ACCOUNTABILITY AND TRANSPARENCY — BUILDING BLOCKS FOR TRUST IN THE EU
By Tony Murphy, ECA President
As the EU’s external auditor, the ECA plays a crucial role in the broader framework of EU institutions and organisations, aimed at enhancing accountability and pinpointing areas for improvement. Tony Murphy, who assumed the role of ECA President on 01 October 2022, has dedicated his career to public sector audit. In the following reflection, he delves into the significance of accountability and transparency in the public sector, explaining how the ECA actively contributes to realising these principles. In his opinion, these principles are indispensable factors of the democratic fabric of the EU.
Indispensable pillars in public governance
In the intricate landscape of the European Union (EU), the principles of accountability and transparency stand as indispensable pillars, essential to its democratic, legitimate, and effective governance. In today’s global context, the fragility of values such as accountability and transparency are increasingly evident. These principles are no longer assumed which means that their preservation is paramount.
If we look at accountability and transparency in a public sector setting, why are these principles so important? The short answer is ‘trust’. In a democratic society accountability ensures that decision makers are held responsible for their actions, while transparency allows citizens to understand how decisions are made. Together they contribute to building trust between public institutions and citizens.
The perception of governing bodies as legitimate entities hinges on the visibility and understanding of decision making processes by the public. In essence, when people can witness and understand how decisions are made, trust is cultivated, strengthening the democratic fabric of the EU.
Accountability focus evolving towards performance
My perspective on these principles has been shaped by a career of over forty years as a public sector auditor. This has included working in the Irish Supreme Audit Institution, then as an internal auditor with the European Commission and finally I have held a number of positions in the European Court of Auditors.
In the early stages of my career, particularly as a qualified accountant, my view of accountability was primarily linked to adherence to established standards and regulations within the public sector. The focus was on ensuring that public sector entities followed legal and regulatory frameworks.
However, my perspective shifted as the environment in which I worked has evolved. This evolution encompassed changes at a broad level, including treaty modifications, institutional reforms, increased access to information, and the advent of digital transformation. Additionally, there was a heightened focus on engaging with citizens, upholding ethical standards, and the introduction of a results oriented approach in the public sector.
From an audit perspective, the focus on results and performance meant that the principles of accountability and transparency became tools for promoting continuous improvement. Through audits, identifying areas of inefficiency, ineffectiveness, or non compliance, enabled governing bodies to address weaknesses and enhance overall performance.
Accountability has multiple facets
So today what do accountability and transparency mean for the European Court of Auditors? It is important that we look at this from several angles. Internally, as the EU’s independent external auditor, it is imperative that the ECA remains accountable and transparent in its own activities, meaning that we are answerable for the proper and efficient use of our resources and operate free from undue influence. In terms of our outputs, these principles also guide what we do in terms of our audits and in terms of our engagement with our stakeholders.
Starting with our outputs, these principles are embedded in the ECA strategy and mission. While our mission states that through our work we aim to improve accountability and transparency, thereby enhancing citizens trust, Goal 1 of our current strategy relates to: Improving accountability, transparency and audit arrangements across all types of EU action. As an auditor, the most straightforward way for me to explain how the ECA achieves this is through examples of our recently published outputs.
A special report which I believe illustrates our strategy goal and our mission in this context, is our audit on the design of the Commission’s control system for the Recovery and Resilience Facility (RRF) published as ECA special report 07/2023 in March 2023. For context, the RRF represents the EU’s main funding instrument in mitigating the impact of the COVID 19 pandemic. The funds available under the RRF total €724 billion. It offers a novel approach in terms of EU funding, in that funds are paid based on the progress in the achievement of the reforms and investments. As the RRF represents a new delivery model with a large amount of funds intended to be spent in a short period of time, it is crucial that there is an appropriate system of checks in place. Hence our overall objective was thus to assess the design of the Commission’s control system for the facility.
Our main finding from this audit is that the design of the Commission’s control system results in an EU level assurance and accountability gap in protecting the EU’s financial interests. Member states are obliged to check that RRF funded investment projects comply with EU and national rules, but the Commission has little verified information through its own work as to whether and how these national checks are carried out. In the absence of such information, the Commission cannot provide assurance that these rules are complied with, which implies a lack of accountability at EU level. In our view, this represents a serious risk to protecting the EU financial interests.
While this audit provides a snapshot of our activities, it embodies our mission to cultivate trust through enhanced accountability and transparency. Broadly, we accomplish this by pinpointing areas for improvement and identifying potential risks across all dimensions of EU actions.
Examining accountability at a macro level, a notable example is our special report 05/2023 on the EU’s financial landscape, also published in March of last year. In recent times, the EU and its member states have demonstrated their remarkable ability to respond swiftly and with unprecedented measures to the series of recent crises we have all faced. These responses often come in the form of various instruments and spending programmes which means that EU’s financial landscape continues to grow in scope and complexity which has resulted in an increasing number of financing instruments outside the EU’s budget over the last 15 years. However, for some of those instruments, there is a gap in the audit of their performance and no European Parliament oversight. The EU’s financial landscape is therefore not fully publicly accountable, a message we communicate to our stakeholders.
Transparency in our own actions
As I indicated, it is essential that the ECA remains accountable on its own activities. Transparency is a core element of our work involving open communication, meaning that we have an obligation to engage openly about our activities, methodologies, and findings. Our commitment is to ensure that our audit reports, opinions, and relevant information are easily understandable and accessible to the public, stakeholders, and decision makers. Moreover, several mechanisms are in place to ensure the application of the principles of accountability and transparency to our own activities.
Annually, the ECA’s accounts and activities undergo analysis by the European Parliament through the discharge procedure. During this process, we participate in sessions with the budgetary control committee, exchanging views and addressing committee members’ questions. To foster further development and improvement, the ECA has undergone several independent peer reviews, with the next one scheduled to commence in 2024. Internally, we have established quality assurance procedures and an internal audit function to maintain rigorous standards and continuous improvement within the ECA.
Accountability requires a common effort
Fostering accountability and transparency within an organization involves multiple actors. Similarly, within the EU institutional framework, we collaborate with various entities who also strive to uphold accountability and transparency through its activities. The European Parliament and Council in terms of legislative oversight, the European Commission, responsible for proposing and implementing policies and programs and the European Ombudsman who scrutinises EU institutions and agencies. Effective collaboration and interaction among these entities are vital to ensuring transparent, accountable decision making processes aligned with principles of democratic governance.
Looking ahead, accountability and transparency will remain key concerns for both ECA and the EU. We have learned that in times of crises transparent communication is crucial for managing public expectations and perceptions. In an era of rampant misinformation, accountability is crucial for those disseminating information, and as Artificial Intelligence (AI) systems play an increasing role in informing decisions and actions, these systems should also be subject to scrutiny. Our Annual Work Programme for 2024+ maintains a strong focus on accountability and transparency. We will continue to assess the EU crises recovery funds, we will also examine EU expenditure related to defence, we have number of audits both ongoing planned in the area of rule of law and one audit related to AI.
In conclusion, accountability and transparency are not just core principles of the ECA, they are the bedrock of effective governance. As we strive for a more accountable and transparent EU, I believe the ECA’s role is crucial in ensuring the responsible use of EU resources and fostering public trust. It is vital that we carry these principles forward together recognising that they are indispensable in order to serve the interests of EU citizens.
This article was first published on the 01/2024 issue of the ECA Journal. 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.
