She concludes: ‘I think

it is very important to bring reports like this to the Parliament, including in

specialised committees.’

Taking the issue of political will even further, it could also be raised in relation

to EU Member States: whether a lack of political will to continue to uphold

the Copenhagen criteria could be a topic for an ECA audit. Bettina Jakobsen

indicates that she has come across the idea of country audits on Member

States during her interaction with the European Parliament. After all, the

ECA has done audits on candidate countries and assessed whether budget

support to non-EU countries has achieved the desired effects, so why not a

country audit on an EU Member State. Bettina Jakobsen takes the following

view on this: ‘It is up to the political system to hold the Member States

accountable for whether they meet requirements on – for example – having

an independent judicial system, and whether certain Treaty articles should be

invoked.’

Outlook for audits and key element for progress… not only on pre-

accession

Asked what her Audit Chamber will do in the future in terms of auditing pre-

accession aid, Bettina Jakobsen points out that this depends on many factors.

‘We always try to look widely on potential policy areas, requests from the

Parliament, risks, financial importance, etc. We have issued several reports

on pre-accession aid during the past few years, ranging from Montenegro

to Turkey, including special report 21/2016 – the meta audit on the Western

Balkans. We try to maintain a certain level of coverage of pre-accession aid

and, at some point, some of these reports may be relevant for a follow-up

audit. We tend to do a follow-up audit three years after. But we have many

competing areas and topics deserving our attention, especially in the area of

security and justice, like border control, hot spots and other migration-related

issues.’

Of all the main challenges the EU faces vis-à-vis the candidate countries, then,

Bettina Jakobsen highlights one in particular: political will. ‘Political will is the

essential and visible commitment to fulfil the conditions you have agreed to.

If you have a stable government, backing the intention to seek admission to

the EU, then you are on the way. I was also the reporting Member for special

report 15/2018 on strengthening the capacity of the internal security forces

in Niger and Mali, which we published in June. In this audit, too, we saw that

political will means everything.’

“

But as several of our

reports have shown,

establishing rule of law

is very difficult if there is

no political will.

“

... we have many

competing areas and

topics deserving our

attention...

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Source:

European Commission

Perspective of EU

membership important

driver for progress

and reconciliation in

Western Balkans

By Gaston Moonen, Directorate of the Presidency

Within the European Commission DG NEAR

is responsible for EU actions towards EU

neighbourhood countries, and countries

covered by the EU enlargement process.

Christian Danielsson is Director-General of DG

NEAR since 2013 and has a long experience

regarding EU accession, already working

on this issue when posted in the ministry of

Foreign Affairs of Sweden. Below his views on

changes in the accession process throughout

the years, what the current main issues are,

how to address them and the EU’s role and

means in doing so.

Interview with Christian Danielsson, Director-General of DG NEAR of the European Commission

Accession process has become more demanding

What the main differences are between the enlargement preparations leading to the big enlargement in

2004 and subsequent accessions?

Based on our experience from the 2004 enlargement and subsequent accessions, the Commission

has introduced a new approach to accession negotiations. The new ‘fundamentals first’ approach

entails prioritising reforms in key areas like the rule of law, economic governance and public

administration reform. This helps the aspiring member states tackle these crucial issues early on

and strengthens the overall credibility of negotiations.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Interview with Christian Danielsson,

Director-General of DG NEAR of the European Commission

continued

The accession process today is more demanding than in the past. The

introduction of opening, interim and closing benchmarks for the key

rule of law chapters – in other words, formal conditions to be met to

move to the next negotiations phase – -made the process more rigorous

and structured. This to help the countries tackle in a more solid and

systematic way the difficult challenges they face in their reform efforts.

However, nothing has changed in terms of the core principles. The

enlargement policy and preparations for accession are based on the

same well-established criteria to join the EU. They were defined already

in 1993 at the European Council in Copenhagen and applied both to

the 2004 enlargement and subsequent enlargement negotiations:

having stable institutions guaranteeing democracy, the rule of law,

human rights and respect for and protection of minorities; a functioning

market economy; the ability to take on and implement effectively

the obligations of membership. One difference in this respect is that

additional conditions for membership have been set out for the Western

Balkans in the stabilisation and association process, mostly relating to

regional cooperation and good neighbourly relations.

What are in your view the three core tasks of DG NEAR in the current

enlargement discussions with candidate and potential candidate countries?

Firstly, DG NEAR assists the countries with a perspective to join the

EU in meeting the membership criteria. This means managing the

bilateral relations of the Union with candidate countries and potential

candidates, frontloading reforms on the rule of law, economic

governance and public administration reform. Our DG also develops

and implements the stabilisation and association process to prepare

the Western Balkans for future membership. Secondly, DG NEAR closely

monitors the progress of enlargement countries towards the EU and

supports accession negotiations as required by the Council. And thirdly,

we manage the bulk of the Union’s financial and technical assistance to

the enlargement countries (IPA).

Enlargement as a credible perspective

What would you consider the biggest challenge for the upcoming years

for your DG to meet expectations from both candidate countries…and

Member States and their citizens?

I think the biggest challenge in the coming years will be to help

alleviate the concerns about possible future enlargements. We can do

it by helping the countries to deliver on reforms and to complete their

political, economic and social transformation. This is the only way to

ensure citizens' trust and confidence when it comes to the benefits of

having a bigger European Union.

The 2004 and 2007 enlargements were seen as an enormous leap forward

for both the EU and the countries concerned. But in hindsight some scholars

and also politicians involved have argued that not all countries were ready

for joining in the sense of being ready for all the enlargement chapters

concerned. How does the Commission ensure that accountability of what

has been achieved, both by the Commission and the countries themselves,

can be properly assessed by the European Parliament and the Council?

First let me stress one thing: we are not talking about admitting to the

EU the enlargement countries of today – they are obviously not ready.

“

The enlargement policy

and preparations for

accession are based on

the same well-established

criteria to join the EU.

“

... ensure citizens' trust

and confidence when it

comes to the benefits of

having a bigger European

Union.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Interview with Christian Danielsson,

Director-General of DG NEAR of the European Commission

continued

Enlargement can only happen once there's solid evidence the country

can respect EU values and standards, and we will not accept any

shortcomings or allow shortcuts.

The principle of own merits and strict but fair conditionality is applied

at all stages of the accession process. The Commission's positions and

recommendations are based on full assessment of the relevant facts

and the individual merit of the countries concerned in meeting the

membership criteria. At each stage of the process, the Commission’s

position contributes to a discussion among the EU Member States,

each of which in turn contributes its views and perspectives before

drawing conclusions collectively as a Union. The European Parliament

is regularly informed about the developments in the enlargement area,

and its opinions and recommendations are duly taken into account in

policy design and assessment of progress. One of our flagship products

– the annual enlargement package- is the best example of this process.

It does not gloss over shortcomings. It provides a balanced assessment

of the countries’ reform efforts and an objective reference point for

civil society to follow the developments and put pressure on their

governments.

Flagship initiatives to prioritise key issues

When reading the 2018 communication of the Commission on EU

Enlargement Policy, issued in April this year, the first concerns raised relate

to the rule of law – including comments on the judicial system, corruption

and organised crime – fundamental rights, functioning of democratic

institutions and migration issues. These appear to be issues which are

mostly in the hands of candidate countries and potential candidate

countries themselves. How does DG NEAR intend to influence these issues,

the more since building up administrative capacity is not done overnight?

Indeed, the pace of transformation depends on the countries’ progress

in implementing reforms. We continue to support and guide them, but

this is in the first place their work and their responsibility.

The Commission’s Western Balkans Strategy of 6 February 2018 puts

forward concrete and tailor made actions in key areas of mutual

interest, ‘flagship initiatives,’ which include the rule of law and

migration. DG NEAR intends to intensify efforts to guide reforms and

to support the ambitious steps taken by the countries themselves

in these areas. This means increased help in prioritising key issues,

close monitoring of reform implementation, as well as more strategic

financial and technical assistance.

One of the audit findings in the ECA meta audit on the Western Balkans

(special report 21/16) and the ECA special report on EU pre-accession

assistance to Turkey (special report 7/18) was that for the ‘rule of law’

projects the Commission had not applied conditions consistently. And

relatively little funding had been provided in key areas, such as media

freedom, public prosecution and the fight against corruption and

organised crime. Last week the ECA issued a report looking into the

European Commission oversight of Member States’ application of EU

Law. One of the key recommendations in this recent ECA report is that

the Commission needs to further strengthen its oversight of the way EU

law is applied in Member States. Do you consider this oversight also a key

attention point for DG NEAR vis-à-vis candidate countries?

“

Enlargement can only happen

once there's solid evidence the

country can respect EU values

and standards, and we will

not accept any shortcomings

or allow shortcuts.

One of our flagship products

– the annual enlargement

package - [...] does not gloss

over shortcomings.

“

... the pace of transformation

depends on the countries’

progress in implementing

reforms. [...] this is in the first

place their work and their

responsibility.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Interview with Christian Danielsson,

Director-General of DG NEAR of the European Commission

continued

We believe the conditionality was applied at the appropriate level

to achieve the maximum impact possible, in often difficult political

contexts. With regard to funding levels, you need to take into account

also the absorption capacity on the ground, and that the areas you

mention not always require large-scale investments but are often

supported through the provision of technical assistance, hence

consuming lower budgets.

The candidate countries must deliver concrete and sustainable results in

the reform process and progressively apply the EU law. The Commission

has been strengthening the tools to monitor this process. For example,

very detailed action plans in the area of the rule of law help us better

monitor and report on the implementation of the

acquis

in this area. We

also check the real application of the law on the ground, for example by

conducting case-based peer reviews. We are also helping to strengthen

the capacity of civil society in the countries to monitor the application of

EU law.

Lessons learnt reflected in the next Multiannual Financial

Framework

The EU has a long history of enlargement and is indicated on the DG NEAR

website as a ‘positive sum game.’ What do you consider to be the key lessons

learnt for the Commission and what is in your opinion the biggest success

until now under your watch as Director-General?

One of the lessons learnt for us is the importance of deep sustainable

reforms for a truly credible enlargement process for the Western

Balkans. The region has still to implement fundamental reforms in

crucial areas like the rule of law or economy, and must redouble efforts

on reconciliation. The EU’s engagement has confirmed to be a real

driver for this process. Most recently, the successful reinvigoration of

the enlargement perspective for the Western Balkans through the very

forward-looking Commission’s Western Balkans Strategy of 6 February

2018 and the historic EU-Western Balkans Summit in Sofia on 17 May

2018 have been key drivers for renewed momentum. I hope this will

translate into a continued impetus for reforms in the region.

We have also certainly looked very carefully into the implementation of

our pre-accession financial assistance for

2014-2020 (IPA II) and have reflected lessons learnt in our proposal for

IPA III for 2021-2028: we need a more strategic approach to financial

assistance, greater ownership from the countries and a programming

that is rewarding performance and progress.

“

We also check the real

application of the law on

the ground,...

“

The region has still to

implement fundamental

reforms in crucial areas like

the rule of law or economy,

and must redouble efforts

on reconciliation.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Lining up for EU Membership: current

candidate countries and potential

candidates

By Philipp Dette and Barbara Ojeda Corominas, Directorate of the Presidency

This year, we celebrate the 60th anniversary of the Treaty of Rome. In January 1958, the

European Economic Community came into being, with Belgium, the Netherlands, Luxembourg,

France, Italy and West Germany as original Member States. Over the years, many other countries

have joined, and membership in what later became the European Union (EU) has grown from

the original six to the current 28 Member States. How does the process of joining the European

Union work? Despite the imminent prospect of the UK leaving the EU, and the last accession

dating back to 2013 (Croatia), this is still a relevant question. In fact, several countries are keen

to join the EU. Philipp Dette and Barbara Ojeda Corominas, both from the Directorate of the

Presidency, give an overview of the process and of the current status of negotiations with

candidates and potential candidates for EU accession.

Steps of accession and requirements for joining

A country that wishes to become an EU Member State starts with the status of ‘potential

candidate’. When the European Commission considers that preparations are sufficiently

advanced, the country can then become an official candidate, but only once the EU

Council has reached unanimous agreement. Formal membership negotiations, known as

‘accession negotiations’, can then start.

A fundamental requirement for becoming an EU Member State is compliance with all

current EU rules (the so-called

acquis),

which are divided into 35 chapters. The negotiation

chapters cover the whole spectrum of policy areas, ranging from the four freedoms to

other agreements such as science, research and the environment. The negotiations are

mainly about how and when the rules are adopted and implemented. Conditions are the

same for everyone, meaning that a country cannot pick and choose which parts of EU

legislation it will apply, although transitional periods may apply for certain aspects.

At the political level, the most important requirements are laid out in the Copenhagen

Criteria. First, a candidate country must have stable institutions guaranteeing democracy,

the rule of law, human rights and respect for minorities. Second, it must have a

functioning market economy and the capacity to cope with competition in the EU. Lastly,

it must have the ability to take on and implement the obligations of membership of the

European Union.

Within each negotiation chapter, a candidate country's current situation is assessed,

and then the country and the EU agree on their respective positions. Each chapter is

subsequently negotiated and can be closed separately. All agreed chapters are then

embedded into an accession treaty, which has to be ratified by the candidate country and

by all other EU Member States. During the negotiation process, the candidate country is

continuously monitored by the European Commission and receives guidance on its path

to becoming an EU Member.

Status of negotiations

Two countries – Bosnia and Herzegovina and Kosovo* – are currently potential candidate

countries, while Albania, the former Yugoslav Republic of Macedonia, Montenegro, Serbia

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Lining up for EU Membership: current candidate countries and potential candidates

continued

and Turkey are candidate countries. For three out of these five candidate countries,

negotiations have already started. So far, the greatest progress has been achieved in

Montenegro, with three out of 35 chapters provisionally closed and 31 chapters already

opened. Montenegro is also part of a visa liberalisation scheme for the Schengen area,

where tourist travel is visa-free for up to 90 days. In the negotiations with Serbia, two

chapters have been closed and 14 chapters opened. Like Montenegro, Serbia is also part

of the visa liberalisation scheme.

In the case of Turkey, the negotiations are difficult and agreements are hard to achieve,

not least due to the recent political and diplomatic tensions between the EU, its Member

States and Turkey. So far, only one chapter (‘Science and Research’) seems ready to be

closed. In view of this situation, there is even debate about whether the possibility of

EU membership for Turkey should be dismissed completely. Of the 15 chapters that are

currently open, negotiations have already lasted for more than 10 years, with no realistic

prospect in some cases of reaching agreement. Of all the current candidate countries,

Turkey is the one that has received the largest amount of EU pre-accession aid. At the

same time, it has the highest GDP per capita of the seven other countries.

Comparison of key data on candidate countries and potential candidates

The map and tables below provides key information about candidate and potential

candidate countries in terms of population, GDP per capita, democracy ranking, human

development ranking and the amount of pre-accession aid received in 2017. The data

show that there are significant differences between the seven candidate and potential

candidate countries.

Outlook

The road ahead for EU enlargement is not easy. Some say that the next wave of

enlargement should happen by 2025, since there is currently a window of opportunity for

the Balkan states, and recent words by Commission President Juncker have given hope to

some countries for this ambitious accession calendar. However, many challenges remain,

not least the fact that Serbia and five EU Member States have not recognised Kosovo.

Additional border disputes in the Balkans could also hold back potential enlargement.

And for some (potential) candidate countries, the European Parliament has expressed

concern about progress on the fight against corruption and organised crime.

On the positive side, there are also favourable signs: progress towards resolving the

name issue between Macedonia and Greece, and the continued transformation of local

systems towards fulfilling the criteria for EU membership. Incentives are also provided

by the new Instrument of Pre-accession Aid, IPA III, as included in the Multiannual

Financial Framework proposals for 2021-2028. The priorities of the new IPA are rule of law,

fundamental rights, good relations between neighbours, regional cooperation and many

other aspects. With well-framed funding and clear incentives for candidate countries to

resolve their issues, some countries might be further along the road to accession than

many people expect.

* This designation is without prejudice on status and is in line with UNSCR 1244 and the International Court of

Justice opinion on the Kosovo declaration of independence.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

European Union

Population in millions

(2016)

GDP per capita (2017)

€

(exchange rate 1

USD = 0,85 euro)

Democracy Index

ranking (2017)

Human development

index ranking

511,8

Average:

31.115

Ranking from

3 (Sweden) to

64 (Romania)

Ranging from

4 (Ireland) to

52 (Romania)

Level of Pre-accession Not

aid in mio euro (2017) applicable

Bosnia & Herzegovina

Population in millions

(2016)

GDP per capita 2017

€;

also expressed as % of

EU average

Democracy Index

ranking (2017)

Human development

index ranking

Level of Pre-accession

aid in mio euro (2017)

3.517

4.728

(15%)

101

43.7

Montenegro

Population in millions

(2016)

GDP per capita 2017

€;

also expressed as % of

EU average

Democracy Index

ranking (2017)

Human development

index ranking

Level of Pre-accession

aid in mio euro (2017)

0,623

6.641

(21%)

39.5

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Source: ECA, based on Eurostat

Serbia

Population in millions

(2016)

GDP per capita 2017

€;

also expressed as % of

EU average

Democracy Index

ranking (2017)

Human development

index ranking

Level of Pre-accession

aid in mio euro (2017)

7.057

5.094

(16%)

215.4

former Yugoslav Republic of

Macedonia

Population in millions

(2016)

GDP per capita 2017

€;

also expressed as % of

EU average

Democracy Index

ranking (2017)

Human development

index ranking

Level of Pre-accession

aid in mio euro (2017)

Albania

Population in millions

(2016)

GDP per capita (2017)

€;

also expressed as % of

EU average

Democracy Index

ranking (2017)

Human development

index ranking

Level of Pre-accession

aid in mio euro (2017)

2.876 m

3.969

(13%)

92.9

2.081

4.459

(14%)

94.9

Kosovo *

Population in

millions (2016)

GDP per capita 2017

€;

also expressed as

% of EU average

Democracy Index

ranking (2017)

Human development

index ranking

Level of Pre-

accession aid in mio

euro (2017)

1.816

3.458 (11%)

Not

applicable

Not

applicable

91.9

Turkey

Population in millions

(2016)

GDP per capita 2017

€;

also expressed as % of

EU average

Democracy Index

ranking (2017)

Human development

index ranking

Level of Pre-accession

aid in mio euro (2017)

79.51

12.695

(40%)

100

636.4

*This designation is without prejudice

on status and is in line with UNSCR 1244

and the International Court of Justice

opinion on the Kosovo declaration of

independence.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

How to make

pre-accession

aid a success?

Interview with Philippe Froidure,

ECA Director of the External Action,

Security and Justice Directorate

DIRECTOR’S CUT

Vítor Caldeira

As early as 1993, the EU has set up pre-accession programmes to help

candidate countries meeting the accession criteria. Over the years,

and the successive enlargements of the EU, the Commission has

redesigned and overhauled these programmes several times. Within

the ECA Philippe Froidure has assessed most, if not all of them. He has

done so in different functions, and for the last decade as director of the

Audit chamber in charge of examining, among other areas, accession

aid. In this interview, Philippe shares some of his reflections on the

specificities of examining EU accession aid and the future need for

audits in this area.

By Gaston Moonen,

Directorate of the Presidency

Painting the picture: evolution of EU Pre-accession Aid since the 1990s

Philippe Froidure clearly has a lot of experience in examining EU Pre-

accession Aid. This does not only come out from his CV but also when he

talks about the topic, with full enthusiasm. During the interview, he pointed

to ECA audit reports from the 1990s on this topic to underline some of

the findings he considers most important. Philippe was involved from the

beginning when the ECA started to examine accession-related instruments.

He explains: ‘Actually, the ECA started its audit work in this domain in 1994.

The division in charge was vested in what was then called Audit Group

II and which was at the same time responsible for the banking activities,

mainly deriving from the European Coal and Steel Community (ECSC) Treaty.

Later on, the division was split which resulted in the creation of the ’PECO’

(Pays d’Europe Centrale et Orientale) division, dealing with the PHARE –

originally standing for ‘Poland and Hungary: Assistance for Restructuring

their Economies’ - instrument for the Pre-accession countries, and the

TACIS instrument for the Community of Independent States, following the

collapse of the Soviet Union. TACIS stood for ‘Technical Assistance to the

Commonwealth of Independent States’ and ran until 2007.’

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Interview with Philippe Froidure, ECA Director of the External Action, Security and Justice

Directorate

continued

From the historical picture Philippe Froidure paints, it becomes clear that the

EU support was essentially sectoral, focused vertically, directly related to the

Copenhagen criteria (see box), the chapters of the acquis and to the setup of an

administration and its ability to handle crucial EU matters.

The Copenhagen criteria, defined in 1993, are the rules that define whether a country is

eligible to join the European Union. They start with political criteria for guarantees for

democracy, human rights and the rule of law. Another key criteria is to have a functioning

market economy. The final key criteria is to have the administrative and institutional capacity

to take on the obligations of EU membership.

Philippe points out that it meant that the EU provided its support, for instance,

to the privatisation of state-owned companies, statistical offices, the customs

administration, the tax administration, SMEs, cross-border infrastructures. ‘Every

programme was managed within an ad-hoc entity, a Programme Management

Unit (PMU). The DG in charge of the Pre-accession could find inside expertise

for the diagnosis and the design of the thematic supports in some other

DGs of the European Commission, like TAXUD and EUROSTAT, except for the

Public Administration. That is why the Commission turned itself towards the

Organisation for Economic Cooperation and Development, the OECD, which

had a division called PUMA, focusing on Public Management matters. This

resulted in the creation of the SIGMA – standing for Support for Improvement in

Governance and Management – a programme managed by the OECD and the

Commission and still on going.’

This all had consequences for the audits, he explains, with the audits privileging

thematic or systems approaches: ‘For instance, we had special reports on the

private sector development, on the time management of the programmes,

on the tendering procedures, those kind of topics.’ For the ECA director it

was the wish of the Commission to take into consideration the constraints

related to the EU membership and to the management of major funds, which

triggered the launch of two additional instruments: SAPARD for the rural

development and ISPA, for the structural funds. He continues: ‘The last element

in the evolution comes back to a single instrument: the Instrument for Pre-

accession Assistance (IPA). The support is currently provided under the second

version of this instrument (IPA II) and a third version is under finalisation for

the next Multiannual Financial Framework. On the institutional side, things

have also changed with the creation of the European External Action Service

and, under the Juncker Commission, with a move from a specific enlargement

DG (DG ELARG) to a DG (DG NEAR) responsible for both Pre-accession and

Neighbourhood policies.’

Political will of candidate country key element in accession process

When asked what kept him in this field in view of his long track record in the

area, he answers without any hesitation: ‘Not only but I would say primarily:

the EU proximity. Major events took and still take place in this geographical

area and these countries may become part of the Union. All that leverages the

interest. In my view pre-accession is a very lively process with a geopolitical

context continuously evolving. The fact is that, after the first major enlargement

in 2004, the second one in 2007 and the last one in 2013 with Croatia, many

serious challenges still existed and new ones appeared both internally - notably

the governance of the EU - and externally as I mentioned earlier. De facto, these

“

[In the past] Every

programme was

managed within an

ad-hoc entity, ...

“

The last element in the

evolution comes back

to a single instrument:

the Instrument for Pre-

accession Assistance

(IPA).

... pre-accession is a

very lively process with

a geopolitical context

continuously evolving.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Interview with Philippe Froidure, ECA Director of the External Action, Security and Justice

Directorate

continued

challenges slowed down the accession process, and raised important questions,

increasing - as I see it - the interest for the domain.'

Going at a deeper, more detailed level, Philippe Froidure explains that the most

critical areas for IPA assistance depend on the situation of each country. ‘For

example, governance was identified by the Commission as the most challenging

are for Serbia, while the rule of law has been particularly challenging for

Kosovo, and more recently for Turkey.’ He points out that, putting aside the

specific areas, the political will of the country is the key element, not only in

the implementation of the measures and/or projects needed, but also for the

sustainability of the achievements in the long run. ‘As the example of Turkey has

shown, several years of progress can be endangered by a serious backsliding.

When there is lack of political will, actions may produce results that are not self-

sustainable and remain heavily donor-dependent.’

Philippe also provides some recommendations to trigger change. ‘For the

reasons I just mentioned, continuous policy dialogue and alignment of the

country’ political objectives remain a priority and should be the primary

instrument to ensure effectiveness of the actions and sustainability of the

results. A second option to accelerate improvements could be a stricter

definition and application of conditionality. As ECA, we highlighted this in our

special report 7/2018 on Turkey.’

He explains that under the IPA, conditionality can be used at political level,

through opening and closing benchmarks regarding accession negotiations,

as well as at project level. Then, with a certain twinkle in his eye, he continues:

‘At political level, the EU legislator has the power to reduce future assistance.

Under IPA I – we are now under IPA II - the Council could suspend IPA assistance

if the principles of democracy and the rule of law had not been complied with.’

He brings up that the European Parliament has called for a suspension of all

pre-accession funds if accession negotiations are suspended. ‘But we found that,

under IPA II, the EU legislator has not explicitly provided for such a possibility.

But the Commission does have some means related to conditionality to foster

reforms, like not transferring the full amount, - the so-called ‘performance

reward’- in the absence of good results, or take over the management of IPA

projects from national authorities.’

Auditing pre-accession aid: still enough work to be done

As to whether the ECA wants to cover all the candidate countries regularly

– almost cyclical – or whether other selection criteria prevail, perhaps even

specific to audit programming in this area, Philippe Froidure has a swift reply. ‘In

the early days, the idea was not to particularly go country per country. Instead,

the selection of the Pre-accession topics was based on criteria which are still

valid and used: such as previous coverage, risks and materiality, stakeholders’

interest and the potential added-value of the audit. As regards the volume of

audit work carried out, this was mainly determined by the number of available

auditors in the PECO division.’

He further explains that, following the changes in the programming procedure

and the administrative reform of the ECA organisation, there is now a more

global prioritisation, not only within an audit chamber, but also in principle at

the central ECA level. ‘Therefore, covering specific countries based on a cyclical

approach is not a sufficient justification as such. Additional selection criteria are

“

When there is lack of

political will, actions may

produce results that are

not self-sustainable and

remain heavily donor-

dependent.’

... continuous policy

dialogue and alignment

of the country’ political

objectives remain a

priority...

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Interview with Philippe Froidure, ECA Director of the External Action, Security and Justice

Directorate

continued

necessary and are applied in the pre-accession domain. Just think about issues

such as security, conflicts, migration … at the doorstep of the EU. Regarding

the current country audits, it is true that the aid modalities and management

modes foreseen in the IPA instrument have rendered the geographical approach

more relevant. For instance, EU budget support for a candidate country was not

possible under the PHARE instrument, while it is now possible under IPA.’

When asked about specific audit skills needed in this area, Philippe believes

that they are not very different from other policy areas. ‘You need strong

professionalism, good interpersonal skills, sound discernment and objective

judgment. There is no room for arrogance. Probably one should insist on the

need for the auditor to understand well the audited matter and the political

context. Indeed, the auditor must find its way in quite complex questions. Like

in other policy areas.’

Regarding future audits on pre-accession aid, Philippe Froidure believes there

is still enough work to be done for the ECA. ‘Normally, if a candidate country

becomes an EU Member State the audit work of EU activities goes to a different

Audit Chamber in the ECA. Let’s say the work in our directorate ‘disappears.’ But

the policy still concerns five candidate countries and two potential candidate

countries. Moreover, as I already mentioned, several challenges, both internally

and externally, related to this domain need to be addressed.’

“

... the aid modalities

and management

modes foreseen in

the IPA instrument

have rendered the

geographical approach

more relevant.

You need strong

professionalism, good

interpersonal skills,

sound discernment

and objective

judgment. There is no

room for arrogance.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Retrospective

reflections

on the ECA

meta-audit on

the Western

Balkans

By Marton Baranyi, Investment for

Cohesion, Growth and Inclusion

Directorate

Source:

European Commission

September 2016 marked the publication of the ECA’s special report 21/2016 on the Western Balkans.

More specifically, it was the release of the meta-audit on the EU Commission’s management of pre-

accession assistance (IPA) to strengthen the administrative capacity in the historically and politically

fragile Western-Balkan region. Marton Baranyi worked on the audit and its presentation as attaché

in the private office of Szabolc Fazakas, then reporting Member for this report. He looks back, two

years after publication and after the annual summit of the Berlin Process in London, identifying a

number of takeaways from this performance audit even today.

Purpose of a meta-audit

Special report 21/2016 has as title ‘EU pre-accession assistance for

strengthening administrative capacity in the Western Balkans: A

meta-audit.’ So the report labels itself as a meta audit. It is obvious

what ‘meta’ means, ‘audit’ as well. But what is a ‘meta-audit’? This

term overs a special audit product at the crossroads of a landscape

review and a single-issue performance audit, covering a wide range

of issues and clearly aiming at making specific conclusions and

recommendations. In this specific case, the meta-audit on the Western

Balkans, led by then reporting Member Zsabolcs Fazakas and head

of task Dennis Wernerus, used already existing ECA Special Reports

of the past ten years - such as the special reports on CARDS, Serbia,

Kosovo*, Croatia etc. -, Commission evaluations and progress reports,

as well as independent expert reports. However, and this has to be

underlined, we also complemented the existing work of others with

new performance audit work. We assessed 52 national IPA projects in

the Western Balkans and three IPA multi-beneficiary programmes and

undertook audit visits at the EU Commission and delegations, as well

as to relevant ministries and IPA structures in the Western Balkans. The

particular focus of the new audit work was on results beyond outputs

in the field of rule of law and public administration reform. In this

regard, this meta-audit was a rather unique audit amongst the external

action related audits.

Example of a finding in the meta-

audit: IPA I project results in the

fight against corruption

Project against corruption, Albania

The purpose of the ‘Project against

corruption in Albania’ was to

support the Albanian government

in implementing its anti-corruption

strategy (2007-2013). Not only did

it fail to deliver on measurable

targets, but its sustainability was also

affected by the fact that the national

anti-corruption coordinator was not

independent and coordinated policies

at national and local level without

adequate budget or staff.

State Commission for Preventing

Corruption, the former Yugoslav

Republic of Macedonia

This project aimed to strengthen the

work of the main body responsible

for preventing corruption. However,

it did not address the fact that the

State Commission for Preventing

Corruption was not in a position to

exercise its mandate effectively in

the face of inadequate commitment

by the national authorities, a lack

of independence on the part of its

senior management and insufficient

resources.

* This designation is without prejudice on status and is in line with UNSCR 1244 and

the International Court of Justice opinion on the Kosovo declaration of independence.

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Retrospective reflections on the ECA meta-audit on the Western Balkans

continued

Presenting the meta-audit on the spot

Furthermore worth mentioning is that the special report had an

unusually wide coverage, not only in Brussels and in the media

focusing on EU affairs, but also in the Western Balkan region itself.

This was also due to the audit team’s efforts to present the report

not only to the usual institutional players like the Budgetary Control

Committee in the European Parliament and in the EP and the relevant

Council formation, but also to stakeholders on the spot. Therefore, we

the results of the meta audit for example during the European Union-

Serbia Stabilisation and Association Parliamentary Committee (SAPC)

meeting in Belgrade in September 2016, to the Regional Cooperation

Council (RCC) Board meeting in Sarajevo in October 2016 and to

Members of the Parliament of Montenegro in March 2017.

The role of a regional approach

The report’s politically perhaps most important message (and

last recommendation) is that the regional approach within the

pre-accession assistance should be further strengthened. This is

an extremely important recommendation for a region that is still

characterised by ethnical, religious, and social tensions, and which had

to endure hardship even in recent times due to the various crises linked

to politics, economics, and migration. Regional approach therefore

means that the EU does not support these countries exclusively on

a one-by-one approach, but also supports and encourages a holistic

regional approach within its pre-accession policy and funding.

Regional approach in this context means enhancing inter-connectivity,

regional cooperation, as well as strengthening administrative capacity

in the region as a whole, notably through the Berlin process (see

below) and several regional frameworks and organisations.

Luckily, there are already a number of regional initiatives in place, such

as the already mentioned RRCC and the Regional School of Public

Administration (ReSPA). The meta-audit covered these initiatives.

Moreover, the trend seems to be favouring this development in recent

years: the meta-audit reported that 23% share of the total IPA funding

for the 2007-2013 period was used for explicit regional programmes,

while this figure was 41.5% in 2017 alone.

Regional approach and the Berlin Process

Strengthening regional cooperation is also an important message of

the Berlin Process. This initiative, launched by the German Chancellor

Merkel in 2014, aims at stepping up regional cooperation in the

Western Balkans and aiding the integration of these countries into the

European Union. As the initiative officially states the process is taking

place with support of the European Commission, international financial

institutions and the Member States involved in the process – Austria,

Croatia, France, Germany, Italy, Slovenia and the United Kingdom. It is

Main conclusions of the meta-

audit

The ECA concluded that the EU

pre-accession assistance was

broadly effective and that IPA I, the

first ‘Instrument for Pre-accession

Assistance,’ partly strengthened

administrative capacity in the region,

despite considerable shortcomings

inherent to the national authorities in

the Western Balkans. With regard to

the Commission’s management, IPA

I objectives were not always specific

and measurable. Programmes and

projects were based on needs but

some beneficiaries’ assessments

in the rule of law sector showed

considerable shortcomings. The

absorption of IPA I funding was

hampered by weak administrative

capacity in some countries and, in the

case of decentralised implementation,

strict requirements linked to the

management of EU funds.

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Retrospective reflections on the ECA meta-audit on the Western Balkans

continued

supplementary to the individual countries’ institutional EU integration

process.

This year, the annual summit related to the Berlin Process took place

in July in London. Important to note is the Joint Declaration of the

summit’s leading participants says that further progress in developing

regional cooperation structures is welcome and commended. Without

overestimating the meta-audit’s importance, it is good to see that we

were thinking in the same direction as several leaders of the EU, namely

in the direction of the necessity of a holistic approach towards the

Western Balkans.

Signs of hope for a continueous peaceful neighbourship

It is clear that there is still a long way to go for the countries of the

Western Balkans on the path towards the EU. However, contrary to

previous times, where the difficulties prevailed, today, there are some

signs of hope for a peaceful settlement of at least some of the tensions.

These include solving the name debate at the upcoming referendum in

Macedonia on the country’s official name and the bilateral negotiations

on a peaceful land swap based on mutual understanding between

Serbia and Kosovo. From our side, with all these activities and regional

programmes, it seems rather likely that there will be another ECA audit

covering the Western Balkan region.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Auditing Turkey: from EU pre-accession

to migration management

By Alejandro Ballester Gallardo,

External Action, Security and Justice Directorate

Turkey has been the largest recipient of the EU Instrument for Pre-accession

Assistance (IPA) since many years. More recently, the EU and Turkey signed an

agreement which provided additional financial support for Turkey hosting refugees

coming mostly from Syria. Alejandro Ballester Gallardo, principal manager at

the ECA who managed the recent performance audit of the IPA aid, explains

the differences and connections between the IPA instrument and the facility for

Refugees in Turkey, set up in 2016. Dennis Wernerus, currently heading the Private

Office of Annemie Turtelboom, ECA Member and previously head of task in the

audit of IPA in Turkey, provides details for the audit methodology used.

Why did the ECA audit Turkey?

Located at the crossroads between Europe and the Middle East, the

Republic of Turkey has been a candidate for EU membership since 1999.

With over € 9 billion from the Instrument for Pre-accession Assistance (IPA)

for the 2007-2020 period, Turkey is the main beneficiary country of EU aid

outside the EU.

Throughout this time, Turkey’s EU accession process has experienced

many ups and downs. Since the attempted military coup of July 2016,

when Turkey imposed a state of emergency and carried out extensive

dismissals and detentions, Turkey’s future accession to the EU has become

even more uncertain. In fact, in November 2016 the European Parliament

called on the Commission and the EU Member States to initiate a

temporary freeze in the ongoing accession negotiations with Turkey.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Auditing Turkey: from EU pre-accession to migration anagement

continued

Also in 2016, the EU Heads of State and Turkey agreed on the EU-

Turkey statement. The aim of this political agreement was to end illegal

migration flows from Turkey into the EU. With the closure of Turkey’s

borders, the number of arrivals into the EU dropped by 97%. Turkey

actually hosts the largest refugee population in the world: nearly 4 million

people, 3.5 million of whom are Syrian. To help the Turkish government

address the basic needs of these refugees and their host communities,

the EU set up the Facility for Refugees in Turkey (FRiT) with an initial

budget of € 3 billion for the 2016-2017 period, and the possibility of a

further € 3 billion by the end of 2018.

Given the above, it is not surprising that the ECA’s work programme

included several audits related to Turkey, both as a candidate country

and as a key partner in migration management. This year was also the

right time to look at these areas, since our assessment of the effectiveness

of the IPA can shape the ongoing political debate about whether the

repressive post-coup measures in Turkey have resulted in backsliding

in the reform agenda that the EU has supported for the last 20 years.

Our report will also be of use for the European Commission’s mid-term

review of IPA II. Similarly, our assessment of the value-for-money of the

first tranche of the FRiT before the end of 2018 could help to improve the

design and implementation of the second tranche.

Two audit teams of four ECA auditors each (headed by Dennis Wernerus

and Cyril Messein) spent one year, including several weeks in Turkey,

meeting government authorities, the EU Delegation, other international

institutions (such as the UN), refugees, civil society organisations, and the

beneficiaries of a sample of 25 EU-funded projects across the country.

Auditing Turkey as a candidate country

Being the largest IPA beneficiary country, Turkey is frequently audited by

the ECA as part of its annual statement of assurance. For example, each

year since 2013 the ECA has audited the regularity of the construction,

service and work components of a total of 40 IPA projects. This means that

we already have extensive knowledge of the financial management of IPA

funds in Turkey. At the same time, our most recent performance audit of

the effectiveness of IPA funds in Turkey dates from 2009.

An important part of our work was therefore to assess what the EU

programmes and projects had achieved in terms not only of results

but also of sustainability. We also examined whether EU pre-accession

assistance had been effective in advancing the reforms that were needed

most for EU accession. We looked at priority sectors such as the rule of

law, governance and human resources. The main reason for this was that

these sectors form part of the EU’s fundamental values and were most

likely to be affected by the post-coup measures. Furthermore, the current

political and humanitarian context has placed the EU in a rather awkward

position vis-à-vis Turkey; on the one hand, the EU has committed itself to

accompanying Turkey’s accession process, which entails pushing reforms

in politically sensitive areas. On the other hand, it needs a cooperative

and willing partner to reduce illegal crossings into the EU. The review of

independent assessments helped us to identify the reforms needed in

these priority sectors. We then looked at the reforms actually funded by

IPA in order to identify any gaps.

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Auditing Turkey: from EU pre-accession to migration anagement

continued

The ECA published special report 7/2018 in March 2018 and concluded

that IPA funds had barely addressed a number of fundamental needs,

such as the independence and impartiality of the judicial system, high-

level corruption, press freedom, and support for civil society. Furthermore,

in areas where there was political will and reforms had actually

progressed, the sustainability of the results achieved was at risk, e.g. due

to large-scale dismissals of public officials who had been trained with

EU funds. The fact is that capacity-building is an important component

of all EU pre-accession assistance, so high staff turnover in the public

administrations of candidate countries can seriously undermine the

sustainability of IPA.

The report received considerable public interest, with more than

1000 online news articles and social media posts referring to it. The

reporting ECA Member, Bettina Jacobsen, presented the report to the

European Parliament’s budgetary control committee in April 2018, and

the committee endorsed its recommendations. In September 2018,

the Council’s Working Party on Enlargement underlined in its draft

conclusions ‘the

relevance of the findings of this audit for the management of

IPA for the beneficiaries, the mid-term review of IPA II, the current discussions

on the proposal establishing IPA III as well as for the wider enlargement

process’

As things stand, uncertainties over Turkey’s accession process remain. The

Council and the European Parliament cut Turkey’s pre-accession funds for

2018 by EUR 105 million, with an additional EUR 70 million of previously

announced spending held in reserve.

Auditing Turkey as a partner for migration management

On the same day as the ECA published Special Report 7/2018 on EU pre-

accession assistance to Turkey, and four months after the EU cut IPA funds

for Turkey, the Commission announced the release of the second EUR 3

billion tranche of the Facility for Refugees in Turkey (FRiT). Some of this

amount comes from unspent IPA funds.

The Facility was set up in 2016 as an innovative mechanism with the aim

of coordinating and streamlining actions financed from the EU budget

and bilateral contributions from EU Member States. Finding the best time

to examine the FRiT was not easy. One reason to commence the audit as

soon as possible was the date of its second tranche, scheduled for 2019.

This meant that our report had to be published in 2018. The complicating

factor was that the actions funded under the non-humanitarian strand

of the Facility, such as hospitals and schools, require between three

to four years to be completed, meaning that projects would not have

advanced sufficiently in 2018. In the end, the ECA decided to launch the

task in October 2017 with a focus on the humanitarian strand of the FRiT,

which accounts for approximately 50% of the Facility’s budget and funds

emergency projects with a shorter lifespan.

A significant share of FRiT funding is channelled through IPA. This means

that, to some extent, migration-related funds in Turkey also follow the

same procedures and rules as EU pre-accession funding. However, as

a candidate country, Turkey is the final recipient of EU funds and has

a relatively clear framework of standards to comply with. These are

Methodology used to

assess effectiveness of IPA

implementation in Turkey

By Dennis Wernerus,

Head of Task for the IPA audit of Turkey

We considered that the IPA’s

implementation was effective when

it delivered the intended project

outputs without significant delays,

and produced sustainable results. In

order to assess this, we first selected

three sectors among the many sectors

prioritised by the EU:

•

Rule of law (fundamental

rights, justice, home affairs)

Governance (civil society,

public administration reform,

public finance management)

Human resources (education,

employment and social

policies)

•

Taken together and only for IPA I,

these three sectors amounted to€1.5

billion in terms of contracts. We

focused on the performance of the

IPA’s management by the Turkish

authorities, because they actually

manage around 85% of all IPA funds

in Turkey. We selected 15 projects

from the above three sectors, which

together amounted to € 112 million,

and assessed their performance. We

also reviewed the various audit and

monitoring reports produced by the

Commission, the EU delegation in

Turkey and the Turkish authorities.

Whenever feasible and possible, we

tried to take account of the views

of those who implemented and

benefited from the projects, i.e. the

Turkish authorities, international

organisations, civil society

organisations and other recipients of

EU funds.

Once we had identified the sectors

to be audited, we used data-

analysis techniques to search for

related projects in the Commission’s

databases. Projects were selected

on the basis of their relevance to

the

acquis,

the representativeness

of the sector, geographical spread

and, most importantly, the level of

implementation, the aim being to

ensure that results could actually be

audited. This also explains why there

is no IPA II project in our sample: such

projects had either not yet started, had

started but were not relevant to the

acquis

(e.g. projects in connection with

FRiT), or were still at a very early stage

when the audit work was carried out.

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Auditing Turkey: from EU pre-accession to migration anagement

continued

defined under each of the 35 chapters of the EU

acquis.

This applies less to

the migration file, where the Turkish authorities have a stronger say about

refugees’ needs, where the EU aid should be allocated, and who should deliver

it and how. We had to take this difference into account when developing our

audit criteria, e.g. for assessing the relevance of EU actions.

Beyond its considerable public and political significance, auditing the FRiT

provided a valuable learning experience. Firstly, as regards the setting-up,

coordination and value-for-money of a new emergency response mechanism,

which may be replicated in the future to cope with similar crises; secondly,

as an in-depth examination of a major programme under the humanitarian

strand of FRiT, the Emergency Social Safety Net (ESN). With a budget of

€ 1 billion, the ESN was implemented by the World Food Programme in

collaboration with the Turkish authorities, and is the EU’s largest-ever

humanitarian programme, providing cash assistance to 1.3 million refugees

living outside the camps. The Commission estimates that more than 30% of

its emergency relief is cash-based assistance, the ESN being the EU’s flagship

programme. Our audit covered the ESN’s internal controls, its cost structure,

the reliability of basic beneficiary data, and the results achieved. Our work

on Turkey thus also provided valuable benchmarks for assessing other cash-

based assistance programmes. The special report related to the audit is due to

be published towards the end of 2018.

Changing dynamics of the EU accession process

In sum, Turkey is the largest recipient of EU pre-accession funding. In addition

to longstanding security and commercial ties with the EU, Turkey has

emerged as a key partner to help the EU stop illegal migration. Indeed, the

EU money allocated to Turkey for migration management has, in the space

of only four years, surpassed total pre-accession funding for the last 14 years

combined. It is therefore no surprise that this has substantially influenced EU-

Turkey relations, and also affects the dynamics of the EU accession process.

The question now is whether the need to work together on migration will

serve as an opportunity to re-activate and enhance the accession reform

agenda, or will actually slow things down as the focus shifts towards

migration. Through our audits, we intend to provide an objective analysis of

the progress achieved in both fields at this crucial time.

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A man, a dog and an EU-funded four-wheel

drive: auditing in the field

By Jussi Bright, Investment for Cohesion, Growth and Inclusion Directorate I

ECA auditors regularly go out into

the field to check the situation on

the spot, e.g. in candidate countries

or potential candidate countries.

Often enough, this leads not only

to relevant findings about the way

EU financial support is used, but

also to interesting experiences and

anecdotes. Jussi Bright shares one

of his field experiences when he was

head of task for an audit assessing

the performance of EU aid for justice

and home affairs projects in the

Western Balkans.

Source: ECA

Auditing the results of the integrated border management

programme

When I see this photo that was published in ECA special report 12/2009

on the effectiveness of justice and home affairs projects in the Western

Balkans, one particular story of an audit in the field comes to mind. Justice

and home affairs projects deal with integrated border management

(IBM), and judiciary and police matters. In this case, I was auditing an IBM

project on the Greek-facing border of the former Yugoslav Republic of

Macedonia.

A modern IBM strategy is based on four key principles: communication,

intelligence, mobility and fire power. To help implement this strategy,

the European Commission provides aid for pre-accession countries in

the form of technical assistance and equipment. Our role was to examine

whether the programme’s intended results had been achieved and

sustained: in other words, whether illegal border crossings could be

detected more easily. In this specific case, I audited the ‘vehicles for border

police’ project, as exemplified by a four-wheel drive jeep to increase the

mobility of the border police.

Visuals bringing back memories

First of all, I should stress that it was quite a challenge to include the

above photo in the report. While there was general agreement that our

audit reports could benefit from more visuals, critics said: ‘Of course Mr

Bright wants this photo in the report: he’s in it!’ My response was that

although this is technically correct, it is mainly my back that is visible in

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A man, a dog and an EU-funded four-wheel drive: auditing in the field

continued

the picture and I doubt whether even my Mum could recognise me. I

recall adding: ‘You can call it vanity, but the idea of a photo is to show the

public that unlike many other audit offices, the ECA generally goes on the

spot to check project results, be they motorways in Poland, jobs created

by SMEs in Portugal, or a four-wheel drive vehicle in operation on the EU’s

external border’.

I also recall that this border section was my second choice for a visit;

I actually wanted to visit the border facing Kosovo.* ‘Sorry, no: too

dangerous,’ said Paul, the EU project manager in Skopje. ‘I hope you’re not

trying to keep me away from some interesting audit findings,’ I quipped.

Then Paul showed me a border police vehicle that had been ambushed

recently and suggested going to Gevgelija on the Greek border. I thought

this was an excellent idea…

A man, a dog and an empty field

It turned out that visiting Gevgelija was not a bad choice at all. There were

many illegal border crossings happening there. Almost exclusively, these

involved Macedonians crossing the border to work on Greek farms. While

we were standing on the border, the border police (the man in green)

suddenly got a call: somebody had been arrested. We all jumped into

our jeeps. With adrenalin coursing through my veins, I wondered what

to expect: something serious involving an organised crime syndicate,

perhaps? No: we found an old man and a young dog sitting in the middle

of an empty field. The man was sad, but the dog was clearly enjoying the

unexpected attention. Against all expectations, the man was Greek; the

dog, however, was Macedonian. That was the key to the mystery: the man

was a recreational hunter and needed a new hunting dog. A trained dog

is worth thousands of euros in Greece, but is much cheaper on the other

side of the border. To save some money and avoid veterinary checks, he

had crossed the border illegally, but was caught returning back home. So

no thrilling story, but something rather down to earth, albeit illegal.

From field work to case study

We let the police get on with the paperwork, as we had to rush back

to Skopje to meet the Minister of the Interior (an audit mission in the

field can also include such encounters). The news was faster than us,

however, and the Minister greeted me with open arms, referring to our

recent finding in the field and praising me for keeping a cool head in

such a situation. I thanked her for her warm words, but was thinking of

the statistical likelihood of what had just happened. All this had occurred

at the exact time the ECA auditors were there. Well, at least I had a nice

case study based on a true story for my next training course on the

auditor’s sceptical mind. If you want to know more about our findings on

the effectiveness of EU support for border management in the Western

Balkans, the full tale is available in special report 12/2009 .

* This designation is without prejudice on status and is in line with UNSCR 1244 and the

International Court of Justice opinion on the Kosovo declaration of independence.

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SIGMA fostering strong public institutions

towards EU membership

By Bianca Brétéché, SIGMA Programme at the OECD

When you have a closer look at

capacity building in candidate

countries a name that quickly

pops up is SIGMA, a joint initiative

of the Organisation for Economic

Co-operation and Development

(OECD) and the European Union,

principally financed by the EU.

What does SIGMA actually do,

including regarding audit, and

how does it relate to activities the

ECA undertakes with Supreme

Audit Institutions (SAIs) in

(potential) candidate countries.

Bianca Brétéché, working as

Senior Advisor public financial

management and external audit

in the SIGMA programme at the

OECD, replies to these questions

and why developing SAIs is so

important.

Source: OECD

Challenge of institutional transformation

SIGMA - these five little letters stand for ‘Support for Improvement in Governance and

Management’ and are the name of an amazingly successful, long-term joint initiative of the

OECD and the EU for more than 25 years now. Since I joined this programme ten years ago

I have felt privileged to have the chance to work in the international environment provided

by the OECD in one of the most beautiful cities in the world: Paris! On top of this, working in

the most interesting and extremely rewarding field of international co-operation for public

governance and institutional capacity building for EU integration.

After the fall of the Berlin wall, the breakdown of the USSR and the iron curtain, when the

door opened for integrating Central and Eastern European countries into the EU, most

international organisations were counting on their economists to help those countries

with the necessary economic reforms. But the OECD and the European Commission were

convinced that one of the biggest challenges for transformation of these countries would be

institutional. With this conviction, they established the SIGMA programme in 1992 to help

countries transform and reform their public administrations to prepare them not only to

become

members of the EU but to

strong and reliable members.

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SIGMA fostering strong public institutions towards EU membership

continued

The specific feature of the SIGMA programme is that we

work in horizontal areas of public administration: policy

development and co-ordination, public service and human

resource management, accountability of the administration,

service delivery and public financial management, including

public procurement and external audit, and the strategic

framework of public administration reform. Some years ago,

together with the European Commission, we developed the

‘The Principles of Public Administration

’ and a measurement

framework that allows the evaluation of progress in public

administration reform against these Principles.

Peer-to-peer basis

We work on a peer-to-peer basis, which means that all

SIGMA senior advisors have long-standing, practical public

administration reform experience in an EU member state.

Several of our colleagues nowadays come from countries

that joined the EU in 2004 or 2007 and bring their own,

personal experience with the EU integration process of their

home countries.

Personally, I’m from Germany, born, raised and educated in the Western

part. After my legal training I became a civil servant in one of the German

states, Brandenburg, only a few years after the German re-unification.

There I experienced first-hand the challenges of the transition of the public

administration from a socialist country to an open market state. The majority

of my colleagues in the Court of Accounts of Brandenburg had started their

career in the former German Democratic Republic. After the re-unification,

they suddenly had to understand the completely different state model of

Western Germany, familiarise themselves with a fully-fledged set of laws

and regulations and apply them correctly in their day-to-day work. I have to

admit that as a young lawyer, trained in Western Germany, at the time I often

didn’t understand well the queries of my colleagues, but looking back now I

realise that this experience has helped me a lot to understand the problems

of EU candidate countries and potential candidates.

SIGMA and external audit: spin-off not only for developing SAIs

So, what does SIGMA do and how does it help to develop strong and efficient

state audit institutions, fit to play their role as watchdogs of national and

EU money? For the audit area, we usually have 2-3 colleagues to cover 19

countries (since 2008 SIGMA also works in the EU Neighbourhood countries).

This is of course impossible without the help of a large network of external

experts, who include senior people from EU member state SAIs or the ECA,

whether active or retired. Together with us, these experts travel and work

with our partner colleagues in areas such as developing strategic plans,

reviewing legislative frameworks, advising on audit manuals and guidelines,

providing training for specific audit issues. Moreover, we sit down with

managers and presidents of SAIs to think about best ways to strengthen the

role of the SAI in their countries and also for the EU integration process.

Source: OECD

http://www.sigmaweb.org/publications/principles-public-administration.htm.

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SIGMA fostering strong public institutions towards EU membership

continued

SIGMA also continues to support the Network of SAIs of candidate

countries and potential candidates and the ECA, through organising

roundtables, workshops and training. This work sometimes includes

comparative studies such as the SIGMA paper on ‘Developing effective

working relationships between SAIs and Parliaments

’ that we drafted

with the help of Jan Pieter Lingen, a former ECA staff member, and which

was published in 2017.

Interestingly this study, which was commissioned by the SAI Network

for their purposes, also received very positive feedback from member

state SAIs and the wider international community. This shows that the

questions addressed in the document and the toolkit, based on practical

experiences, are also interesting and inspiring for developed and mature

SAIs. It is an experience that we find frequently: the EU integration

process brings up and spells out challenges that EU member states face

as well, and some of the solutions found nowadays in EU candidate

countries and potential candidates can also serve very well within the EU.

SIGMA is of course only one small player among other EU support, like

Twinning, Technical Assistance and TAIEX, the Technical Assistance and

Information Exchange instrument of the European Commission. But I

think the joint efforts pay off: our regular assessment of reform progress

that is published on our website shows that SAIs are clearly one of the

stronger, better-managed public institutions, and are more trusted by

citizens, in the current EU candidate countries and potential candidates.

This also gives them a unique opportunity to support the EU integration

process with their audit work, for example by realising performance

audits that provide governments and parliaments with insight about

important reform processes for EU integration.

Ongoing challenge: from design to implementation

Today more than ever, I believe in the importance of strong public

institutions and in our responsibility to help the countries that strive to

become members of the EU to strengthen their public administration,

including the SAIs. The legal frameworks for solid institutions are

mostly in place now. The current and future challenges are their full

implementation. Additionally, we need to continue to provide particular

support to the SAIs in finding appropriate ways to deal with their

sometimes very difficult political environment, as well as the frequently

misleading expectations of their parliaments and citizens.

https://doi.org/10.1787/d56ab899-en

http://www.sigmaweb.org/publications/monitoring-reports.htm

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

EIB in the Western Balkans:

how the EU Bank helps

countries towards accession

and EU integration

By Matteo Rivellini, Lending Operations in Slovenia,

Croatia and Western Balkans, European Investment Bank

Railway in Montenegro.

Source: EIB

The European Investment Bank, or as they like to call themselves, sometimes also called the

‘’EU Bank,’ ’ is the world’s largest multilateral lender and borrower, including providing inter alia

funding for many projects within the EU and implementing one of the key initiatives of the

Juncker Commission, the European Fund for Strategic Investments. But what does the EIB do for

(potential) candidate countries? Matteo Rivellini, as Head of Division in the EIB responsible for the

Bank’s operations in Croatia, Slovenia and the Western Balkans, gives an overview on what the EIB

does, particularly in the Western Balkan countries and how it ties in to EU policy initiatives.

The Western Balkans – a key priority for the EIB group

The Western Balkans is a key priority for the EIB Group, consisting of the European

Investment Bank and the European Investment Fund. Since 2007, the EIB Group has

financed projects totalling over € 8 billion in the region. For comparison: In 2017,

the EIB Group provided more than € 78 billion for long-term investment in projects

across Europe and around the world. The EIB’s regional activity follows the EU’s

objective of helping the Western Balkans towards accession and rapid integration

into the EU.

Financing from transportation to environmental protection

Our work in the Western Balkans is broad, from building roads and railways, to

investing in energy and digitalisation projects. We are working actively to improve

the region’s physical, human, and economic connections both with the EU and

within the region. However, there is more to do. The quantity and quality of

infrastructure in the region is low, well below the level found in the EU. According

to the IMF, the average infrastructure development in the Western Balkans is about

50% lower than the EU average, ranging from approximately 30% in Serbia to

almost 70% lower in Albania.

This issue is observed across a number of sectors. In transport, Western Balkans

countries have on average 54 kilometres of roads per 100 square kilometres of land,

compared with 126 kilometres of roads per 100 square kilometres in the Central

and Southeast European countries in the EU, excluding Romania and Bulgaria. In

response, the EIB is financing roads in the region including those on the so-called

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EIB in the Western Balkans: how the EU Bank helps countries towards accession and

EU integration

continued

priority corridors in Serbia and the Former Yugoslav Republic of Macedonia, and

in Bosnia and Herzegovina. To develop a more sustainable and diverse regional

transport system, several new rail operations are also under consideration. This

includes supporting Montenegro’s national railway network upgrade along the Bar-

Podgorica-Vrbnica line forming part of the Orient/East Mediterranean Extended

TEN-T core corridor.

Concerning energy, power generation in the Western Balkans largely comes from

lignite coal power plants (over 55%) and hydropower (over 35%). While domestically

mined lignite provides the region with supply security, this form of coal emits

significant levels of greenhouse gas and other pollutants. Wind, solar and other

energy efficiency projects have a large untapped potential in the region. Given

the lignite-rich context and the green EIB energy lending policy, the Bank’s energy

sector lending represents a small share of our work in the Western Balkans (about 4%

compared to 15% within the EU). We are exploring opportunities in energy efficiency

and renewable energy to make the region greener and more sustainable. For

example, the EIB is participating in the European Commission-led pilot programme

to boost energy efficiency in Serbia and is appraising potential investments in wind

farms.

The EIB is also active in other vital sectors that promote key regional objectives

such as manufacturing, research and development, and environmental protection.

In Serbia, we have provided € 500 million to Fiat Chrysler Automobiles (FCA) to

refurbish, modernise and expand the company’s automotive plant in Kragujevac.

This has increased production capacity from 30,000 vehicles to over 180,000

vehicles. Also in Serbia, we have provided € 200 million of financing to support

public sector research and development to promote innovation and science literacy

in the country. In Bosnia and Herzegovina, following the 2010 Sava river basin floods,

the EIB have financed flood defence facilities along the Sava river and its tributaries

to protect people, houses and industries in the area from future flood damage.

All of this work is assisted by the EIB’s central role in the EU’s Western Balkans

Investment Framework (WBIF). This unique partnership between the European

Commission, International Financial Institutions (IFIs), EU Member States and our

Western Balkans partners, is highly effective in supporting the region through

blending EU grants and IFI financing.

Stimulating SME development

The EIB does not only support infrastructure projects. Ensuring investment of small

and medium-sized enterprises (SMEs) is also a core part of our business. Western

Balkans countries have fewer SMEs than the EU, according to population size (30

SMEs per 1,000 people compared with 47 SMEs per 1,000). Yet, SMEs contribute

towards over 65% of value added in the region. These small businesses generally

need more support for longer-term financing where impediments are often related

to high collateral requirements.

The EIB helps by lending to local banks and other intermediaries, which

subsequently ‘on-lend’ to SMEs and midcaps. Since 2007, the EIB has provided over €

3.1 billion of financing to intermediaries in the region. In 2017 alone, the EIB Group

financed over 800 SMEs generating more than 45,000 jobs in the Western Balkans.

This work is reinforced by our participation in lending facilities such as the Western

Balkans Enterprise Development and Innovation Facility (WB EDIF). WB EDIF provides

financial instruments for SMEs such as loan guarantees. To date,

€ 275m has been invested into the programme and 4,600 SMEs are to be supported

under WB EDIF.

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EIB in the Western Balkans: how the EU Bank helps countries towards accession and

EU integration

continued

Accountability and cooperation with other European institutions

We strive to demonstrate to EU citizens that we have their best interests at heart and

are accountable to them. We are committed to good administration and delivering

positive results as laid out in our corporate responsibility. Our robust accountability

framework ensures the right to be heard and the right to complain by any EIB

stakeholder who believes we have failed to honour these commitments, for example

through the Bank’s Complaint Mechanism.

In line with good governance, we strive towards constant improvement in all aspects

of performance, and our Operations Evaluation (EV) forms an important part of this.

EV carries out independent ex post evaluations of EIB and EIF activities, looking at

relevance, effectiveness, efficiency and sustainability, with two aims:

Accountability: to assess whether our activities have been in line with our

policy mandates and the strategies that have derived from them, and if these

activities have delivered as expected.

Lessons learned: identifying possible areas of improvement that can be

applied to Group activities to increase performance in the future.

Furthermore, we maintain close working ties with the other members of the family

of EU institutions in pursuit of the Union's objectives. In particular, we have a strong

and fruitful cooperation with our colleagues from the European Court of Auditors: in

accordance with Article 287(3) of the Treaty on the Functioning of the EU (TFEU), the

European Court of Auditors can audit loan operations under the mandate conferred

by the EU on the Bank, as well as the operations managed by the Bank that are

guaranteed by the general EU budget.

Financing for the future: going beyond the traditional projects

As we look ahead, the EIB Group will continue to support important projects in the

region. In 2016, the EIB launched the Economic Resilience Initiative (ERI), following

a request from the European Council as part of a joint response to the refugee

and migration crisis. ERI is addressing social and economic infrastructure gaps and

stimulating private sector-led growth by increasing the EIB’s financing in the Southern

Neighbourhood and Western Balkans from the € 7.5 billion already envisaged to € 13.5

billion over a five-year period.

ERI, alongside our other activities, represent the EIB’s continuous commitment

towards enhancing the prosperity of the Western Balkans. Our support will contribute

to the on-going economic and social stabilisation of the region. Moreover, in the

context of this year’s Bulgarian and Austrian Presidency’s of the Council of the EU,

which have placed the region’s enlargement as a priority, our support is fully aligned

with helping our Western Balkans partners on their paths towards EU accession.

Source: EIB

Zvezada Technology Parc Serbia

Architect: Predrag Jakovljevic

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

The EBRD and the

road to EU accession

Corridor Vc Zenica bypass in Bosnia Herzegovina.

Source: EBRD

Western Balkans: EU membership challenges creating opportunities

By Zsuzsanna Hargitai, Western

Balkans Directorate of the EBRD

While the approximation process between Turkey and the EU is currently

seeing little progress, preparations for membership of the European

Union are gaining momentum in the Western Balkans. The six countries

of the region – Albania, Bosnia and Herzegovina, FYR Macedonia, Kosovo,

Montenegro, Serbia – are making serious efforts to fulfil the Copenhagen

criteria. Thanks to its mandate, which combines investment with policy

engagement, the European Bank for Reconstruction and Development

(EBRD) is ideally placed to play an important role in this process.

The Copenhagen criteria, defined in 1993, are the rules that define whether a country

is eligible to join the European Union. They start with political criteria for guarantees

for democracy, human rights and the rule of law. Another key criteria is to have a

functioning market economy. The final key criteria is to have the administrative and

institutional capacity to take on the obligations of EU membership.

Bringing (potential)

candidate countries up to

gear to meet the criteria for

EU-accession is a challenge.

Almost all of these countries

have sought and continue

to seek external support.

Since 1990, the EBRD is an

important provider of such

support. Within the EBRD

Zsusanna Hargitai is, as

director, responsible for the

investments and assistance

provided to Western Balkan

countries. Her contribution

provides not only an

overview of what the

EBRD does in the Western

Balkan countries aiming for

EU membership, but also

insights in how this can

lead to concrete changes

on the ground or support to

specific organisations.

The approximation process is taking place on two levels: investment and

reforms aim to strengthen the economic performance of and governance

in the Western Balkans countries. The challenges are serious. For example,

the competitiveness of many firms remains below the levels seen in

previous accession countries. Productivity is often low and access to

finance is frequently difficult, especially for small private enterprises,

the most vibrant economic agents. After years of underinvestment, the

region’s infrastructure needs a massive overhaul. But this illustrates that

in every challenge there is also an opportunity: new connections can now

be built that will integrate the Western Balkans ever more effectively into

global trade flows.

Investment

The EBRD is a leading investor in all EU pre-accession countries, with

a strong local presence and a track record of operating efficiently and

effectively. We invest in all sectors of the real economy, and also in reliable

municipal services and transport which contribute to improving the lives

of millions of people. In the Western Balkans alone, our total cumulative

investments to date amount to €10.7 billion in more than 600 projects,

the majority of these in the private sector.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

The EBRD and the road to EU accession

continued

Our work benefits from a longstanding cooperation and strategic

partnership with the European Union, one of the EBRD’s founding

shareholders and its largest bilateral donor. In many EBRD investments in

the Western Balkans and Turkey we blend our financing with EU grants.

During the period 2014-2017, the EBRD signed a total of €284.6 million in

IPA grants, leveraging such grants to achieve over €3 billion of investment.

Through the EBRD’s participation in the Western Balkans Investment

Framework (WBIF), which pools resources from the EU, 20 bilateral donors,

recipient countries and financial institutions, we focus on transport

and infrastructure projects, greener economies and on advancing the

competitiveness of small and medium-sized enterprises (SMEs). Good

transport infrastructure is vital for well-integrated economies to boost

their regional and international trade.

The Western Balkans economies remain far behind EU countries in energy

efficiency: when measured per unit of GDP, the six countries consume on

average 37% more than the EU average. The EBRD provides funding and

policy engagement to address this challenge.

EBRD environmental projects, again combining investment with policy

measures, help improve standards in the countries of Western Balkans

and progress them towards EU acquis in the areas of wastewater and

solid waste management. Now all capitals in the region have joined the

EBRD’s Green Cities programme, leading to strategic plans and prioritised

investment to clean up cities and improve the everyday life of their

residents.

SMEs are crucial for the economic success and prosperity of the EU

accession countries. However, access to finance remains a major

obstacle for their growth and competitiveness, together with a lack

of adequate business skills and standards. The EBRD, with EU funding,

tackles these issues by providing finance and advice. The EU-EBRD SME

competitiveness programme is being rolled out across the region.

The EBRD is also seeking to address specific, underserved SME market

segments. The Bank’s specially designed ‘Women in Business’ programmes

combine loans with the provision of know-how tailored to promote

women’s entrepreneurship by helping women-led small and medium-

sized enterprises.

Policy engagement

The challenges that EU accession countries face are not only economic.

Weak institutions, insufficient transparency and a difficult business

environment are widely recognised to be key factors that are holding

back the region’s economic development. The EBRD is addressing these

issues head-on.

We do this through technical assistance and business advice on adopting

EU standards and through policy reform dialogue to advance efficiency

and transparency in public institutions. With our Investment Climate

and Governance Initiative the EBRD promotes reform initiatives in areas

of economic governance that affect the private sector by improving the

investment climate.

Example in transportation

The EBRD is working with the

EU on the upgrade of the Tirana-

Durres rail line and a new link to

Tirana International Airport in

Albania, as well as Corridor Vc in

Bosnia and Herzegovina, a vital

artery that connects the Western

Balkans with western Europe.

Between 2018 and 2020, the EBRD

will invest up to €700 million in

Corridor Vc alone.

Examples in energy

The EBRD promotes energy

efficiency in industries and

residential buildings, through

EU-supported credit lines under

Green Economy Financing

Facilities, in cooperation with

local commercial banks. The most

recent example is in Serbia, where

in September 2018 we signed

with UniCredit Bank a Dinar 600

million loan for investments in

private homes to improve energy

performance and generate savings.

In Bosnia and Herzegovina, thanks

to an EBRD loan and WBIF grant,

the city of Zenica will refurbish its

hospital, which cares for 300,000

patients a year, by introducing

energy saving and anti-flooding

measures. The investments

will result in energy savings of

more than 60% and reduce CO

emissions by up to 80%, while

patients will receive better service.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

The EBRD and the road to EU accession

continued

In the Western Balkans we have over 30 such projects in a wide range

of areas: encouraging transparent public procurement, establishing

platforms for public-private sector dialogue, improving governance in

state-owned enterprises, streamlining business inspections, building

judicial capacity, introducing alternative dispute resolutions system

(including commercial mediation), and more.

Enhanced cooperation stimulated through harmonisation

While many investment in climate challenges in the Western Balkans

are national in scope, there is a strong rationale for a complementary

approach that promotes regional convergence as a way to address

shared obstacles. The harmonisation of laws and practices across

the Western Balkans countries will promote enhanced regional

cooperation and integration, as well as supporting the governments’ EU

approximation goals, including in the context of developing a Regional

Economic Area and single ‘investment space’ for the region.

A concrete example of how we deliver is the

Regional Investment

Platform

(www.investinsee.com),

a new electronic one-stop shop for

foreign investors interested in the Western Balkans. It was developed by

the regional chamber of commerce, the Chamber Investment Forum,

established in July 2017 and bringing together the national chambers

of the six Western Balkans countries. The goal is to facilitate market

access and raise the region’s attractiveness to foreign direct investment

which remains behind inflows which have been registered in regions

with similar. For the EBRD this is a signal to deepen our engagement

and work to attract more investors. This is also why we are pleased to

be holding our 2019 Annual Meeting and Business Forum next May in

Sarajevo, where we expect to welcome more than 2,000 business and

other guests to discuss investing in the Western Balkans.

Example in public

procurement

We worked with the Serbian

government to support the

reform of public procurement and

strengthen the institutional capacity

of Serbia’s Republic Commission for

the Protection of Rights in Public

Procurement Procedures. In Albania,

the EBRD is providing capacity-

building in the Prime Minister’s

Office, the Albanian Competition

Authority, and the Bank of Albania,

on corporate governance in the

banking sector. In addition, the

EBRD has supported anti-corruption

training for public officials, in

cooperation with the OSCE.

Tunnel construction for the Corridor Vc Zenica bypass in Bosnia Herzegovina

Source: EBRD

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

‘Enlargement process

as occasion for the

EU to reinvent and

reform itself’

Interview with

David McAllister, Member of

the European Parliament

By Gaston Moonen, Directorate of the Presidency

Source: EP

MEP David McAllister chairing the AFET Committee during the vote on EU-US relations in the AFET Committee meeting of 28 June 2018

The ECA reports on EU Pre-accession Aid are of particular interest to EP’s Committee on Foreign

Affairs (AFET). What does AFET do with ECA reports on this topic and what are an MEP’s view on

the enlargement process? David McAllister, Chair of the AFET Committee, gives his perspectives on

the work of his committee, the enlargement process and the use that the EP can make of ECA audit

reports. And he also shares his views on the looming UK withdrawal from the EU

The global village and its European neighbourhood

Your political roots have been in local and regional government. Can you

elaborate on your specific interest in international relations, what is your drive

for that?

I grew up in West-Berlin as the son of a German mother and a father who

was a civil servant in the British Military. Thus, my life was affected by foreign

politics, especially by the conflict between East and West, at an early age. As

a young politician, foreign relations have regularly crossed my path. Later

on, as Prime Minister of Niedersachsen, European Affairs and international

politics had a major impact on my work.

In a broader context and from the EU’s point of view, foreign relations are

becoming more important by the day. The EU’s security environment is

more volatile, unpredictable, complex and ambiguous than at any time

since the end of the Cold War. Projections anticipate that the EU will account

for only 5% of the world population in the 2050 horizon, compared to

13% in 1960. No single EU Member State can effectively respond to global

challenges on its own. It is high time to implement our Common Foreign

and Security Policy (CFSP) tools, instruments and policies to enable the EU

to respond to external conflicts and crises, build partners’ capacities and

protect the European Union.

“

... the EU will account for only

5% of the world population

in the 2050 horizon,

compared to 13% in 1960.

No single EU Member State

can effectively respond to

global challenges on its own.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Interview with David McAllister, Member of the European Parliament

continued

You are also active in the Delegation to the EU-Serbia Stabilisation and

Association Parliamentary Committee (SAPC). How does this help you in your

position towards the candidate countries of the Balkan countries as far as EU

accession is concerned?

The SAPC meets twice a year and I always find the exchange with our

Serbian counterparts particularly enriching. But the delegation's work goes

beyond these bi-annual meetings. The delegation is actively engaged in

the enlargement process and puts a special focus on helping Serbia on its

ambitious path towards the European Union.

ECA reports helping AFET Committee members making informed

choices

Earlier this year the ECA published its special report 7/2018 on pre-accession aid

to Turkey and in 2016 it published a meta audit report concerning the Western

Balkans - special report 21/2016. Were these reports useful for the activities and

deliberations for AFET, what did AFET do with them?

The ECA reports were very useful for our work indeed, as they provided

evidence as to what works and what doesn't in our cooperation with Turkey

and the Western Balkans, as well as concrete suggestions for improving it.

The reports featured prominently in the Strategic Dialogue between the

European Parliament and the Commission/EEAS on the programming of IPA II

funds for the second half of the current multi-annual financial framework that

took place in March this year. The findings have also been used in the context

of AFET's annual reports on the enlargement countries.

What would you consider to be useful topics to be audited by the ECA and useful

for AFET’s work?

The reports by the ECA are already very useful for our work in AFET.

Especially the audits that concern the enlargement countries. Our focus

in the Committee is on the Western Balkan countries and the ‘wider’

neighbourhood in geographic terms. As regards thematic priorities, AFET and

its sub-committees deal with a wide range of issues, such as the promotion

of democracy and human rights, security and defence and migration. Every

audit that touches upon these topics is of interest for our work.

Increasingly the ECA present its reports in meetings of specialised EP Committees,

like DEVE, ITRE or REGI, besides presenting them to CONT. Would you think this to

be useful also for AFET?

Presentations of specific reports in AFET could be very useful to increase

our Member's awareness of the ECA's findings and enable them to engage

directly with the ECA on the issues at hand.

In its special report 7/2018 on Turkey the ECA has raised some observations to the

lack of sustainable effects of EU aid on administrative capacity building in Turkey,

due to a lack of political will. What do you think of this main conclusion and

which actions do you think the EU can undertake to improve this, to leverage its

influence to improve the situation in Turkey?

The view that the lack of political will has had detrimental effects on the

effectiveness of EU assistance in critical areas such as administrative capacity

building, rule of law and fundamental rights is widely shared in the Foreign

“

The ECA reports were very

useful for our work indeed,

as they provided evidence

as to what works and what

doesn't in our cooperation

with Turkey and the

Western Balkans, as well as

concrete suggestions for

improving it.

“

Presentations of specific

reports in AFET could be

very useful to increase our

Member's awareness of the

ECA's findings and enable

them to engage directly

with the ECA on the issues

at hand.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Interview with David McAllister, Member of the European Parliament

continued

Affairs Committee. I share the report's recommendation to make stronger

use of conditionality in the funding for Turkey. In addition, I think it is

important to continue with the increased focus on supporting Turkish civil

society.

As AFET Chair you also contribute to the Conference of Committee Chairs

providing suggestions to the ECA on its work programme. How can the

ECA help MEPs in the policy-decision making process regarding future

enlargements and EU external actions as such?

The European Court of Auditors reports are already very valuable for our

daily work. EU financial management and the promotion of accountability

and transparency are of utmost importance especially in the enlargement

policy. A country that is unable to use EU funds in accordance with the

relevant EU rules and regulations is not ready to join our Union.

Enlargement process as opportunity for EU reform

Where do you see the pre-accession process going for the near future, also

in view some countries objecting further enlargement, even though the

European Commission President Juncker has suggested that Serbia and

Montenegro will be ready to join in the next few years?

While some talk of 'enlargement fatigue', I see a renewed focus and

understanding of the strategic importance of the enlargement process

among European decision-makers. The upcoming years are decisive for the

future of the Western Balkans and that of the EU itself. The enlargement

process is an occasion for the EU to reinvent and reform itself. Enlargement

is a democratic process that has no fixed dates – it is based on efforts

and progress, and a once frontrunner can turn into a laggard or the

other way round. A historical reconciliatory breakthrough and progress

demonstrated by FYROM along with immense reform efforts by Albania

are paving the way to opening accession negotiations with them next

year. I do trust that Montenegro and Serbia will redouble their reform

efforts and the remaining countries will advance on the reconciliation and

reform path. As the renewed EU engagement brings tangible benefits to

the citizens of the future EU members, we must do more to communicate

the good work of the EU in the Western Balkans and to better explain the

benefits of years. Although we have seen some positive signals in the last

few weeks, the rhetoric needs to be underpinned by concrete measures in

order to allow us to get out of the current deadlock.

Being from German and Scottish origin you are, like many Europeans, a

European with more than one nationality, or at least influenced by different

environments. What are your views on the current Brexit process and what

does it mean for you?

Brexit is a historic mistake! It will have severe consequences for the British

people and for its economy. However, we have to respect this sovereign

decision. The task is now to organise the disentanglement of the UK from

the EU's institutions and policies, and to agree on a new partnership. The

United Kingdom has been an EU member for 45 years. We share common

values and have a number of common interests. As a member of NATO,

the G7 and the UN Security Council, the UK should remain an important

economic, political and strategic partner of the EU.

“

I share the report's

recommendation to make

stronger use of conditionality

in the funding for Turkey.

A country that is unable to

use EU funds in accordance

with the relevant EU rules

and regulations is not ready

to join our Union.

“

The enlargement process

is an occasion for the EU to

reinvent and reform itself.

“

Brexit is a historic mistake!

It will have severe

consequences for the

British people and for its

economy.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Capacity building in EU candidate countries

in the area of financial control: some

personal experiences and thoughts

By Jan Pieter Lingen, expert on capacity building in EU candidate countries

Source: TCA

Capacity building for administrations and

good governance are one of the issues

looked at by ECA auditors when it comes

to EU Pre-accession Aid. For several years,

and following his retirement from the

ECA, Jan Pieter Lingen has contributed to

projects that aim to build up administrative

capacity, often in the audit and finance

sectors, through ‘SIGMA’ projects organised

by the OECD and similar activities. He looks

back, elaborating on what these capacity-

building projects aimed for and what they

did – or did not – achieve.

Jan

Pieter Lingen meets Recai Akyel, President of the Turkish Court

of Accounts in Ankara in 2013

Getting to work with Pre-accession Aid and candidate countries

My first encounter with pre-accession aid and capacity building in candidate

countries was when I joined the ECA in September 2000 as Head of ECA Member

Maarten Engwirda’s private office. At the time, Maarten Engwirda was responsible

for the audit of pre-accession aid – although not

all

pre-accession, aid since

pre-accession aid in the structural funds area, for example, fell under the audit

responsibility of the ECA Member responsible for auditing structural funds. I recall

that this situation regularly led to discussions on how to coordinate audit scopes

and activities between the different teams.

The then ECA President, Jan Karlsson, was an enthusiastic supporter of

establishing good relations with Supreme Audit Institutions (SAIs) in candidate

countries, and he visited all of them, often with Maarten Engwirda. I had an

opportunity to accompany them on most of these visits. It was a very interesting

experience to witness the general atmosphere of hope and progress, and the

willingness of candidate countries’ SAIs to invest in a better future, as well as

the ECA’s commitment to assist in these efforts, which included an internship

programme for staff from those SAIs.

The European Commission and the Organisation for Economic Cooperation

and Development (OECD) had jointly developed an initiative known as

SIGMA

(Support for Improvement in Governance and Management). The SIGMA

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Capacity building in EU candidate countries in the area of financial control: some

personal experiences and thoughts

continued

programme, which is based at the OECD and financed by the Commission, aimed

to support the capacities of the governments of EU candidate countries. One of

its initiatives was to organise workshops for auditors from candidate countries’

SAIs, and I was one of the ECA staff that assisted with those workshops. Later, I

also became involved in peer reviews of SAIs of (potential) candidate countries,

which were also carried out by SIGMA at the request of the SAIs concerned.

This contributed much to my understanding of the problems facing the audit

institutions in modernising their approach, methodology, communication policy

and organisation, and of course in the audit environment where they had to

carry out their work.

Practice what you preach

Interestingly enough, the accession criteria formulated by the Commission

and agreed by the Council were based on the principles of a modern public

financial management and control system and audit approach that were

non-existent even in some of the EU 15 Member States at the time. This led to

thought-provoking discussions between representatives of Member States and

candidate countries, for instance in the Contact Committee for financial control

organisations in Member States and candidate countries: ’Why don’t you do

yourselves what you demand from us?’ Jan Karlsson was rather upset that in his

home country, Sweden, no independent SAI existed at the time, while he had to

emphasise the importance of constitutional independence for SAIs during his

visits to candidate countries. A case of practise what you preach!

The fact that the SAIs’ organisational set-ups were not always very efficient or

effective raised comparable questions about the ECA’s own set-up. For instance,

when I participated in a peer review of the Bulgarian SAI in 2006, I concluded

that their collegial organisational model was not well suited to the challenges

they faced, which made me doubt whether a similar organisational set-up was

appropriate for the ECA itself. I admired the courage of the candidate countries’

SAIs in volunteering for peer review. At the time, this was not yet accepted as

good practice by many EU SAIs; indeed, it took some time and a considerable

effort for the ECA to acknowledge the usefulness of the concept for itself.

EU Membership as catalyst for change

Overall, my impression was that the candidate countries’ SAIs, and also the

relevant departments of those countries’ ministries of finance, were committed

to establishing a well-functioning public financial management and control

system, and were working hard to get there. The prospect of EU membership

served as a catalyst to promote change, and I was happy to play a very modest

role in this process. I found it personally enriching to meet colleagues and to

exchange knowledge and experience. The network of liaison officers related to

the EU Contact Committee played a stimulating role and supported many of the

activities designed to assist the candidate countries’ SAIs: the atmosphere was

positive, with lots of work in prospect but a commitment to make things happen.

My hope was that this ethos would remain after EU accession, and that it would

inspire the remaining candidates and potential candidate countries.

My expectation of continued capacity building was one of the reasons why I

continued to work for SIGMA in the Western Balkans and Turkey after I retired

from the ECA in 2011. I became involved in various activities related to capacity

building in candidate countries. I carried out assessments of SAIs; assisted in a

project to establish internal audit in Turkey; was involved in a project in Serbia to

stimulate cooperation between internal and external audit; worked on projects

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Capacity building in EU candidate countries in the area of financial control: some

personal experiences and thoughts

continued

in Turkey and Serbia to improve effective relations between their SAIs and

parliaments; participated in a peer review of Montenegro’s SAI and another

of the SAIs in Bosnia and Herzegovina; assisted with the development of a

strategic development plan for Albania’s SAI; and advised on fine-tuning audit

law in Kosovo.* One of my last contributions was towards drafting a SIGMA

paper on the development of effective working relations between SAIs and

parliaments (OECD, SIGMA paper no 54, Paris, 2017).

Capacity building needs solid foundations…

Looking back, I confess that I may have been too optimistic about future

progress. Development is not, of course, an unimpeded march forwards; it is

a struggle. The model of a modern public financial management and control

system can only be successfully implemented in a well-founded and publicly

supported democratic state based on the rule of law. Unfortunately, this was

– and is - not always the case, either in the Western Balkans, or in Turkey. One

of the legacies of the wars in the former Yugoslavia is a political system based

on perceived victimisation, nationalism and ethnicity, against a backdrop of

corruption in the privatisation of former state companies. This means that

interests other than the general interest in establishing good governance

prevail. It is extremely difficult for SAIs to operate effectively in such an

environment. There was no war in Albania, but the other factors I mention are

equally valid. And the political developments in Turkey are well known: the

rule of law has in effect been abolished. The risks are that an SAI’s leadership

becomes politicised, its mandate restricted, its independence weakened, its

budget reduced, or its reports simply neglected. Several of these risks actually

materialised in many of the countries mentioned.

… and our support

Over the years, I have felt more and more disappointed that the path towards

development has been hindered by political interference and bureaucracy.

The pace of development has slowed considerably, and there have been many

setbacks. I feel sorry for the colleagues with whom I was in close contact. They

were very willing, and committed to the professional development of their

institution and to good governance in general. They have every reason to be

frustrated by the sometimes very slow pace of development. I am still shocked

by a meeting I had with a former ECA intern in Ankara, who was suspended

after the aborted coup in 2016. After a couple of months, he was cleared of

supporting the suspected perpetrators of the coup, but his career was over.

My sympathy is with the auditors and other finance professionals who are

still trying to make the best of the situation – and who struggle to make any

progress. They deserve our strongest support!

*This designation is without prejudice on status and is in line with UNSCR 1244 and the

International Court of Justice opinion on the Kosovo declaration of independence.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

The Western Balkans parallel performance

audit project: boosting regional cooperation

between national audit offices

By Jussi Bright, Investment for Cohesion, Growth and

Inclusion Directorate

During the last two years the ECA, together with

the Swedish National Audit Office, successfully

facilitated a performance audit project on

public procurement in the Western Balkans. The

audit work was conducted by the six Supreme

Audit Institutions (SAIs) of Albania, Bosnia &

Herzegovina, the former Yugoslav Republic of

Macedonia, Kosovo

, Montenegro and Serbia. Jussi

Bright, one of the key facilitators in the project,

elaborates on this project - the largest of its kind

ever carried out in the region - and how it has

enhanced the performance audit capacities of the

six participating public audit bodies. Also included

are statements from participants.

Source: ECA

Putting substance to the INTOSAI motto

Did you ever wonder what the Latin text in the INTOSAI logo

stands for? ‘Experientia mutua omnibus prodest.’ means ‘Exchange

of experience benefits all.’ The Parallel Performance Audit (PPA) I

facilitated on public procurement audit in the Western Balkans aimed

at putting this catchphrase into practise regarding performance audit

in South-East Europe. This demonstrates that the INTOSAI motto are

not empty words.

Overall project purpose achieved: From suspicion to success

Of course, the project was challenging. In the initial stages of this

project, there was quite some suspicion and resistance: can this

actually work? It should not be forgotten that on the one hand, not

that long ago, most of these countries were at war. As pointed out

by Hazim Sabanovic, Western Balkans liaison officer of the Swedish

National Audit Office, in his INTOSAI capacity building blog ‘the

participating audit offices were expected to work together, to talk to

each other and share information on government issues, to exchange

their experience and help each other to improve the quality of their

audit work.’ This was not necessarily within the comfort zone of some

of the participating SAIs.

Source: INTOSAI

* This designation is without prejudice on status and is in line with UNSCR 1244

and the International Court of Justice opinion on the Kosovo declaration of

independence.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

The Western Balkans parallel performance audit project: boosting regional cooperation

between national audit offices

continued

On the other hand, the region has a common history and culture

with same kind of social and government challenges as numerous

Commission’s reports on enlargement have indicated.

The key outputs envisaged for the project were:

carrying out parallel performance audits on public

procurement in all participating countries;

publishing performance audit reports by all participating SAIs

and a synthesis report;

exchanging experiences between the participants by among

other things carrying out peer to peer activities.

At the beginning, all six SAIs had to agree on the same audit topic,

which was public procurement. However, within this common audit

domain, each audit office could pick a specific topic depending on

national priority. For example, in Bosnia this was timeliness of the

procurement process in general but partly sparked by an incident

where the citizens did not receive their passports and could not travel

abroad due to failed tender procedures.

The six procurement reports produced were the following:

Country

Albania

Bosnia and Herzegovina

The former Yugoslav

Republic of Macedonia

Kosovo

Montenegro

Serbia

Name of the report

Overuse of negotiated public

procurement procedures without prior

publication of a contract notice

Timeliness of the public procurement

procedures in institutions of Bosnia

and Herzegovina

Lack of staff and established procedures

make public procurement less

effective at local level

Delays and cost overruns in

construction contracts

Planning the public procurement of

medical equipment

Efficiency and economy of the

negotiated procedure without invitation

to bid

Part of the statement made by Hazim

Sabanovic on the INTOSAI capcity

building bloc (see for complete

statement:

http://www.intosaicbc.org/

development-outside-the-comfort-

zone/

(…) We chose the hard way. After

exactly two years of work, in February

2018, we have published the Synthesis

Report on Public Procurement in

Western Balkans, with joint audit

findings and conclusions from six

participating SAIs. This is the biggest

such publication ever done in the

region. The media attention we

received was beyond ordinary. It started

with a ten minutes live interview in

prime time on the largest regional TV

network, which was then re-played by

a number of local stations, followed by

a number of newspapers articles and

radio broadcasts. Audit results were

presented at a regional prosecutors’

conference on public procurements.

Further results are yet to come. Each

of the six SAIs – even with different

audit scopes, all came to, more or

less, the same audit conclusions. This

makes the arguments presented in the

audit reports much stronger and more

difficult to ignore by the authorities.

The project was a success, the journey

was a very bumpy one, and there was

not a minute of comfort along the way.

Everyone had to compromise. Auditors

had to adjust and change everything

they usually do – from their work plans,

through their methodology, to the

structure and contents of their audit

reports. (…) What was driving us all?

Enthusiasm and energy within the

friendly Western Balkans audit group

that was, and still is, able to see beyond

the horizon of daily routine.

Project design and delivery: we are one but not the same

There are substantial challenges when managing parallel audit

projects. Unlike with joint audits, which have joint audit teams, identical

objectives, scope, methodology, and joint audit reports, parallel audits

are different. The teams and the reports are national. According to

ISSAI 5800 (‘Guide on cooperative audits’) the objectives, scope and

methodology are not the same but similar. The table below gives an

idea of the advantages and limitations of the parallel audit method.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

The Western Balkans parallel performance audit project: boosting regional cooperation

between national audit offices

continued

Advantages

Effective and efficient from donor

perspective: many countries at

the same time. New platform to

cooperate.

Regular workshops

create

networks

Workshop design ”hands-on”

Peer pressure, healthy competition

among participants

Adaption to local context

Flexible approach to different

levels

Make use of many auditor’s

experiences and perpectives

Challenges and limitations

Cooperation does not go as deep

into issues as bilateral projects

Vulnerable to staff rotation

A lot of planning and

communication

Constant progress monitoring

Institutitutional and political

obstables by SAI

Ensuring appropriate training to

all

Strong long term commitment

and resource investment from

SAIs

Feedback from Goran Mandić, Senior

Advisor, Performance Audit Sector, State

Audit Institution of the Republic of Serbia

All this should be taken into account when trying to progress a

number of different audits simultaneously.

For example, a lot of time was spend on audit plans discussing ‘what

a good plan looks like.’. Even to the extent that another line from a

popular Irish band came to my mind: ‘I still have not found what I am

looking for.’. Nevertheless, focusing the audit early enough paid off

later on at the conducting and reporting phase.

The other challenge was to manage some 25 performance auditors

coming from the six audit offices. They all had different backgrounds

in performance auditing, different skill sets and a different level

of English. The two working languages of the projects were Yugo-

Esperanto and broken English. The quality of the individual national

reports and the joint summary report, show the remarkable will power

of the participants to learn and share experiences among each.

According to Simon Sinek (author of the book ‘Start with Why’) there

are only two ways to influence human behaviour: you can manipulate

it or you can inspire it. I am tempted to say that the PPA project used

both, also manipulation but manipulation only in a non-pejorative

sense. For example, facilitators used peer-to-peer reviews to create

a healthy pressure among the participants. Nobody wanted to look

bad in these international gatherings, although it has to be said

participation was always on voluntary basis. Much of the inspiration

of participants both during and after the project comes from the

networks you create during the workshops and is documented in

some of the participant’s feedback.

The Parallel Performance Audit

project is an incredibly professional

experience. Besides the fact that

I had the opportunity to listen to

lectures and work with experienced

auditors of the ECA and the Swedish

NAO, I exchanged experiences

with colleagues auditors from the

SAIs of the countries participating

in the project. The epilogue is that

we gained new knowledge about

performance audits, new skills in

communication, and a plurality of

stored contacts.

I am proud that I was part of the

team of the State Audit Institution

of the Republic of Serbia in this

project, and I sincerely hope that

more of my colleagues participating

in a new project like this will feel

this experience. Until then I will try

to unselfishly share my experiences

from this project. I take this

opportunity to once again thank the

organizers and all the participants in

the project.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

The Western Balkans parallel performance audit project: boosting regional

cooperation between national audit offices

continued

Feedback from

Milan Milović,

Auditor, Audit Office

of the Institutions

of Bosnia and

Herzegovina

Feedback from

Katica Nikolovska,

Principle Auditor

and PPA II team

leader, State Audit

Office of the former

Yugoslav Republic of

Macedonia

The Parallel Performance Audit project

was something more than I expected.

Participation in such a project opened my

eyes. Besides gaining knowledge, getting

more experience in communicating and

learning to cope with stressful situations

that are characteristic for performance

audit, the main benefit for myself was

getting in touch with other auditors from

other SAI's and to stay connected. Even now,

I can send just a message to say hello or

congratulate someone because of a birthday

but also to ask for some advice and help

regarding current performance audits

This project was an incredible way for

learning from experienced auditors as well

as from sharing practices among the region’s

audit offices. There is only one ISSAI 300

(Fundamental Principles of Performance

Auditing) but I learnt that there are different

practices implementing it. As the common

synthesis report shows, we finished this

project as one. Facilitators shared their

knowledge unselfishly and guide us to

fulfill our audit goals. I liked the most the

constructive criticism at the peer-to-peer

review sessions regarding the different

stages of the audit process. What can I do

better? Is my audit plans and draft report

understandable for others? Sometimes the

workshop agenda was very intensive. Still, if

there is another chance for such a journey, of

course I would like to participate.

Sustainability is the most valuable outcome

At the beginning of the project, the key risk we identified was that knowledge gained by the participants

might not be institutionalised. Therefore, before starting this engagement, the ECA hosted a conference for the

Auditors Generals of the six participating SAIs to commit their top management to keep building a sustainable

performance audit function in their institutions. This commitment stayed valid to the end. The final common

workshop in in Belgrade in the summer of 2017 included two Auditors General, three Deputy Auditors General

and six performance audit managers. An individual workshop were organised during autumn 2017 on lessons

learnt and the way forward.

It cannot be emphasized enough that the buy-in of senior management was the key enabler to achieve good

project results. And the project results were even better than expected: subsequently two participating SAIs

have collaborated on their own as a direct results of the PPA project. From my point of view as a performance

auditor at the ECA, facilitating parallel auditing is an effective method to develop capacity and enhance

regional cooperation within the SAIs of the EU candidate and potential candidate countries.The network among

participants is alive and the headcount of performance auditors is growing. For example, in Serbia performance

audit started only in late 2012 by the appointment of Supreme State Auditor. Already the end of 2013 they had

seven employees, at the end of the PPA in autumn 2017 there were 15 persons. And their employment plan is to

have 19 employees! The sustainability of performance auditing in the region looks promising.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

How EU Pre-accession

Aid helped our SAI to

shape its future

Interview with Bujar Leskaj, President of ALSAI,

Albania’s Supreme Audit Institution

By Derek Meijers, Directorate of the Presidency

Bujar Leskaj, President of ALSAI

Source: ALSAI

When Albania submitted its application for EU membership in 2009, its national supreme audit

institution (SAI) decided to modernise and to align its working methods and procedures with

internationally recognised standards. To this end it participated in a twinning project, for which it

received training, guidance and advice from the SAIs of Poland and Croatia. Bujar Leskaj, President of

Albania’s Supreme Audit Institution (ALSAI), looks back at this experience and shares with us how his

organisation benefitted from it.

Has ALSAI received any EU pre-accession aid?

From the beginning of my mandate in 2012, it was clear that, for our SAI

to comply with the Copenhagen criteria (EU accession criteria) in the

field of external public audit, we had to modernise our organisation to

bring our audits in line with the INTOSAI standards.

To reach this goal, we asked the EU Delegation in Albania to support

us, and also re-activated our cooperation with SIGMA (Support for

Improvement in Governance and Management, a joint initiative of the

OECD and the European Union which helps third countries to strengthen

their public governance systems and public administration capacities).

SIGMA then started a training programme for our auditors in mid-2012

and established very good relations with the Commission’s Directorate-

General for Budget, which provided advice on the draft SAI law and later

also on the Instrument for Pre-accession programme (IPA).

In 2015, our efforts resulted in the grant of a twinning project worth

€ 2.1 million under the IPA for 2013. Which gave us another opportunity

to cooperate with the Supreme Audit Office of Poland (NIK) and the

Croatian State Audit Office (see box below). Two SAIs with which we

had already established very good working relations, since a group of

Albanian auditors had participated in a NIK training course on financial

audit and compliance audit procedures and risk assessment in July 2012.

“

it was clear that, for our SAI to

comply with the Copenhagen

criteria (EU accession criteria)

in the field of external public

audit, we had to modernise

our organisation ...

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Interview with Bujar Leskaj, President of ALSAI, Albania’s Supreme Audit Institution

continued

In addition to this, for many years already the ECA has been supporting

ALSAI auditors by providing internship opportunities. These projects

and exchanges give our auditors a unique opportunity to learn about

new audit approaches and gain valuable experience in other public

audit institutions, which is a substantial help for the SAI.

What were the main pillars of the twinning project?

The twinning experts analysed ALSAI's legal framework from the angle

of compliance with INTOSAI standards and adoptable models from

EU Member State SAIs, and provided us with practical guidelines for

implementing the new ALSAI law in specific areas and an action plan

for drafting subsidiary laws.

Our project partners also analysed ALSAI’s internal regulatory

framework and suggested reviewing and amending it in accordance

with the new ALSAI law, which provides new approaches for

compliance, financial and performance audits. They assessed the

regulatory acts and concrete practice in the area of ALSAI’s relations

with Parliament, and drafted a guideline on institutionalising those

relations and a plan for implementing the guideline. Finally, they

analysed the legal framework governing our practice when following

up the implementation of our recommendations.

Did you also develop pilot audits during the twinning project?

Yes, we tested the performance and financial audit manuals in a pilot

of four performance audits, three financial audits and one IT audit.

These audits were performed under the supervision of Polish and

Croatian experts, who lent their support during the planning, evidence

gathering and reporting stages, after which they reviewed the progress

made with our audit teams.

“

These projects and exchanges

give our auditors a unique

opportunity to learn about

new audit approaches ...

Twinning project between ALSAI and the Supreme Audit Office of Poland (NIK) and

the Croatian State Audit Office

Main pillars:

analysis of gaps in the new SAI law, identification of possible barriers to implementing the law;

development of proposals for the institutionalisation of ALSAI’s relations with Parliament;

review, update and development of performance, financial and IT audit manuals;

development of an audit methodology and approach for audits of financial statements;

development of an overall strategy for audit planning.

Main outcomes:

improved audit methodology in the fight against corruption and fraud;

adoption of a sustainability plan for the period after the twinning project;

implementation of an audit management and documentation system;

identification of the desired skills and necessary components for the auditor certification procedure;

extensive training of ALSAI auditors and implementation of professional development and professional

training procedures.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Interview with Bujar Leskaj, President of ALSAI, Albania’s Supreme Audit Institution

continued

During these pilots, our auditors gained substantial valuable

experience in the field of performance, financial and compliance

audits, the fight against corruption and fraud, quality control and

assurance procedures, policies for communicating the results of audit

to the public and enhancing transparency, and human resources

policies aimed at increasing the professional capacities of auditors.

What are the most important lessons ALSAI learned during the

project?

Thanks to the experience gathered during the project, especially

with regard to the development of ALSAI’s methodology for

drafting strategic and annual plans, we prepared and launched the

ALSAI Development Strategy 2018-2022, which strongly expresses

our ambition and determination and projects ALSAI as a model

organisation to serve citizens for years to come .

So the twinning project was a valuable and successful experience

for ALSAI?

I think it was very successful indeed! The EU’s pre-accession support via

the twinning project helped us achieve the six main objectives of our

Development Strategy 2013-2017 – and four in particular: to amend

ALSAI’s legal and regulatory basis in accordance with international

standards and European good practices; to increase audit capacity-

building and audit quality; to increase the quality and number of

performance audits; and to re-engineer the use of IT in audits and

develop IT audits. So I think we can safely say that the substantial

support the EU has provided thus far on different levels has helped us

a great deal in modernising our capacities, consolidating our present

and shaping our future.

“

... the substantial support the

EU has provided thus far on

different levels has helped us a

great deal in modernising our

capacities, ...

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Audit authority on IPA funds: helping the

country to move towards accessions

From left to right: Dennis Wernerus, ECA, Adem Curi, General IPA Auditor, Hannu

Takkula, ECA Member, Liman Muhadziri, Deputy general IPA Auditor, Turo Hentilä,

ECA, Ivan Ignjatov, Assistant IPA Auditor, Jussi Bright and Helka Nykänen, ECA

Interview with Adem Curi,

Director of the Audit Authority

for the audit of IPA in the former

Yugoslav Republic of Macedonia

By Gaston Moonen,

Directorate of the Presidency

To ensure that EU Pre-Accession Aid is well spent, both

regarding compliance and results, the Commission has

required candidate countries to set up audit authorities

at national level for the audit of the Instrument for Pre-

Accession Aid (IPA). Adem Curi is the General IPA Auditor and

happy to explain what his organisation – the Audit Authority

for IPA of the former Yugoslav Republic of Macedonia - does.

Acting as auditor for both Commission and national government

There are several players when it comes to the management of EU

Pre-accession Aid: at EU level, at national level of the recipient country

and also at regional and/or project level. The same goes for the audit

pyramid created to ensure accountability on what is done with the

EU funds provided. At national level an important player for both the

European Commission and for the national Government, is the Audit

Authority for IPA. Adem Curi: ‘We report to both the Commission and to

the Government, including to the different Directorates General of the

Commission for the particular components we have.’ Together with his

colleagues Liman Muhadjiri, Deputy General IPA Auditor, and Ivan Ignjatov,

Assistant General IPA Auditor, he visited the ECA in April 2018 to exchange

information and learn more about ECA audit methodology and approach

when it comes to auditing the Instrument for Pre-accession Aid (IPA); and

in search for closer cooperation.

Together with his two colleagues, Adem Curi explains how and why the IPA

Audit Authority was set up in his country. ‘We were established in July 2007

within the general framework of the national Supreme Audit Institution

(SAI), the State Audit Office (SAO). We were part of that office until 2011

and with the new requirements in the IPA legislation we had to operate as

a separate legal entity. As a result, we are now established as independent

audit body with a separate law reporting to the European Commission and

the government and thus separated from the State Audit Office, which is

working under Parliament.’ When asked how this affects his organisation’s

independence he explains: ‘We are auditing the IPA structure in our

“

... we are [...] reporting to the

European Commission and

the government and thus

separated from the State

Audit Office, ...

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Interview with Adem Curi, Director of the Audit Authority for the audit of IPA in the former

Yugoslav Republic of Macedonia

continued

country. We submit draft reports to the Government, the ministers are

aware of our findings. We have contradictory procedures, meaning that

Government can comment on our findings and then we have our final

report, which is not public. However, the Government does not approve

our Annual Report; we are independent in our audit work.’

His colleague Liman Muhadziri sets out how their organisation works:

‘We prepare an Annual Audit Work Plan, now regarding IPA II, we have

a Multi-Annual Audit Strategy and in this we cover all the parameters

of what we are going to audit. Based on the risk assessment we do, we

arrive at possible audit topics.’ He indicates that the results of their audits

are presented in one Annual Report. ‘We have different types of audits,

focusing on system audits, audit of operations and looking into the

efficiency and effectiveness of management control systems. ‘

When talking about the amounts his organisation has to audit, Adem

Curi gives an amount of € 622 million through the IPA I (2007-2013) and

€ 664 million through the IPA II (2014-2020). ‘The whole programme

of IPA for our country amounts to that. We are auditing this on an

annual basis according to internationally accepted auditing standards

(INTOSAI) with focus on risk assessment and sampling procedures. In

fact IPA II goes until 2020, like the Multiannual Financial Framework

does.’ He explains that in the audits his organisation also looks at the

sustainability of projects. ‘This is an important element in ensuring

effectiveness.’

Retaining good staff for IPA implementation

Discussing recent reports Adem Curi explains: ‘Recently we audited the

staff policy in the IPA structure of the Republic. An important finding

relates to the lack of qualified staff in the IPA structure. Staff needs to be

motivated to remain and work with IPA, but after couple of years they

leave and go to the private sector.’ He continues saying that they have

the same salary like other administrative civil servants while they need

to work in English and receiving the same salary. ‘We, as Audit Authority

report both in Macedonian and in English.’ He highlights the importance

of a good retention policy for staff working within the IPA structure to

continue working there. ‘This was one of the findings regarding the IPA

management structure and we made several policy recommendations

to better retain staff, since good staff is of key importance to ensure

effectiveness.’

Speaking about their own background, it turns out that all three know

the ECA rather well. Adem Curi further clarifies this. ‘We have all worked

in the ECA in its internship programme with candidate countries. ‘Ivan

was the first one in 2007, I was here in 2009. Each one of us stayed in

Luxembourg for 5 months, it was a good experience.’ Currently he heads

an organisation of in total 33 employees: ‘We are a small country, and

also a small organisation covering simultaneously several types of audit.’

That being said Adem Curi indicates that if the Commission would like

his organisation to audit a specific issue he most likely would do so. ‘The

Commission is a big stakeholder, in a way we are working for them. We

submit reports to them and if they have additional requirements for

audit coverage they can always ask us.’ He continues identifying where

most IPA funds toes to in his country and consequently, most of AA IPA’s

activities focus on. ‘We basically have five components for IPA funds:

transition and institutional building policy; cross border cooperation;

“

... the Government does not

approve our Annual Report;

we are independent in our

audit work.’

“

... good staff is of key

importance to ensure

effectiveness.

We have all worked in the ECA

in its internship programme...

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Interview with Adem Curi, Director of the Audit Authority for the audit of IPA in the former

Yugoslav Republic of Macedonia

continued

regional development; social policy and education; and rural and

agricultural development.’ He points out that each of the components has

several projects, some of which also directly benefit the EU. ‘For example,

a major project in regional development is the construction of the so-

called ‘motorway 10.’ This motorway is part of the pan-European corridors

and runs from Salzburg (Austria) to Thessaloniki (Greece).

Moving in the right direction

When it comes to what his organisation does regarding less tangible

issues, like the rule of law, Adem Curi refers to an audit they had done in

this area. ‘We will still have to see what the impact in the society will be.

But until now we can see that the institutions, which were rather closed

in the past, are more open now on what they do and adopting legislation

according to our key recommendations. Of course the implementation of

laws is always something to be seen, but I believe we are moving in the

right direction.’

When discussing the perspectives of accession for his country Adem Curi

is optimistic: ‘We recentsaw a more positive report from the European

Commission on this and we are waiting for the Council to give us dates

so our country can further progress.’ He also sees his optimism further

strengthened by words Commission President Juncker had said: ‘He

indicated that if there is no extension in the Western Balkans, there will

be another war in the Balkans. I believe that accession for Western Balkan

countries is an important step to avoid another civil war.’

In search for cooperation and training

When it comes to cooperation with other auditors Adem Curi and his

colleagues refer to the positive experience they had when working in their

SAO regarding the parallel performance audit on public procurement

issues. ‘We saw the positive impact of this on the auditors’ work. We want

to launch the idea of doing another parallel audit with audit authorities

from the whole region. I think it will have a good influence on our work,

improve it and we can develop our audit skills.’

He explains that the IPA Audit Authority has a mandate to audit IPA

funds, which the SAO does not have. ‘The more reason why we need to

strengthen our cooperation with other audit authorities set up by EU

Member States to audit the European Structural and Investment (ESI)

funds and the ECA. We can help the ECA when it comes to audit, we know

the EU regulations, the situation on the ground, and the ECA can build on

the work we have done. And we can learn from the ECA.’

In addition to discussing such cooperation, with the ECA using the IPA

audit authorities’ work as much as possible, Adem Curi finally highlights

another reason for his visit to the ECA. ‘We know the ECA and we would

like to have the opportunity to attend some trainings the ECA provides.

We know the ECA has a good programme for training auditors. And

we are very much interested in sending some of our audit staff to the

ECA for an internship, to learn from ECA auditors. Because they are the

most experienced in the whole of Europe when it comes to auditing IPA

funds.’are very much interested in sending some of our audit staff to the

ECA for an internship, to learn from ECA auditors. Because they are the

most experienced in the whole of Europe when it comes to auditing IPA

funds.’

“

... we can see that the

institutions, which were

rather closed in the past, are

more open now...

“

I believe that accession for

Western Balkan countries is

an important step to avoid

another civil war.

“

... the ECA can build on the

work we have done.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

ECA’s contribution to capacity building

in candidate country SAIs: providing

internships to share good practice

By Michael Pyper, Translation, Language Services and Publication Directorate

Since 1998, the ECA has each year welcomed auditors from the SAIs of EU candidate

countries for a five-month placement. The experience represents an opportunity for

them not only to advance their own careers, but also to experience a different audit

environment and disseminate what they have learned at their home institutions. Michael

Pyper spoke to Jovan Dabovic from Serbia, who has just finished his placement, and

Stanislava Gjoshevska from FYR Macedonia, who is about to embark on hers.

The programme: history and numbers

Once again this year, within the framework of pre-accession assistance, the ECA

welcomes a number of auditors from the Supreme Audit Institutions (SAIs) of

European countries that are currently candidates for EU membership: Albania,

the Former Yugoslav Republic of Macedonia, Montenegro, Serbia and Turkey. To

participate in the exchange, these auditors typically need a university degree plus

at least two years of professional experience in their home institutions, as well

as knowledge of English or French. The ECA puts candidates through a rigorous

selection procedure based on their biography, cover letter and subsequent

interview.

The exchange lasts for a period of five months. In order to ensure that their

home institutions benefit fully from their experience, auditors participating in

the exchange generally commit to spending at least a further three years there

following their return.

Through the placement programme, which started in 1998 within the framework

of pre-accession assistance, the ECA aims to provide auditors from the SAIs

of (potential) candidate countries with insight into the audit of EU funds. The

internship programme is a capacity-building tool that complements the ECA’s

support for the activities of the ‘Network of SAIs of Candidate and Potential

Candidate Countries’. Cooperation within the Network includes facilitating regular

exchanges of information, developing audit methodologies and professional

training, with the aim of achieving greater convergence in audit methodology and

audit practice.

In 1999, the ECA welcomed the first participant in the programme from a candidate

country SAI, namely Poland. Since then, 164 auditors, on average nine per year,

from 18 different countries have each spent five months in Luxembourg working

alongside ECA auditors to learn about the ECA’s methodology, further develop

their skills and gain valuable experience of working in an EU institution. During this

period, they may be placed in any of the ECA’s audit directorates. There they have

the opportunity to learn about and contribute to all aspects of an ECA audit, from

the planning phase and data analytics to on-the-spot visits and testing.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

ECA’s contribution to capacity building in candidate country SAIs: providing internships

to share good practice

continued

Over the years, the target population has changed considerably: up until the 2004 enlargement, the ECA

received 49 interns from the ten countries that joined the EU that year. The two subsequent enlargements

brought 29 interns from the three countries concerned. To date, 78 ‘ECA-trained’ auditors from the national

audit offices of 13 participating candidate countries have seen their countries become EU Member States.

The largest share of these interns (36 to date) has come from Turkey, one of the first countries to participate

in this programme, followed by the former Yugoslav Republic of Macedonia and Bulgaria, which have sent 17

and 13 auditors respectively.

interns

intern

interns

Trainees per (former) (potential)

candidate country. Source ECA

interns

intern

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

ECA’s contribution to capacity building in candidate country SAIs: providing internships

to share good practice

continued

Professional experience and good audit practice

The programme gives visiting auditors from candidate countries the opportunity

not only to further their own careers, but also to familiarise themselves with the

ECA’s audit approach and best practice, and to share their knowledge within their

home institutions upon their return. As Stanislava Gjoshevska, a Junior Auditor at

the SAI of the Former Yugoslav Republic of Macedonia (FYR Macedonia), who will

start her placement at the Court in October, explains: ‘The ECA is a prominent audit

institution which provides valuable opportunities to exchange views and share

experience and good practice in audit work.’

Asked what had motivated her to apply for the programme, Stanislava replied that it

was an opportunity to obtain as much training and practical experience as possible

at a prominent audit institution, exchange professional experience and improve her

audit skills. ‘In particular,’ she said, ‘I aim to broaden my experience in performance

audit, accountancy and EU law.’ She believes the knowledge and experience she

Stanislava Gjoshevska

gains at the ECA will help her to contribute to further upgrading

her home SAI and promoting consistent audit quality in FYR Macedonia.

Stanislava has been working for the State Audit Office of FYR Macedonia since 2014.

In her career to date, she boasts a broad audit experience, having been involved in

financial and compliance audits of public authorities and political parties, as well

as performance audits covering a wide range of fields such as agriculture, energy

and natural resources. She therefore brings plenty of relevant experience to the

directorate to which the ECA has assigned her, which deals with the ‘Sustainable use

of natural resources’.

Comparing notes and transferring knowledge

Earlier this year, for the April 2018 edition of the Journal focusing on training at the

ECA, I interviewed Jovan Dabovic, a Younger Advisor in Audit at the Novi Sad office

of the Serbian State Audit Institution. I recently caught up with him again, shortly

after his return to Serbia. He worked for five months at the ECA, during which time

he became an integral part of the ECA community. He derived maximum benefit

from his experience working in the audit chamber dealing with ‘Financing and

Administering the Union’, notably on reconciling of the budgetary accounts with

the EU budget as part of the team responsible for drafting the ECA’s annual report

chapter on the EU’s budgetary and financial management. This is not to mention his

contribution to the ECA choir and football team.

So what next for Jovan? Thanks to the experience of several of his colleagues who

came before him, Jovan arrived for his placement at the ECA well- informed about

the programme and knowing what he wanted to achieve. And now, in the same

way, he intends to pass on his knowledge and experience to his colleagues. Because

Jovan Dabovic

his work at the ECA on the reconciliation of accounts was closely related to what

he had done back in Serbia, his ‘ECA time’ gave him the chance to compare and

contrast methods and tools. Jovan, who has a keen interest in financial and data

analytics, particularly welcomed the opportunity to further develop his skills in this

area. For instance, he was happy to get to grips with the Audit Command Line (ACL)

programme, given that the Serbian SAI uses its competitor, which is called ‘IDEA’.

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ECA’s contribution to capacity building in candidate country SAIs: providing internships

to share good practice

continued

How will he transfer this knowledge? Jovan explained that, like the other Serbian

auditors who have returned from Luxembourg before him, he will provide the

president of the SAI of the Republic of Serbia with a written report on what he

did during the five-month period. This report covers points such as audit area and

tasks he was assigned to, what kind of audits he performed, whether he undertook

any missions, what training he received, and extra-curricular activities. Just as he

benefited from the informal advice of his colleagues before coming, Jovan will be

more than happy to offer the same help to his interested colleagues.

Making the most of the opportunity

Beyond any specific aspects of audit, however, Jovan has the following advice for

those making the journey after him: ‘Try to make the most of each opportunity

given to you. An internship at the ECA is a unique chance to improve your audit

skills, meet new people, practice languages (and not just English) and present

yourself in the best possible light.’

Stanislava, who will arrive on 1 October, is ready to follow Jovan’s recommendation.

She is very much looking forward to the challenge of submerging in the wealth of

cultures, traditions and diverse identities that Luxembourg has to offer. She adds:

‘I am eager to be part of an institution that offers the opportunity to work in a

diverse, multicultural environment, one that emphasises professional and personal

development and strives to improve the lives of millions of European citizens.’

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

ECA internship for auditors of candidate

countries: a portal for professional

development and…

a return to the ECA

By Jolita Korzuniene, Investment for Cohesion, Growth and Inclusion Directorate, and

Tomas Mackevičius, Private Office of Rimantas Šadžius, ECA Member

Since almost two decades the ECA offers internships to audit staff of national audit institutions

of (potential) candidate countries. What were the early experiences and, perhaps even more

interesting, what has been the impact of such internship. To know more on both accounts we did

not have to go far: two current ECA staff members started 17 and 15 years ago their internship,

went back to their national audit institution in Lithuania, and returned to the ECA. Jolita Korzuniene

works now as an ECA principal auditor and Tomas Mackevičius as attaché in a private office. Below

their personal account on why they started at the ECA back then and came back for.

My ECA traineeship in 2001: a stepping stone on several accounts

By Tomas Mackevičius

New kids on the block

Following the accession process of the new candidate countries

into the EU, in the year 2000, the ECA started inviting auditors from

the Supreme Audit Institutions (SAIs) of these countries for a five-

month internship. At that time, I was a young yet senior auditor

at the National Audit Office of Lithuania and among the first ones

interviewed and chosen by the ECA’s selection panel for an internship

starting on1 March 2001.

I can clearly remember my first day in Luxembourg – a grey and

chilly morning of the first day of spring with snow melting under my

shoes, everything was strange and unknown, juxtaposed with a very

warm reception by ECA staff and colleagues in the section to which I

was allocated . The section was called

PECO,

the French abbreviation

for the unit in charge of auditing the use of pre-accession funds for

candidate countries and other EU external aid. Indeed, in my case

the unit was very relevant for on-the-job training and extremely

beneficial for my future career

I was in the good company of three other interns from SAIs of

candidate countries (Cyprus, Latvia, Lithuania and Slovakia), with

whom I had the most remarkable time. I still remember that we were

very proud of an article with a photo that appeared on the front page

of the ‘Luxemburger Wort’ of Jan O. Karlsson, then President of the

ECA and us. With the four of us representing somehow the new wave

of Member States to join, the newspaper covered an item on the

audit interns from candidate countries. New for us, but also new for

them.

Insights into performance auditing

Besides doing new professional ‘discoveries,’ the most impressive

thing was working in a multicultural and multilingual environment,

which I still enjoy very much to this day. I highly appreciated the

support of the ECA colleagues for their guidance and kind support

Tomas Mackevičius

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

ECA traineeship for auditors of candidate countries: a portal for professional development

and… a return to the ECA

continued

in professional but also personal matters. I was impressed by the professional and

systematic way in which auditors performed their tasks. In comparison with my

national office, the ECA was particularly more advanced in auditing performance

issues. During my five months internship I learned a great deal on this in theory

and in practice, which I used a lot after going back to Lithuania.

One of the tasks I was assigned to was the audit of effectiveness of environmental

projects funded by EU Pre-accession funds. Some projects funded in Lithuania

were selected for an on the spot visit. After my return to the Lithuanian national

audit office, I continued with this audit by assisting the ECA audit team in auditing

projects on the spot in Lithuania. Moreover, some of the selected projects I

audited myself as a ‘national’ auditor, which resulted in a report of the Lithuanian

SAI and subsequently contributed to an ECA special report.

Back home on a fast-track career path

The internship has had a great influence on my future career and further

specialization in audit. Soon after my return to Lithuania, I got the position of

Head of Unit and later of Director of Department in charge of auditing EU pre-

accession and post-accession funds in Lithuania. The National Audit Office was

specifically assigned by law to audit EU funds within the control framework of the

EU. This meant that my team and I were charged with duties rarely performed by

other SAIs – the Certifying Body for EU agricultural funds and the Audit Authority

for EU structural funds with direct reporting responsibilities to the Commission.

With the work done in this particular role, and the impressive efforts made by my

former colleagues, the National Audit Office of Lithuania is now one of the leading

audit authorities in the EU when it comes to auditing the European Structural and

Investment Funds.

A certain highlight of my professional activity was my appointment to the post

of Deputy Auditor General in 2006 by the President of the Republic of Lithuania.

Subsequently, my audit responsibilities became much broader than EU funds,

which significantly enhanced my further professional development. Finally, in

2010, nine years after my internship, I came back to the Court as Head of the

Private Office of Rasa Budbergytė, then ECA Member, and I presently serve as

Attaché in the Private Office of Rimantas Šadžius, ECA Member, employing my

knowledge and experience for the benefit of the EU project.

Enabling professional evolution and triggering change

For me the internship proved to be an excellent tool that gives indispensable

opportunities to learn and develop. For me it was definitely a driving force

behind my professional evolution. Such internships also allow to build social and

professional networks, enabling the sharing of knowledge between different

people, institutions and countries, and even contribute to fostering developments

in SAIs. Last but certainly not least, a few long lasting friendships and very warm

memories remain invaluable.

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ECA traineeship for auditors of candidate countries: a portal for professional development

and… a return to the ECA

continued

Applying what I learnt at the ECA

By Jolita Korzuniene

A complex audit landscape

In 2003 I got selected for a five-month internship at the ECA. At that

time, I was working as a chief auditor at the National Audit Office of

the Republic of Lithuania. In October, I arrived in Luxembourg and

was assigned to the directorate responsible for auditing external

action, and within that the ‘Central and Eastern European Countries

and New Independent States Division,’ headed by Ossi Louko. I

joined the team of Lars Markström (my tutor) who was a team leader

for the DAS audit of the PHARE programme, the EU Pre-accession

instrument of those days.

Soon after my arrival, I saw that the audit practice and approach

at the ECA was quite different from my experiences in Lithuania.

In Vilnius the annual financial audit process focused on a single

auditee and analysed various budget lines and balances. At the

ECA the audits seemed more complex: the number of auditees

was rather substantial as the programmes involved many Member

States, a large number of different supported activities and various

implementing bodies.

I was involved in auditing the PHARE programme, the EU's initiative

that provided grant finance to support its partner countries to

the stage where they are ready to assume the obligations of

membership of the European Union. The audit team carried out

substantive testing of the PHARE 2000 Economic and Social Cohesion

programme, including in Lithuania. We audited beneficiaries and

the regional project-implementing units. At the rather early stage

of implementation of EU programmes in Lithuania, our visit was

sometimes stressful for the auditees. However, at a same time,

particularly for us, very useful, since we got many important

questions related to programme management clarified.

Applying ECA experiences back home

At that time the ECA only started implementing ASSYST I, the

ECA’s internal audit management programme. Our audit was a

pilot project to document missions and file working papers for

a first time on this IT system. I studied, with great interest, the

functionalities of the programme. It was very useful, since after my

return from the internship to the National Audit Office of Lithuania I

helped to develop a new audit documentation system there. Other

valuable experiences that stand out for me were participating in the

traditional workshop of the directorate, where I made presentations

on DAS audit missions and learned about experiences of other

colleagues, and the many trainings, enhancing my knowledge on EU

budget management.

The internship served favourably for my future professional

development and my career: soon after my return in Lithuania,

I was appointed as Deputy Director of the Performance Audit

Jolita Korzuniene

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

ECA traineeship for auditors of candidate countries: a portal for professional development

and… a return to the ECA

continued

Department. I got involved in the development of the performance audit

manual, preparation of the annual audit programmes and implementation of

the quality control procedures. Two years later, I lead the department dealing

with the preparation of the annual audit report on the national budget and

state debt. Here, my understanding about the systematic approach for

financial and compliance audit used in the ECA helped me to further develop

the methodological approach of state budget auditing.

Cooperative spirit for the benefit of EU programme management

Back on Lithuania, my best ECA memories were related to the friendly

atmosphere in the sector, which was the merit of all the staff working there.

I appreciated very much the help and heartiness of my dear colleagues,

especially Lars Markström and Tim Upton, my teammates. Professionalism of

the ECA staff was a good driver in my personal development.

Coming back to the ECA in 2009 was like coming back to the place where I

knew I would be feeling like home: nice colleagues, good working conditions,

and interesting topics. I worked for many years in the Transport and Energy

Performance Audit Unit and I continue working in the directorate responsible

for auditing EU Structural Funds. Starting with my internship I got to realise

how important it is to have close connections with national Supreme

Audit Institutions. We can learn a lot from each other and I believe that a

cooperative spirit – in the sense of working together - helps to improve the

management of EU funded programmes.

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Meeting of Central and Eastern European SAIs and the ECA, Luxembourg 21 November 2000

Roots of the cooperation

between ECA and candidate

countries’ SAIs: it all started

in the mid-1990s

Interview with Dirk Pauwels,

Private Office of Danièle Lamarque, ECA Member

By Gaston Moonen, Directorate of the Presidency

Following the fall of the Berlin

wall and the subsequent

historic changes in Central and

Eastern European countries,

the possibility of European

integration and even accession

to the EU began to dawn. In

the mid-1990s the ECA began

to reflect on how it might

contribute to such integration,

not only through auditing but

also by helping to build capacity

in its specific area of expertise,

external audit. Dirk Pauwels,

who joined the ECA at that time,

vividly recalls the ECA’s first steps

in assisting and cooperating

with candidate countries’ SAIs,

whether newly established

or eager to reform, in their

capacity-building efforts.

The beginnings of cooperation between the candidate countries’

SAIs and the ECA

Dirk Pauwels revisits the first steps towards cooperation taken

between 1994 and 1996: ‘Discussions between the EU and the Central

and Eastern European Countries intensified in view of accession

negotiations. EU budgets for technical and other assistance increased

in the region and so did our audit activities. Through the contacts

we had as external auditor with the national administrations, we

received multiple requests for cooperation with national external audit

institutions.’ He points out that the ECA had responded positively by

organising the first ever meeting with Central and Eastern European

SAIs, which was held on 23 October 1996 in Luxembourg. The

presidents of 12 SAIs were present, two of whom would later become

ECA Members: Anton Antončič of the Slovenian SAI and Janusz

Wojciechowski of the Polish SAI, who has been a Member since 2016.’

According to Dirk, the results of the meeting were first formulated in

a number of basic principles and priorities: ‘The presidents signed a

declaration whereby they agreed - on a voluntary basis - to develop

the audit cooperation with the ECA and also to find ways to develop

the capacity of their institutions. They agreed to prepare concrete

proposals for a next meeting.

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Interview with Dirk Pauwels, Private Office of Danièle Lamarque, ECA Member

continued

Putting intentions into practice

Dirk describs the prompt, concrete follow-up in the form of, what he

views as, rather impressive innovative actions: ‘After the meeting in

Luxemburg in 1996, the Polish SAI, the NIK, organised, together with

the ECA, a second meeting of Central and Eastern European SAIs.

This was in Warsaw in March 1998. I remember the very impressive

opening speeches of Bronislav Geremek, Minister of Foreign Affairs -

and convinced European - as well as that of the chair of the European

regional organisation of SAIs, Lubomir Volenik, President of the Czech

SAI. The 13 Presidents present decided to focus cooperation on two

aspects: firstly, the institutional strengthening of SAIs and, secondly,

the role SAIs could play in preparing their country to EU membership.’

Dirk cites some of the concrete actions agreed. ‘A number of SAIs had

questioned what convergence criteria should be applied on their

institution for EU integration. They had found little concrete guidance

in the INTOSAI [the global umbrella organisation for SAIs] documents

as these were of a general nature and contained no concrete tools for

institutional or capacity building. The Presidents therefore decided

to work on the definition of convergence criteria.’ He continues by

explaining that the participants had also agreed that professional

training was a prerequisite, if SAIs were to integrate effectively into

the EU: ‘So they decided to work on professional training strategies,

training programmes and training activities.’

Another specific issue concerned the matter of audit methodology:

‘One of the returning questions at the time was the necessity to

develop audit methodology and to agree on basic auditing standards

to be applied in a European environment. As I said, at that time –

and fortunately it improved a lot - INTOSAI standards only had a

very general character. Therefore, the ECA developed the European

Implementing Standards for the INTOSAI Auditing Standards.’ He

adds that these appeared to be very useful to colleagues in the SAIs,

where they were used extensively. ‘Therefore, the ECA translated the

document in[to] all the languages concerned.’

In Dirk’s view, another practical decision was taken during the

Warsaw meeting. ‘The presidents of the 12 SAIs of the Central and

Eastern European countries present and the ECA decided to establish

a permanent structure for cooperation. Similar to the Contact

Committee of European Union SAIs, this would consist of liaison

officers’ meetings and Presidents’ meetings.’

Looking into the implementation of the acquis

he second matter on which the 1998 Warsaw meeting focused was

that of the role SAIs could play in preparing their countries for EU

membership during the accession procedure. When discussing this,

Dirk recalls, ‘Yes, this was something very new to all. In fact, during the

accession process a SAI can play an active and positive role in verifying

the implementation of, for example, the

acquis communautaire

and

related aspects, thereby looking also into a country’s capability to take

on the obligations of EU membership. This also meant looking into

institutional capacity.’

“

... during the accession

process a SAI can play

an active and positive

role in verifying the

implementation [...] This

also meant looking into

institutional capacity.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Interview with Dirk Pauwels, Private Office of Danièle Lamarque, ECA Member

continued

He explains that, in order to achieve this and carry out an assessment,

the Presidents decided to start building up expertise, knowledge and

experience in these areas. ‘Guidance was prepared enabling interested

SAIs to apply an active approach in the accession process. Making such

guidance and sharing this [are] key elements of so-called ‘knowledge

sharing.’

The ECA’s specific role in SAI capacity-building

When it comes to concrete ECA action in the area of capacity building,

Dirk observes that the ECA took a rather practical approach. ‘I think

the ECA realised from the beginning that it does not have the capacity

nor the financial resources to be a driving force in this process. A lot of

the activities required different forms of technical assistance.’ However,

Dirk also points to another problem: ‘The typical technical assistance

financed by the Commission was provided by private companies which

had - and perhaps have - limited capacity and knowledge in the area

of public external auditing. Secondly, the technical assistance financed

by the Commission focused on national ministries and administrations

but it did not include SAIs. The ECA therefore supported the idea to

include SAIs in the pre-accession assistance programmes provided by

the Commission.’

Regarding the issue - with the Commission providing the financing -

who was to provide the expertise if the private sector could not offer

what was needed, Dirk replies, ‘The ECA suggested developing such

activities through SIGMA [Support for Improvement in Governance and

Management managed by the Organisation for Economic Cooperation

and Development], which could call on expertise from national SAIs

whilst receiving financial support from the European Commission. I

remember that the first stone of this support structure was laid during

an informal meeting in our old ‘antenna’ office in Rue de la Loi in

Brussels during a meeting between representatives of both the ECA

and the Commission, and Kjell Larsson of SIGMA. Later on Kjell Larsson

played a very important role in the development of capacity-building

projects and providing technical assistance for SAIs in candidate

countries.’

According to Dirk, besides supporting the initiative of setting up

SIGMA, the ECA lent experienced ECA staff to provide advice to any

SAIs interested, either via SIGMA or directly, on a limited basis. ‘In

addition, ECA expertise was provided by ECA staff going on more

long-term secondments to SAIs, mostly after a country had become

an EU Member. Such secondments still continue between EU SAIs, the

ECA receiving also secondments from national audit offices. And then

there is, of course, the internship programme with SAIs of [potential]

candidate countries. But I understand that this is covered more

extensively elsewhere in the ECA Journal.’

“

... the ECA realised from

the beginning that it does

not have the capacity nor

the financial resources to

be a driving force in this

process.

The ECA suggested

developing such activities

[providing expertise]

through SIGMA...

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

Reaching out

The Summer School in public auditing and accountability -

auditors and academics exploring data analytics

By Gilberto Moggia, Information, Workplace and Innovation Directorate

The ECA, the University of Pisa and the Association of

Chartered Certified Accountants (ACCA) jointly organised

the first ‘Summer School in Public Auditing and

Accountability’ in Pisa (Italy). The aim was to examine

emerging issues in data analytics, which appears to be a

powerful driver of change in audit. Gilberto Moggia, who

was heavily involved in setting up the programme and

rolling it out, provides further details.

Gilberto Moggia in Pisa

The School - a new learning opportunity for European auditors

To keep pace with innovation, auditors and audit organisations need to monitor

and understand emerging trends and technologies, which have potential not

only to improve, but often also to disrupt current audit practice. This is the

raison d’être

of the School: instead of focusing on consolidated audit techniques

and practices, the three organising bodies chose to design the School as a new

learning opportunity for European auditors, where the focus is on emerging

global issues that are particularly relevant for the future of the audit profession.

Data analytics is one such emerging issue and a powerful driver of evolution in

audit: before our very eyes, digital technology is changing the nature of audit in

both the private and public sectors. No doubt about it, digital technology has

revealed new audit opportunities that audit organisations can ill afford to neglect

if they want to remain relevant in changing times. But incorporating analytics

into audit is not without its challenges. One of the main challenges facing our

organisations is the lack of the necessary technical skills to analyse data flows.

In fact, making sense of data for auditing is a complex operation that means

combining diverse disciplines and skills which are not typically to be found in the

toolbox of professional auditors.

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The Summer School in public auditing and accountability - auditors and academics exploring

data analytics

continued

Auditors and academics exploring

opportunities and challenges of data

analytics

The 2018 edition of the School offered a highly

intensive immersion course in data analytics.

The instructors gave the 45 participants

original insights into current trends, focusing

on the practical implications for audit. The

ECA and its partners successfully brought

together a number of respected academics and

practitioners to speak on all the main aspects

of data analytics for auditing. We welcomed

instructors from the University of Pisa and other

leading universities, the EU institutions, the

OECD, SAIs and the private audit sector.

Participation was not restricted to ECA auditors.

The participants came from a wide range of

public audit organisations: 22 from the EU institutions (ECA, Court of Justice,

Commission and Investment Bank) and 18 from twelve European SAIs (Austria,

Belgium, Denmark, Estonia, Finland, France, Germany, Italy, Lithuania, Malta,

Sweden and Switzerland). We were also delighted to welcome three PhD

students from the University of Pisa and two private auditors.

The training objective: improving core analytical capabilities

The discussions in Pisa showed that some SAIs have been making considerable

progress in the area of digital audit. In general, however, the establishment

of core analytical capabilities is still in its infancy. Moreover, our organisations

do not yet readily share with each other the expertise essential for successful

data-driven audit. In this regard, Pisa represented a very good opportunity for a

fruitful exchange of knowledge and good practice, both among auditors from

a range of audit organisations and between academia and the audit profession.

In the course of the week, teachers and participants analysed the new audit

opportunities offered by data analytics, seeking to identify and assess the

related risks, evaluate methods and solutions, appraise tools and technologies,

and suggest how best to update our professional practice.

A learning path in six modules

Data analytics demands a rich mix of knowledge, methods and technologies,

all of which are necessary for processing large volumes of complex and

heterogeneous data for audit. To cover the main aspects of such a labyrinthine

topic, the course content was organised in six modules as follows:

Module 1 – Extracting value from data:

introducing participants to the main

aspects of the big data phenomenon: its overall importance and the main

opportunities and challenges of it, the IT implications and risks, and the legal

issues raised for public administrations by working with data;

Module 2 – Data analytics for auditing:

outlining the concepts and definitions

of data analytics in the context of auditing and the wide range of methods and

techniques needed for a successful implementation of data analytics in our

organisations;

2018 Summer School session in Pisa.

From left to right: Michael Kell (UK

NAO), Guiseppe D’Onza (University of

Pisa), Maggie McGhee (ACCA), Eduardo

Ruiz Garcia (ECA)

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

The Summer School in public auditing and accountability - auditors and academics exploring

data analytics

continued

Module

–Statistical

methods and techniques for data analysis: offering an

overview on the main statistical techniques for data analytics and on the specific

developments related to the use of big data for statistics;

Module 4 – Data-driven audit – case studies & field experiences:

opening the

floor to participants to present their results in data-driven audit practice;

Module 5 – IT methods and techniques for data analysis:

: introducing the

participants to the comprehension of the main IT methods for data analytics,

including those necessary for machine learning and predictive analysis;

Module 6 – Data mining and analytics - implications for the audit profession:

discussing the challenges for the audit Institutions of incorporating analytics into

audit and what public audit institutions should take into consideration when

planning and developing their new capabilities.

Pisa and beyond

It is impossible to summarise the richness of the week’s presentations and

discussions in just a few lines. However, it is worth emphasising two key messages.

Firstly, digital audit is about the efficient use of technology, but auditors do not

need to become software developers or computer programmers to take full

advantage. What they do need is to understand the key elements of the IT involved

(such as the functioning of algorithms) so that they can generate new kinds of

insights from data. It is essential for auditors to acquire some hands-on knowledge

and experience and a high degree of comfort in using technology to process and

analyse data.

Secondly, to successfully implement data analytics for audit it is crucial to

combine the skills of data analysts with the professional mind-set and approach

of auditors. To promote data-driven audit, the ECA and other SAIs should set up

multidisciplinary teams. With the help of data analysts, and powered by innovative

technologies, auditors will have the resources, tools and time to apply their

professional scepticism and judgement to generating new insights.

Data-driven audit is a new field now under development. Encouraged by the

participants’ very positive evaluation of the course, the ECA intends to continue the

work begun in Pisa so as to facilitate knowledge-sharing on innovative practices.

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

FOCUS

ECA publications in July-September 2018

Background paper

EU Auditors to examine VAT and customs duties in e-commerce

The European Court of Auditors is conducting an audit to find out how effectively the

EU is addressing the challenges posed by e-commerce in terms of VAT and customs

duties. They will examine the European Commission’s regulatory and control framework

for e-commerce and cooperation between Member States to ensure that VAT and

customs duties on e-commerce transactions are collected in full. The auditors have

today published a Background Paper on the collection of VAT and customs duties on

e-commerce as a source of information for those interested in the subject.

Click here for our report

Published on 05 July 2018

Briefing paper

The Commission’s proposal for the 2021-2027 Multiannual

Financial Framework

On 2 May 2018 the Commission published a package of legal proposals and

accompanying explanatory documents for the new Multiannual Financial Framework

(MFF) – a seven-year budget for the European Union for the 2021-2027 period.

In this briefing paper we focus on the proposed MFF Regulation, the MFF Communication

and the accompanying Spending Review.

Click here for our report

Published on 10 July 2018

Special Report N° 18

Is the main objective of the preventive arm of the Stability and

Growth Pact delivered?

The European Commission has exercised discretionary powers granted by the preventive

arm regulation very extensively with a view to reduce the adjustment requirements, both

by setting the implementation rules and in individual decisions.

We consider that the combination of the current matrix parameters, allowed deviations

and flexibility clauses cumulatively erode the target set in the Regulation which is to

achieve an average annual adjustment of 0.5 % of GDP over the cycle. This prevents that

the Medium Term Objectives of member states are reached within a reasonable period.

Particularly worrisome is very slow, or even absent adjustment in several member states

with high public debt ratio.

The implementation rules and Commission’s practice therefore need to be reviewed and

strengthened.

Click here for our report

Published on 12 July 2018

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

FOCUS

ECA publications in July-September 2018

Opinion No 1/2018

Opinion No 1/2018 concerning the proposal of 2 May 2018 for a regulation of the

European Parliament and of the Council on the protection of the Union's budget in case

of generalised deficiencies as regards the rule of law in the Member States

Click here for our report

Published on17 July 2018

Background paper

The Fund for European Aid to the Most Deprived (FEAD)

The European Court of Auditors is conducting an audit of the Fund for European Aid to

the Most Deprived (FEAD). The Fund seeks to help lift the most deprived people in the

EU out of poverty and foster their social integration by combining material and food aid,

along with specific advice and social inclusion measures. The auditors will assess the initial

set-up of the FEAD and examine whether the Member States’ programmes are effective in

targeting the most deprived. They will also review the performance measurement put in

place by the Commission to determine the Fund’s contribution towards meeting the EU’s

poverty reduction target.

Click here for our report

Published on 30 August 2018

Landscape Review

Putting EU law into practice: The European Commission’s oversight

responsibilities under Article 17(1) of the Treaty on European Union

Opportunities exist for the European Commission to further strengthen its oversight of

the way EU law is applied in the Member States, according to a new Landscape Review

by the European Court of Auditors. The review looks at the Commission’s oversight

activities and identifies challenges and opportunities ahead. It also points to the need

for transparency, accountability and audit in applying EU law.

Published on

3 September 2018

Click here for our report

Special Report N° 21

Cohesion policy: emphasis still on outputs rather than

resultsEuropean Union

Project selection procedures in Cohesion policy still emphasise outputs and spending

rather than results, despite a longstanding intention to improve matters, according

to a new report from the European Court of Auditors. Moreover, say the auditors,

shortcomings in monitoring make it difficult to assess the extent to which EU funding

has contributed to EU and Member State objectives.

Published on

4 September 2018

Click here for our report

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

FOCUS

ECA publications in July-September 2018

Special Report N° 22

Erasmus+: a successful European brand, but needs better

performance measurement

Student mobility under the Erasmus+ programme generates many forms of European

added value and has a positive effect on participants’ attitudes towards the EU,

according to a new report from the European Court of Auditors; countries would not

be able to achieve such effects acting alone. However, the auditors found that the

indicators used to measure the Programme’s performance should be better aligned with

its objectives. They add that application and reporting processes are still too complex,

despite some simplification.

Published on

6 September 2018

Click here for our report

Special Report N° 23

Air pollution: Our health still insufficiently protected

Air pollution causes great harm to European citizens’ health. Each year, about 400 000

people die prematurely due to excessive air pollutants such as dust particles, nitrogen

dioxide and ozone. For about 30 years, the EU has had clean air legislation that sets

limits to the concentrations of pollutants in the air. Nevertheless, bad air is still common

today in most of the EU Member States and in numerous European cities. We found

that European citizens still breathe harmful air mostly due to weak legislation and poor

policy implementation. Our recommendations aim to strengthen the Ambient Air

Quality Directive and to promote further effective action by the European Commission

and the Member States, including better policy coordination and public information.

Click here for our report

Published on

11 September 2018

Background paper

Enforcement of EU competition policy

The European Court of Auditors has today published a Background Paper on the

enforcement of the EU’s competition rules. Background Papers provide information on

ongoing audit tasks and are designed as a source of information for those interested in

the policy and/or programmes being audited.

Click here for our report

Published on

12 September 2018

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

FOCUS

ECA publications in July-September 2018

Special Report N° 17

Using Cohesion funds money should not become an end in itself

The European Commission and Member States should make more effective use of

Cohesion funding, according to a new report from the European Court of Auditors.

Delays in finalising the legal framework and slow progress with spending plans put

national administrations under pressure to use the money quickly, sometimes at the

expense of performance, warn the auditors. The Commission was late in addressing

spending difficulties in some programmes; however, its actions and those of the

Member States had a positive impact on absorption.

Published on

13 September 2018

Click here for our report

Special Report N° 20

The African Peace and Security Architecture:

need to refocus EU support

EU financial support for the African Peace and Security Architecture (APSA) has had a

poor effect and needs refocusing, according to a new report from the European Court of

Auditors. For many years, the APSA has been heavily dependent on donor funding and

EU support has been focusing on contributing to its basic operational costs rather than

on capacity-building measures, say the auditors.

Click here for our report

Published on

September 2018

EUU, Alm.del - 2018-19 (1. samling) - Bilag 15: Rapport fra Den Europæiske Revisionsret august/september 2018

ISSN 1831-449X

Political will is essential for accession progress

Perspective of EU membership important driver for

progress and reconciliation in Western Balkans

Auditing Turkey: from EU pre-accession to migration

management

‘Enlargement process as occasion for the EU to reinvent

and reform itself’

Capacity building in EU candidate countries in the area

of financial control: some personal experiences and

thoughts

EDITION

HIGHLIGHTS

COVER:

Fictitious car registration plates symbolising countries' aspirations for EU membership

Source: © ECA

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