REPORT on the nomination of Mihails Kozlovs as a Member of the Court of Auditors
12.1.2022 - (C9‑0407/2021 – 2021/0804(NLE))
Committee on Budgetary Control
Rapporteur: Tomáš Zdechovský
PROPOSAL FOR A EUROPEAN PARLIAMENT DECISION
on the nomination of Mihails Kozlovs as a Member of the Court of Auditors
(C9‑0407/2021 – 2021/0804(NLE))
The European Parliament,
– having regard to Article 286(2) of the Treaty on the Functioning of the European Union, pursuant to which the Council consulted Parliament (C9‑0407/2021),
– having regard to Rule 129 of its Rules of Procedure,
– having regard to the report of the Committee on Budgetary Control (A9-0003/2022),
A. whereas, by letter of 5 November 2021, the Council consulted Parliament on the nomination of Mihails Kozlovs as a Member of the Court of Auditors;
B. whereas Parliament’s Committee on Budgetary Control then proceeded to evaluate the credentials of the nominee, in particular in view of the requirements laid down in Article 286(1) of the Treaty on the Functioning of the European Union;
C. whereas the committee subsequently held a hearing with the nominee on 10 January 2022, at which the nominee made an opening statement and then answered questions put by the members of the committee;
1. Delivers a favourable opinion on the Council’s nomination of Mihails Kozlovs as a Member of the Court of Auditors;
2. Instructs its President to forward this decision to the Council and, for information, the Court of Auditors, the other institutions of the European Union and the audit institutions of the Member States.
ANNEX 1: CURRICULUM VITÆ OF MIHAILS KOZLOVS
An independent, qualified and motivated professional with over 20 years of in-depth experience in EU and national economic policy making, EU budget, public finances, auditing and sound financial management, public management, institutional relations, development banking, diplomacy, representation, communication as well as people, change and project management, with rich network at all levels in the EU institutions, complemented by a solid educational base and proven achievement track record.
Postgraduate university diploma in “Audit of public organisations and policies”, University of Lorraine, France
Executive MBA, City University London, Cass Business School, with distinction
Master in Social Sciences, University of Latvia Bachelor in Social Sciences, Riga Technical University
Eurofaculty, University of Latvia
Since May 2016:
Member of the European Court of Auditors
○ Currently works in Chamber IV - “Regulation of Markets and competitive economy”.
Reporting Member for audits/reviews on EU financing for Euronews, Ethical frameworks in the EU institutions, Control of state aid to financial institutions, EU space assets, EU anti• money laundering, Remarks of the Court on the 2021-2027 multiannual financial framework, and Chapter 4 “Competitiveness for growth and jobs” of the 2018, 2019 and 2020 annual reports.
Member of the Audit Quality Control Committee and alternate member of the Administrative Committee. Worked at the Strategic Foresight Advisory Panel in charge of the Court’s Strategy for 2021-2025. Representative of the Court on the Conciliation Committee of the Tripartite Agreement between the Court, Commission and EIB on audit arrangements, also responsible for negotiating the renewed Tripartite Agreement.
o From May 2016 to February 2018, worked in Chamber V- “Financing and administering the Union”. Reporting Member for the review of the multiannual financial framework, the opinion on the European Fund for Strategic Investments (EFSI), the performance audit plan for EFSI and public participation in EU law-making, and Chapter 2 “Budgetary and financial management” of the 2016 and 2017 annual reports.
Alternate member of the ECA’s Ethics Committee from October 2016 to June 2017.
April 2012 - April 2016:
Deputy Director (Economics, Finance, EU Budget - ECOFIN), Adviser, Chairman of the EU Council of Ministers working party on the European Fund for Strategic Investment and of the Financial Counsellors working party during the Latvian Presidency of the EU, Latvian Ministry of Finance and Permanent Representation to the EU, Brussels
October 2010 - April 2012:
Adviser to Executive Board Director (representing Finland, Norway and Latvia) at the European Bank for Reconstruction and Development, London
May 2003 - October 2010:
Counsellor (economics, finance, EU budget, taxation) at the Latvian Permanent Representation to the EU, Brussels
January 2002 - May 2003:
Director in the EU Integration Department, Ministry of Finance, Riga
February 2001- January 2002:
Head of EU Integration Unit, Ministry of Finance, Riga
January 2000 - April 2000:
Trainee at the European Commission, Directorate for Economic and Financial Affairs, Brussels
June 1996- December 1999:
Various entry-level positions in the private and public sectors and the academic world
English - fluent; French - good working level, German - basic to intermediate, Latvian and Russian - native.
Recognition by the Cabinet of Ministers of the Republic of Latvia, November 2015
Recognition by the Prime Minister for personal contribution to the successful Latvian Presidency of the EU in 2015 and to the introduction of the euro in Latvia in 2014
Recognition by the Minister of Foreign Affairs: contribution to the introduction of the euro in Latvia in 2014
Certificate of merit from the Minister of Finance: outstanding representation and promotion of Latvian economic and financial interests in the EU, 2008.
Sports: Latvian ex-champion in water-skiing
“Sixth edition of the ECA Award - for research on EU added value and public sector auditing”; ECA Journal 03/2020
“Auditing the ethical framework of EU institutions: easier said than done”; ECA Journal 02/2019
“Future EU budget decision-making enters the crucial stage”; ECA Journal 11/2017
“Professor Mario Monti at the European Court of Auditors: Results of the work of the High Level Group on Own Resources (HLGOR)”; ECA Journal 04/2017
“European Fund for Strategic Investments (EFSI): the negotiation process”; Latvian Interests in the EU, November 2015 (in Latvian)
ANNEX 2: ANSWERS BY MIHAILS KOZLOVS TO THE QUESTIONNAIRE
Questionnaire for the renewal of Members of the Court of Auditors
Performance of duties: lessons learnt and future commitments
The important pillars of ECA’s work are collegiality and team spirit therefore many of the achievements that I will mention in my replies would not be possible without support of fellow Members and professional staff. It has been my honour and pleasure to be part of the College and various strategic, reflection and audit teams throughout my mandate until now.
1. What are your main achievements as a member of the ECA? What were the biggest setbacks?
ECA Members have ownership of the ECA Strategy and they are ultimately accountable for its implementation, individually and as College. I provided regular contributions to development of the Strategy and to making sure that the Court as a whole evolves constantly to become a future-proof organisation. I put my ambition, my will to improve and my knowledge at the Court’s disposal delivering during a set of diverse audit products and other documents during my mandate.
I saw the need to improve the process of strategy development at the Court and to act upon the recommendations of the peer review. That is why I volunteered to work as a member of the Foresight and Strategic Advisory Panel (FSAP) and later on as an active member of the Strategy Development group within the Court that resulted in adoption of the ECA Strategy 2021-2025. It is not simply a new Strategy but a document that came into being through a qualitatively different process. Its mission, vision, values, goals and enablers are now broadly shared by the College and staff as they have been developed through a wide-ranging consultation and reflection process engaging all staff. Of course, implementation is key – that is why, now also as a Member of the Administrative Committee, I continue to closely follow the elaboration of various action plans to ensure their full alignment with our strategic objectives.
My conviction is that in order to best support the principles of sound financial management, work of any supreme audit institution should result in timely, relevant and impactful audit products. I believe that under my leadership the audit teams have managed to produce several truly impactful and timely special reports, such as Special Report 13/2021: EU efforts to fight money laundering in the banking sector are fragmented and implementation is insufficient (AML report) or Special Report 21/2020: Control of State aid to financial institutions in the EU: in need of a fitness check (state aid for banks report). I also stepped out of the ‘audit comfort zone’ (that is conducting audits that one can do and not necessarily the ones that should be done) and led the team that audited ethical frameworks in the main EU institutions - Special report no 13/2019: The ethical frameworks of the audited EU institutions: scope for improvement. In fact, this audit led the Court itself to undergo a peer review of tits ethical rules that resulted in improvements. In general, one of the main measures of a SAI’s effectiveness is whether auditees act on the findings and recommendations, which I believe, was very much the case on these occasions.
To enhance the Court’s capabilities, I led the team, re-negotiated and signed, on behalf of the Court, the Tripartite agreement (TA) with the Commission and the European Investment Bank (EIB). The new TA was signed in the beginning of November 2021. I am convinced we managed to improve the audit arrangements over the EU funds implemented by the EIB.
Active engagement with the national authorities is important in order to enhance the impact of the Court’s work. Enhancing the visibility of the Court in my home country was one of my priorities in the previous years. Thanks to numerous measures at various levels that I implemented with support of my cabinet staff, I am convinced that colleagues in Latvia do not only know more about our work and reports but they also use them in their everyday work.
Regarding setbacks, in my view, they should not discourage from moving towards what one believes is right, but rather to motivate us in pursuing better. For this questionnaire, let me focus on the institutional level and provide several examples.
I think, despite general recognition of the value added of investing in digital tools in audit, their uptake is still quite slow, thus there is room for improvement. I follow these activities at the Court and support them.
Inability to leverage and promote our work well enough is sometimes disappointing, that is why I contributed actively to development of the Court’s Communication Strategy.
2. What are the main lessons learnt in your field of competences / results achieved in your duties and audit tasks?
Each Member has his/her professional background and knowledge that we bring to the benefit of the Court. My previous experience lies in the economic/financial area, yet I have also embraced work in other policy areas and learnt a lot. I think the main lesson that I learnt based on the audit work I led is that the European project, while always moving on, still has a lot to be improved and that the Court can support this forward motion. I think this is true in economic and financial governance, foreign policy, defence, research&innovation, just to name a few.
I also learnt that it is not enough to develop and publish a good report. It is no less important to spare no effort to leverage the strength of the report through various activities, like presentations, conferences, publications, debates etc.
The experience at the Court until now also showed once again the importance of sticking to the highest level of ethical conduct and leading by example.
As to the results, I believe my work during first years at the Court on the EU budget (e.g. mid-term review) and on the ethical frameworks at the EU institutions led to improvements, as for example, we saw at the high level conference on ethics that I organised in September 2020 on the basis of the audit report. Later on, I focused on the financial and economic governance area as I saw room for improvement. So far, I led two audits in this field - state aid to banks and the EU anti money laundering framework. In both cases audit was scoped in the way to cover banking sector, as this is the sector that ensures financial stability and can affect every citizen. I am sure our recommendations are having impact, as testified, for example, at the conference on the economic and financial governance that I initiated and organised in July 2021 on behalf of the Court and Chamber IV involving all stakeholders to the crisis management framework in the EU. Besides, as part of the AML audit, I tested, successfully, the MoU between the Court and the ECB. Finally, in the field of internal market the audit I led resulted in specific recommendations on how to leverage the sizeable EU investment in its space assets for the benefit of innovative companies, SMEs and public administrations.
Regarding the Statement of Assurance work, I see it as a constant monitoring tool and a good source of information about implementation of EU policies. In this field, I was responsible for two chapters: “Chapter 2 - Budgetary and financial management” (2 years) and “Chapter 4 - Competitiveness for growth and jobs” (3 years and ongoing). As regards Chapter 2, I expanded the usual scope of the audit and focused more on the complexity of the EU budget and disclosed more analysis about Member States absorption capacities. In Chapter 4, when I was appointed as Reporting Member, the Court piloted the project to test the possibility to apply the attestation engagement in audit. Even though our conclusion for the time being is that due to several weaknesses it would not be possible for the Court to rely on the information provided by Commission auditors, nevertheless we identified also several significant areas in the Commission’s control system that we asked to address with several recommendations, for example to ensure that private auditors contracted by the beneficiaries deliver higher quality audit work. With SoA work we also contributed to the new legislative proposal for Horizon Europe.
3. What added value could you bring to the ECA on your second term and/or particularly in the area you would be responsible for? Wold you like to change your area of responsibility? What motivates you? M
In the current strategic period 2021-2025 ECA will face various challenges. I became a Dean on the basis of a programme that I presented to my fellow Members, and I will bring value by delivering upon that programme by further improving Chamber’s performance.
One of the challenges is defining our audit approach to the NGEU, both legality/regularity and performance. Chamber IV has assumed a leading role, notably on performance auditing of the new fund. I will contribute by leveraging my knowledge in the field of the EU budget and economic governance.
I will also build on my experience at the Court in order to support various strategic goals, for example in terms of improving audit arrangements within existing ECA mandate, identifying and closing audit gaps, arguing against the silo approach in order to create the optimal audit portfolio reflecting the topical issues, and supporting all efforts to enhance the impact of ECA’s work.
More specifically, I see the need for the Court to provide several contributions in the field of fiscal and financial governance. Regarding the fiscal frameworks, I believe the Court should contribute to the ongoing debate based on its previous audit work. The same applies to financial governance in the EU where the Court has accumulated a portfolio of high quality audits. I will argue in favour of such contributions, and I am also ready to assume responsibility for delivering.
Importantly, I will argue in favour of open and collaborative ways of work with our stakeholders, notably the European Parliament and the Council, as well as with the auditees, notably the Commission, while safeguarding full independence in line with the Treaty provisions.
My previous experience shows that rotation of Members across various Chambers and Committees is conducive to better performance of the Court. I started in Chamber V, then continued in Chamber IV (currently as Dean) while also assuming the extended mandate at the Audit Quality Control Committee. I believe in the short/medium term I can bring value added to the Chamber’s IV work while later on I do not exclude assuming roles in other Chambers or at the Court level.
As I indicated previously, the main motivation for me is the fact that there are many ways to enhance the European project across various policy areas. I am satisfied when I see that the Court’s work contributed to this process, even if it is not always visible as the external auditors’ role is not to be in the media headlines but to deliver good input for policy makers to inform and support their decisions.
4. How do you make sure to reach the planned audit objectives of an audit task? Have you ever been in the situation where you could not realize the audit task and for which reasons? How do you operate in such controversial situations?
First and foremost, by preparing well for the audit task and setting the audit scope right. Before approving the audit task plan, I always study the audit area extensively. I pose questions and look for answers, for example, what are the most pertinent issues, what is of relevance for various stakeholders (including the policymakers), what are the views of the academic scholars, will I be able to obtain sufficient and appropriate evidence? It is also very important to stick to the audit plan, even if there might be obstacles, for examples objections of the auditee to audit evidence collection methods, its scope or findings.
I have always been able to complete all audit tasks under my leadership, the only departure from the audit plan being time delay due to the need to convince the auditees to fully co-operate. For example, in one audit the auditee asked not to continue the audit due to the Covid pandemic, I proposed to delay the active stage of the audit work for two months to give the auditee the time to adjust to the new reality, and then I proceeded in line with the audit plan.
Sometimes, we face circumstances where the ECA has no audit rights or they are limited, for example in field of economic and financial governance. But, to truly judge the effectiveness of EU action from the top to the bottom, one would have to look together at the effectiveness of both - EU and national - level action. Often we have to stop at EU level action because the ECA mandate has limitations.
To sum up, in such cases, I attempt to deliver upon the mandate of the Court by employing various measures that result in completion of the audit procedures agreed upon within the Chamber.
5. If you were reconfirmed for a second mandate and hypothetically, if you were elected Dean of a Chamber in the ECA, how would you steer the work to define its priorities? Could you give us two or three examples of areas to focus on in the future?
My colleagues in Chamber IV endorsed me as Dean in September 2021; it has been my honour to accept this function. That was a result of in depth discussions as to how Chamber IV could best contribute to the Court’s work in the current circumstances. I based my proposition on the three following points. 1) As a Dean, I will try to focus the work of Chamber IV on the key trends in Europe through timely, relevant and impactful audit work delivered by strong audit teams. 2) It will imply more careful and strategic approach to planning of our Chamber’s work combining top-down (Members) and bottom-up (Directorate and staff) co-ordination. 3) We would need to sharpen the focus of our audit portfolio and also to ensure a balanced coverage of various policy areas. We will also have to make sure that it fits well with the Court wide approach.
More specifically, in addition to several priority areas (like NGEU) I already mentioned in my answers on the previous questions, I would single out also the need for more work on the functioning of the EU Single Market and the effectiveness of the EU action in the field of research and innovation. For example, regarding the EU Single Market, I think the Court has a potential to shed light on how many of the objectives that exist on paper have been acted upon and delivered for the benefit of the EU economy and its citizens. This has to do with reporting on performance, and I am glad to be a part of the Parliament-Court reflection group on how to better report on performance of the EU action.
6. If you had to manage the selection of audit tasks in view of the preparation of the ECA annual working programme, on which basis would you make your choice among the list of priorities received from the Parliament and/or the CONT committee?
What would you do if a political priority does not correspond to the ECA risk assessment of the Union’s activities?
The list of priorities from the Parliament and the CONT Committee represents an important source of information for reflecting upon the Court’s Annual Work Programme (AWP). I welcome the fact that each year the Parliament proposes many topics for audits that is a reflection of the current and, importantly, future political priorities. The Court also performs its own risk assessment (using also the foresight techniques) and receives an increasing number of proposals from the Council. Putting this matrix together is not an easy task but I think in the recent years the Court considered in depth the proposals from the Parliament as, for example, its ideas are covered in 31 tasks of 38 audit tasks in AWP 2022. This is a result of a robust internal procedure at the Court whereby each audit idea is assessed against the Parliament’s list.
I think that a gradual introduction of the multiyear rolling work programme would allow the Court to cover the Parliament’s ideas even better.
At a more practical level, I use two criteria – timelines and relevance. I also follow legislative processes in our Chamber’s policy areas and try to support audit ideas that can contribute and add value to legislative debate - this is how I apply the “timeliness” criterion.
I support more policy related audits where the Court should provide a contribution even if the amount of the EU budget involved may be limited (i.e. for administration only). This is how I understand relevance of our audit work, i.e. the ability to support the legislative or budgetary process with helpful and fact-based evidence.
Of course, the overarching ‘filter’ for the hundreds of audit ideas we consider is our new Strategy that provides a clear framework for distinguishing between nice to do and have to do.
Management of portfolio, working methods and deliverables
7. Producing high quality, robust and timely reports is key:
– How would you ensure that the data used in an audit are reliable and that the findings are not outdated?
Indeed, one of the main responsibilities of professional auditor is to collect proper audit evidence. We are bound by auditing standards that clearly define the data auditors can use for their judgements. I would advocate for strict application of auditing standards to avoid situations when someone is questioning data we use or findings we disclose.
The framework for audit evidence collection and assessment is established by the international audit standards. ISA 500 AUDIT EVIDENCE states that Audit evidence is reliable if it fulfils the necessary requirements for credibility, if the same findings arise when tests are carried out repeatedly or when information is obtained from different sources. The reliability of audit evidence is affected by its source and type and is dependent on the circumstances under which it is obtained.
Obtaining audit evidence from different sources or of a different nature may indicate that an individual item of audit evidence is not reliable, such as when audit evidence obtained from one source is inconsistent with that obtained from another. This may be the case when, for example, responses to inquiries of management, internal auditors, and others are inconsistent, or when responses to inquiries of those charged with governance made to corroborate the responses to inquiries of management are inconsistent with the response by management. ISA 230 includes a specific documentation requirement if the auditor identified information that is inconsistent with the auditor’s final conclusion regarding a significant matter.
ISSAI 100 - FUNDAMENTAL PRINCIPLES OF PUBLIC-SECTOR AUDITING states that the auditor should evaluate the audit evidence with a view to obtaining audit findings. When evaluating the audit evidence and assessing materiality of findings the auditor should take both quantitative and qualitative factors into consideration. That include also timing aspect.
Based on the findings, the auditor should exercise professional judgement to reach a conclusion on the subject matter or subject matter information.
The Court also has strong internal procedures to ensure that the audit evidence is solid, and as a Member of the Audit Quality Control Committee I am part of this framework.
– How would you improve the quality and pertinence of the recommendations?
I would advocate for more consistency and strict application of auditing standard ISSAI 300 - PERFORMANCE AUDIT PRINCIPLES that states that recommendations should be well-founded and add value. They should address the causes of problems and/or weaknesses. However, they should be phrased in such a way that avoids truisms or simply inverting the audit conclusions, and they should not encroach on the management’s responsibilities. It should be clear who and what is addressed by each recommendation, who is responsible for taking any initiative and what the recommendations mean – i.e. how they will contribute to better performance. Recommendations should be practical and be addressed to the entities which have responsibility and competence for implementing them.
In everyday work, it is my usual practice to fully participate in drawing conclusions and formulating recommendations based on audit work performed and evidence collected.
8. The aim of the ECA’s reform is to establish a stronger accountability relationship between the audit team and the rapporteur member:
– Given your experience, do you think that the role of a member is to be more involved in the audit work?
To provide a straight answer, yes, I think this is the only approach to deliver high quality audit work and to engage with the co-legislators, auditees and stakeholders while presenting the results. This is what I committed to do during the first hearing at your Committee in 2016 and I believe I have delivered upon this commitment.
First, I engage actively with my Colleagues Members and auditors already prior to approval of the audit tasks in the Annual Work Programme in order to foster discussion on the timeliness, relevance and potential impact of any proposed audit. Then, prior to adoption of the task plan, I meet the audit team and the key stakeholders several times to ensure that during the so-called issue analysis we have full information to adopt the most pertinent audit questions. Later on, me and my office are in permanent contact with the audit team and director to steer their work, address any obstacles and adjust, if necessary, to enhance the ultimate value added. Importantly, in preparation of the preliminary observation for adoption at a Chamber meeting, I review the audit work (virtually paragraph by paragraph) together with the audit team in order to ensure top quality and full evidence base. I also believe it is important to stay in close contact with the audit team after the publication in order to leverage the results of the audit presenting it to the co-legislators, other stakeholders, at conferences and other events. I find such deep substantial involvement (yet, without micromanagement) the only way to be able to develop pertinent recommendations and defend them at various fora. Close involvement of the Reporting Member is also a motivating factor for the audit team.
So my recipe for a good performance report is: get involved in the work with the team, trust the professional team members, motivate them through support in difficult situations, keep in touch after the report has been published.
– Would you change the way you work with an audit team? If yes, how? E
Given my modus operandi from day one at the Court, I would maintain and strengthen the application of the above -mentioned principles.
9. What would be your suggestions to further improve, modernise the ECA functioning, programming and work (audit cycle)? After your first mandate, could you give us a positive aspect of the ECA working and a negative one? E, L
I believe any organisation can always do better. The same refers to ECA, and ECA has proven this over time. I think the College can demonstrate more leadership and ownership, improve its goal setting (for example, in terms of issuing more opinions), shorten the audit cycle, move to the multiannual rolling work programme, be more ambitious in identifying and using digital tools in audit, communicate better about its work and nurture the culture of ethics. There is also room for improvement in terms of co-operation with the co-legislators, both Parliament and the Council. We made certain progress regarding the Council but, regrettably, the intensity of co-operation is still quite far behind our work with Parliament.
I would like to mention flexibility of the Court, for example, in terms of adjusting to the new ways of work in the post-pandemic world – this allowed us to keep and in some respects increase our output while safeguarding the quality.
I believe the silo approach is still present to some extent in our relatively small organisation. Efforts to address this problem should be continued within the new strategic period, especially because of the need to perform more cross-sectoral or thematic audits.
10. Under the Treaty, the Court is required to assist Parliament in exercising its powers of control over the implementation of the budget in order to enhance both the public oversight of the general spending and its value for money:
– With the experience of your first term, how could the cooperation between the Court of Auditors and the European Parliament (Committee on Budgetary Control) on auditing the EU budget be further improved?
The European Parliament is the closest partner of the Court in exercising the Court’s Treaty mandate. Overall, I find cooperation has improved during recent years and several good practices that were introduced should be maintained and reinforced, like, for example, CONT/ECA annual meetings. I also had a practice to meet regularly with the rapporteurs, shadow rapporteurs, co-ordinators and any MEP willing to engage that was interrupted by the pandemic but I will endeavour to renew this practice as soon as possible.
We could also consider more focused meetings between, for example, Court Chambers and groups of MEPs dealing with a set of specific questions in various Committees.
We have to reflect how the Court could react to a rapidly evolving situation in a particular issue by providing quick inputs. Opinions is an important element, while other products can also be considered. For example, I would like to recall a rapid case review on the EU financing to Euronews.
Notwithstanding the key role of the CONT committee in the discharge, I also very much support the practice of joint CONT and sectoral Committees’ meetings to discuss more specific special reports. I consider this is a very good idea as it gives different perspectives and enriches the debate and also saves time on both sides.
I have participated in a few public hearings organised by the Parliament and I find them to be a very useful forum for exchanging the ideas and assisting CONT and other Committees in their work.
I think it would be mutually beneficial also to holding shared conferences or formal/informal discussions on major themes of interest for the EU.
– Similarly, how to strengthen relations between ECA and national audit institutions?
I think ECA and national SAIs should see each other as partners and not competitors because we work for the same purpose. Organising regular common events with information and experience exchange is the best proven way of cooperation.
International fora for SAI co-operation represent an excellent opportunity to build closer ties. At the EU level, Contact Committee meetings are usually very useful. From the broader perspective, EUROSAI and INTOSAI umbrella formations help to develop the public audit profession. For example, I represent the Court at the INTOSAI Working Group of Financial Sector Reform and Modernisation where I exchange with colleagues from around the world, including the EU SAIs.
NGEU is one more opportunity to work together, i.e. national recovery funds will be implemented at the national level and RRF will be spent at national level thus they are in the spotlight also for the SAIs. I see that there can and should be audit synergies in this field. For example, the Chamber IV now audits the process of assessment by the Commission of the national recovery and resilience plans (NRRP). At the same time, I know that some SAIs audit the process of NRRP development at the national level. Clearly, this work is mutually beneficial as ultimately it will provide the whole picture.
Common audit work (although still a challenge) on the topics of shared interest or, at least, common.co-ordinated presentations of the results of independent audits in the same policy area could enhance the impact. For example, I organised presentation of the Courts report on the EU mega-projects in transport in Latvia in the same week when the Latvian SAI presented the audit work of the three Baltic SAIs on the implementation of the RailBaltica project. Both reports received a lot of attention amplifying each other.
Before pandemic, I was about to pilot a summer school, where together with SAIs of Baltic states we would unite academia, public sector audit professionals and private sector audit professionals to exchange their knowledge and study recent innovative developments in audit. Unfortunately, due to pandemic, this project was interrupted but I intend to pursue it when the health situation improves.
11. How will you support the Parliament in the achievement of the shortening of the discharge procedure? What actions can be undertaken from your side?
The current discharge procedure stems from various legal deadlines for the institutions involved, it is effectively a chain of interconnected events. The Court has already advanced the publication of its annual report in the autumn of year n+1 by several weeks compared to the recent past. As the Court adopts the Annual report in the middle of July of year n+1, perhaps its publication could be further advanced, subject to co-operation from the auditee.
A more non-conventional idea would be to consider carefully, if there is a need for discussing in the current format the MFF headings where according to ECAs assessment error rate is below 2% as error rate below materiality indicates that there are no major problems with disclosure in the accounts.
Independence and integrity
12. What guarantees of independence are you able to give the European Parliament, and how would you make sure that any past, current or future activities you carry out could not cast doubt on the performance of your duties at the ECA?
The cornerstone of the SAI independence is the Mexico declaration. I believe I have proven my independence by my performance at the Court. I have been involved in the discharge procedure as a Reporting Member on two chapters of the Annual report, led various performance audits (including on the ethical frameworks in the EU institutions), contributed regularly to key internal processes at the Court (for example, Strategy development, foresight, quality control). During this work, I have come across the situations where I needed to exercise my independent judgement in order to carry on with, sometimes, difficult conclusions and recommendations to the auditees despite their resistance and pressure. This is because I have been actively involved in the audit work from the very beginning to the end and felt confident about its results.
I assume that the second part of the question refers to outside activities. During my mandate, I have performed one outside activity (a two-day seminar without remuneration for high level Romanian officials) to share my experience in making the Latvian EU Presidency a success that I duly notified to the Court’s Ethics Committee and received its positive opinion that was endorsed by the Court. Given my conviction that ECA membership is a full time job, I do not envisage to undertake any outside activity that would compromise discharging my obligations as a Court Member. I had several proposals to engage in outside activities during my current mandate but, upon a careful reflection, I decided not to pursue them.
Beyond outside activities, I would continue to exercise in my work the highest standards of personal and financial responsibility, integrity and commitment to the European project and to use the Court’s resources in line with the applicable guidelines and my personal ethical principles.
13. How would you deal with a major irregularity or even fraud in EU funds and/or corruption case involving persons in your Member State of origin? Were you in this situation during your current mandate?
I never had this situation, but should it appear in my work regarding the implementation of the EU budget, I would apply the standard procedure, i.e. report to the ECA Legal service that assesses the necessity to transfer the information to OLAF and EPPO. Internal control system established in ECA would not allow anybody to hide certain national issues as teams are international and professionalism is very high. I would also discuss the matter with the President of the Court.
I also believe such cases merit a serious analysis in order to understand the reasons and to strive to prevent similar cases. In general, systemic preventive actions prove to be more effective as they decrease the occurrence of major irregularity, fraud and corruption and thereby enhance citizens’ trust. However, the detection and enforcement are also powerful tools and they should be applied.
14. The existence of conflict of interests can trigger a reputation risk for the ECA. How would you manage any conflict of interest?
Internal control system established in ECA and enhanced several years ago ensures that there are tools to avoid conflict of interest. Perceived and potential conflict of interest is also assessed carefully. For Members, the Ethics Committee and the President are the first port of call. It is a usual practice to consult them well before submitting a request, for example, for an outside activity. The Legal Service of the Court can also be consulted.
Regarding performance of duties, the Members, for example, Reporting Members for the Annual Report or special reports, assess carefully potential conflict of interest. They can report to a Dean or to the President and to request to be allocated another task. In case of doubts, Ethics Committee would provide both formal and informal advice.
The post-employment conflict of interest is, arguably, a lesser problem for the Court. However, the Court’s Ethics Committee conducts a very careful analysis and, based on my experience until now, the application of the rules is strict.
15. Are you involved in any legal proceedings? if so, what kind?
There are no legal proceedings related to performance of my duties as public official.
16. What specific commitments are you prepared to make in terms of enhanced transparency, increased cooperation and effective follow-up to Parliament’s positions and requests for audits?
I would like to underline that positions and opinions of the Parliament have always been a key ingredient of my work. For example, in the framework of all performance audits under my lead I have always contacted the Members of the Parliament who have been active in respective policy area. These exchanges proved to be very useful. I also find the practice of public hearings organised by the Parliament very useful and I always accept invitations to participate therein.
The Parliament’s list of proposed audit priorities is a great source of inspiration and information as it helps us to design a programme including timely, relevant and impactful audits.
Last but not the least, I am always open for any professional exchange regarding the Court’s work and co-operation with the Parliament.
An important source of information about the Parliament’s view about ECA is the ECA discharge procedure that I have been following very carefully and will continue to do so also as Member of the Administrative Committee. I am glad the Court’s transparency and accountability framework has evolved over time taking into account relevant developments and Parliament’s positions.
17. Will you withdraw your candidacy to a renewal of mandate if Parliament’s opinion on your appointment as Member of the ECA is unfavourable?
Given that my position on this matter since I was nominated for the first time did not change, I would like to keep the same reply I gave in the past, adjusted for the renewal situation.
The Latvian Government has put its trust in my candidature by proposing based on a unanimous decision my candidacy for renewal. Given my performance at the Court and efforts in promoting the Court’s work at the national level, I am confident I can live up to the high expectations and to further contribute to the Court’s work.
If the European Parliament had serious doubts regarding my commitment and ability to further contribute to the European project through continuing as a Member of the European Court of Auditors and believed they do not correspond to the bar set by the European Parliament, or if the Parliament considered that my conduct or performance during the first mandate was below their expectations, I would withdraw my candidacy. Trust of the Parliament is necessary for the good functioning of the ECA College.
More generally, if any party believes that there are shortcomings in the current Treaty in terms of the institutional balance while appointing the Court Members, they should be analysed and, if found necessary, remedied as soon as the Treaty revision takes place.
18. Being appointed Member of the ECA requires full attention and dedication to the institution itself and to ensure trust for the Union among its citizens:
– What are your views on the best way to assume these professional duties?
I fully agree with the above statement: ECA Member is a full time job for the benefit of the EU and its citizens. Members should be fully involved in all aspects of ECA work (for example, audit work and internal management). Therefore, Members should prioritise their work at ECA and exercise their mandate with all due care and integrity. In case of any other activities, they should act in full compliance with the Code of Conduct. Members should also act in a way to enhance the ECA reputation, to lead by example and to avoid any conflict of interest, real, potential or perceived. I believe that during my work at ECA I have been following these principles very carefully.
– What are your current personal arrangements in terms of number of days of presence in Luxembourg? Do you plan to change these arrangements?
As of the first day of my mandate, me (and my family) have established permanent residence in Luxembourg in line with the applicable law. I live in Luxembourg. I do not plan to change these arrangements.
PROCEDURE – COMMITTEE RESPONSIBLE
Partial renewal of members of the Court of Auditors - LV nominee
13353/2021 – C9-0407/2021 – 2021/0804(NLE)
Date of consultation / request for consent
Date announced in plenary
Discussed in committee
Result of final vote
Members present for the final vote
Matteo Adinolfi, Olivier Chastel, Caterina Chinnici, Lefteris Christoforou, José Manuel Fernandes, Luke Ming Flanagan, Isabel García Muñoz, Monika Hohlmeier, Jean-François Jalkh, Pierre Karleskind, Joachim Kuhs, Claudiu Manda, Alin Mituța, Younous Omarjee, Tsvetelina Penkova, Markus Pieper, Sabrina Pignedoli, Michèle Rivasi, Petri Sarvamaa, Simone Schmiedtbauer, Vincenzo Sofo, Angelika Winzig, Tomáš Zdechovský
Substitutes present for the final vote
Pascal Durand, Maria Grapini, Mikuláš Peksa, Elżbieta Rafalska, Sándor Rónai, Viola Von Cramon-Taubadel
Substitutes under Rule 209(7) present for the final vote