The ECA’s statement of assurance opinions are based on objective evidence obtained from audit testing in accordance with international auditing standards. This is how we do our work.
Reliability of the accounts
Do the EU annual accounts provide complete and accurate information?
The EU budget is complex. Hundreds of thousands of accounting entries are initiated by Commission directorates‑general each year, which capture information from many different sources (including Member States). We check that accounting processes work properly and the resulting accounting data are complete, correctly recorded and properly presented.
- Evaluation of the accounting system to ensure it provides a good basis for reliable data (complete and accurate).
- Verification of key accounting procedures to ensure they function correctly.
- Analytical checks of accounting data to ensure they are presented consistently and appear reasonable.
- Direct checking of a sample of accounting entries to ensure the underlying transaction exists and is accurately recorded.
- Checking of financial statements to ensure they fairly present the financial situation.
Regularity of transactions
Do the EU income and expensed payment1 transactions underlying the EU accounts comply with the rules governing them?
1 Expensed payments: interim payments, final payments and clearing of advances
The EU budget involves millions of payments to beneficiaries both in the EU and the rest of the world. The majority of this spending is managed by Member States. To obtain the evidence we need, we test income and expensed payments directly and assess the systems by which they are administered and checked.
- Samples of transactions are drawn from across the EU budget using statistical techniques to provide a basis for detailed testing by our auditors.
- The sampled transactions are audited in detail, usually at the premises of final recipients (e.g. a farmer, a research institute, a company providing publicly procured works or services) to obtain direct evidence that the underlying event ‘exists’, is properly recorded and complies with the rules under which the payments concerned are made.
- Errors are analysed and classified as either quantifiable or not.
- The impact of errors is calculated through the extrapolation of quantifiable errors in the form of an estimated level of error.
- The estimated level of error is compared against a materiality threshold of 2 % to determine the ECA’s opinion.
- The systems for revenue are assessed to determine their effectiveness in making sure the transactions they manage are legal and regular.
- Other relevant information is taken into account, such as annual activity reports and reports of other external auditors.
- All findings are discussed with both the authorities in the Member States and the Commission to ensure the facts are correct.
- We adopt our opinions based on the work done and results achieved.
Note on the naming of Member States in examples:
Due to our sampling approach we do not audit transactions in every Member State, beneficiary state and/or region each year. The examples of errors given in this document are provided in order to illustrate the most frequent error types. They do not form a basis for drawing conclusions on the individual Member States, beneficiary states and/or regions concerned.
More information on the audit process for the statement of assurance can be found in Annex 1.1 of the 2014 annual report on the EU budget.