It was the logical thing to do: DG EMPL and DG REGIO share the same audit and assurance framework and this, in a substantial number of cases, based on co-financed, joint multi-fund programmes. Instead of having two different teams auditing cohesion policy programmes and authorities at EU-Commission level, we now have a single directorate.
Moreover, the programme audit authorities in the Member States, in most cases, deal with all the funds. So they now have one single interlocutor in the Commission for cohesion policy. In this way, we have become more flexible, improved synergies and expanded the knowledge and capacity of our auditors. The forward-looking courage and mutual trust of our two directors general were key to making it possible and overcoming various unavoidable administrative difficulties linked with the creation of such a cross-DG service.
We needed to do this to be ready for the 2021-2027 programming period and to face the challenges brought to us in the last years with the increase of funds (linked to the pandemic and Russia’s war in Ukraine), with implications for audits. The DAC’s mission is to provide assurance and audit results for all funds under the responsibility of DG EMPL and DG REGIO in cohesion policy under shared management, but also for funds under indirect and direct management.
About a year-and-a-half after it was established, a DAC spirit of mutual accountability has developed and colleagues now care less and less which of the two DGs they initially came from. We brought people who used to work in different DGs into the same audit team and they share the same vision. This initially required much internal communication, reflection and time spent together (not always easy in the aftermath of the pandemic!) to forge a common DAC identity. For example, we had to insist on having a DAC induction away-day in September 2021, when DG HR was cautious about the risk with the pandemic. But we did it. It was highly appreciated by all colleagues and crucial to give a face to the new directorate.
We have a good mixture of competences in the DAC. Most of our colleagues are certified auditors, some have a legal background or even an engineering education. Others have experience in auditing programmes with funding from DG EMPL, or are familiar with programmes financed by DG REGIO. With the creation of DAC, we used all these particularities, which I consider strong points, when organising the mixed audit teams and conducting our audits.
So those are the main building block we used to create our joint identity: working together, discussing, being open to new ideas from new colleagues, aligning our working methods, and seeing which ones are best practices. I want to pay tribute to all DAC colleagues who have worked hard since 2021. Today we can say that we have stable DAC processes in place.
Synergies and economies of scale were realised and cooperation in the directorate and with the services in the two DGs. The DAC has contributed to both DG EMPL and DG REGIO reflecting on further aligning certain internal audit, assurance and financial management processes. My colleagues, by working as a team in the DAC, have achieved a long list of results: harmonising and streamlining internal procedures, achieving coherence in the implementation of the cohesion management and control framework, increasing the audits for each DG, effectively implementing the ambitious audit plan since 2021, and adopting the common audit strategy for 2021-2027.
The DAC has been active in raising awareness about audit findings and ensuring know-how exchange for audit authorities. We are sensitive about the need to continuously work with programme authorities to reach understanding, so that we can jointly better prevent and detect irregularities. The DAC has been working full speed since its creation at putting in place the necessary delegated regulation on sampling (recently adopted) and audit methodologies for 2021-2027.
There is no change in the general assurance approach and in the audit methodology. If there is a change for the managing authorities and beneficiaries of EU-funded projects, it is streamlined communication with auditors in the Commission. This is important for the Commission’s ambitious simplification agenda for 2021-2027. Let me take an example directly linked to the work of managing authorities, and one that is crucial to preventing irregularities: management verifications under the 2021-2027 period will no longer be systematic but risk-based. This requires management authorities to assess in writing the specific risks they need to anticipate and address in the implementation of their programme. To this end, managing authorities and auditors need to communicate with each other more than ever.
Our teams comprise auditors with the knowledge and competences to improve management and control systems, to avoid recurrent errors on project eligibility and expenditure, to protect the EU budget. Moreover, we ensure a joint understanding and application of rules throughout Europe by constantly discussing and sharing expertise with our 116 audit authorities in multilateral or bilateral technical meetings.
The DAC’s work is based, to a large extent, on the work done by our colleagues from audit authorities in the Member States (single audit approach). Therefore it is important that we all have the same understanding and apply the same audit and control standards in different countries. We include the European Court of Auditors in such discussions. Both goals, protecting the EU budget and improving systems, benefit managing authorities, beneficiaries of EU-funded projects and ultimately, EU citizens.
The DAC implements its audit plan based on the single audit strategy for cohesion policy and funds under the 2021-2027 Common Provisions Regulation (to which we welcomed the HOME funds, in addition to the European Maritime, Fisheries, and Aquaculture Fund) and following its annually updated risk assessment.
Our team provides assurance on more than 440 programmes for the 2014-2020 programming period, with some EUR 45 billion spent per year. For this programming period, the last audit reports will be submitted in 2025. In 2023, we start the work for the 2021-2027 programming period, following the adoption of almost all programmes, with early preventive audits when systems changed. But we insisted, in designing the 2021-2027 assurance model, on continuing the existing systems in the new period (no designation process) where these were effective (over 90% of our programmes as reported last year).
This should allow a smooth transition to the first set of annual accounts. The legal framework also provides for simplified audit and control requirements for well-functioning programmes, and we are working with the concerned audit authorities on how to approach this. These programmes and their beneficiaries, with proven records of good quality assurance, will be more lightly audited than before to reduce their administrative burden, while maintaining our high standards for providing assurance. We focus on areas which do not function so well and where, together with Member States’ authorities, we can achieve better compliance results.
In 2021-2027, we will increasingly exploit all digitally available information before going on the spot, adapt to new challenges, maximise use of data-mining tools such as Arachne and reflect on using new tools based on artificial intelligence. This will include use of data on beneficiaries and contractors. In doing so, we can reveal interesting information about the implementation of our funds and address growing concerns about conflicts of interest or double funding in the context of increased public support under the 2021-2027 multi-annual financial framework and NextGenerationEU.
