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PPT ECA, SIGMA Workshop on Digital Auditing for SAIs, Skopje, November 2019

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PPT ECA, SIGMA Workshop on Digital Auditing for SAIs, Skopje, November 2019

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PPT ECA, SIGMA Workshop on Digital Auditing for SAIs, Skopje, November 2019

  1. 1. Digital Audit at the European Court of Auditors Presentation by Konstantinos Chatzis 07 November 2019
  2. 2. The European Court of Auditors
  3. 3. ECA and the other EU institutions Position Political direction Legislative Executive Monetary policy and banking supervision External auditJudiciary Guardian of the Treaties Initiation of legislation
  4. 4. Mission Offers guidance to EU policymakers and legislators Contributes to improving EU financial management Promotes accountability and transparency Acts as the independent guardian of the financial interests of the citizens of the Union
  5. 5. The ECA’s role and tasks are set out in articles 285, 286 and 287 of the Treaty on the Functioning of the EU (TFEU) Tasks Examines whether EU policies and programmes reach their objectives Examines all revenue and expenditure in the accounts of the EU and its agencies and decentralised bodies Provides a Statement of Assurance on the reliability of the accounts and the legality and regularity of the transactions underlying them Delivers opinions at the request of one of the EU institutions and reviews on its own initiative Assists the European Parliament and the Council by providing the audit reports used in the discharge procedure Assesses whether financial management has been sound
  6. 6. 5 Audit Chambers 28 Members Organisation of ECA Corporate Strategy, Planning and Performance Management Institutional Liaison Communication and Media Relations Legal matters Internal audit Human resources, finance and general services Information, workplace and innovation Translation and language services Chamber II (Investment for cohesion, growth and inclusion) Chamber IV (Regulation of markets and competitive economy) Chamber I (Sustainable use of natural resources) Chamber III (External action, security and justice) Chamber V (Financing and administering the Union) PRESIDENCY SECRETARIAT GENERAL ADMINISTRATIVE COMMITTEE AUDIT QUALITY CONTROL COMMITTEE AUDIT CHAMBER S
  7. 7. The ECA also audits European Development Funds (EDFs) EU agencies and other bodies, such as joint undertakings European Investment Bank and European Investment Fund European Central Bank Borrowing and lending operations of the EU (e.g. European Financial Stabilisation Mechanism) Single Supervisory Mechanism and Single Resolution Mechanism
  8. 8. Carrying out audits in line with international standards on audit and quality control Contributing to the development and dissemination of international public audit standards Reliability of the accounts (financial audit) Examining accounting records and financial statements Legality and regularity of transactions underlying the accounts (compliance audit) Examining control systems intended to prevent or detect and correct errors Testing a sample of transactions (revenue and expenditure) Selecting audit subjects which are likely to yield high impact in terms of identifying potential improvements Assessing effectiveness, efficiency and economy of EU policies and programmes Applying criteria derived from legislation and the principles of sound financial management INTERNATIONAL AUDITING STANDARDS STATEMENT OF ASSURANCE PERFORMANCE AUDIT The ECA’s audit approach
  9. 9. Many audit visits take place both in Member States and the EU institutions (including their decentralised agencies and bodies across the EU). Within scope of an audit, auditors visit international organisations like OECD and UN as well countries outside the EU. EU institutions and international organisations 2 723 Non EU countries 489 6 480 on the spot audit days in 2018 The ECA’s audit work in practice Source: 2018 activity report EU Member States 3 272 of which: Brussels and Luxembourg 1 637 AUDIT DAYS Note: Totals may vary due to the effects of rounding.
  10. 10. The ECA’s audit work in practice
  11. 11. Foresight, Strategy and Plans
  12. 12. Foresight conclusions Digital transformation of our financial and compliance audit replace or enhance statistical sampling methods with whole population audit and analysis enabled by mass data processing and automation perform continuous, comprehensive monitoring of transactions to improve recurrent audits provide better assurance to European taxpayers through earlier and more comprehensive identification of risks and irregularities and good practices enhance the reporting and internal quality control processes by generating reports and visualisations automatically increase productivity by automating repetitive human tasks Page 12
  13. 13. Strategic measures  Vision design  Pilots  Data and information input mapping overview  Technology discovery  Establishment of a roadmap ‘Digital Steering Committee’ should drive the digital transformation. Page 13
  14. 14. IT Master Plan for 2018-2020 Page 14 Technology for audit – Digital audit as the ultimate goal Connect – Get clear messages across to our audiences Transform the way we work – A workplace for fostering productivity and collaboration Reinventing IT – Towards a digital ECA 4 Goals 1 2 3 4
  15. 15. Technology for audit Put technology for audit at the core of activities for the 2018-2020 period as a means to optimise and transform the way audits are performed under the following objectives: Page 15 Automate the full audit life cycle and reuse audit work Support new audit products and develop new data services Auditing IT 3 Objectives 1 2 3
  16. 16. the ABCDof digital audit: A for Artificial Intelligence B for Blockchain C for Cyber-security D for Data Analytics Robert Hodgkinson ICAEW
  17. 17. ECA developed framework Page 17
  18. 18. Short-term: REUSE analytics used to improve current processes •Knowledge Node on Data science •Identify case of application •Training of auditors in analytics using existing tools Mid-term: EXPERIMENT identify digital impact on the audit process •Create a Data Lab •Recruit and train data sciences •Investigate improvements to the SOA and performance Long-term: INDUSTRIALISE Propose new ways of working •Redefinition of processes •New products •Creation of a toolset (T4D) •Creation of cross-functional teams Road map – Towards digital audit
  19. 19. ECALab Page 19
  20. 20. ECALab: A physical space Page 20
  21. 21. The ECALab Created in 2017 as a step towards establishing data services tailored for audit, the ECALab is: with different job profiles and having personal interest in big data, data analytics, text mining, visualisation, machine learning, etc. equipped with "up- cycled" IT equipment such as servers and laptops where tools can be tested in real life conditions to share knowledge and ideas on technologies for audit where they can come to ask for advice, share ideas and search for solutions to problems or questions they have with books and people who are available to explain
  22. 22. ECALab home page Page 22
  23. 23. Automating the audit on EU agencies
  24. 24. Introduction Project Scope 24  Pilot project to move the annual agencies audits towards digital transformation  Demonstrate how innovative technology can be used to create opportunities for automation, estimate the qualitative benefits and identify the main barriers  6 executive agencies, which have similar administrative procedures and similar IT systems  the experience gained will also be useful for other agencies and SOA audits.
  25. 25. Definition of objectives Mixed teams Mapping Design of automated procedures Testing & optimization The pilot goes live Plan overview 25 Done On going
  26. 26. Full scope of the agencies’ audit
  27. 27. Scripting RPA Manual work Today Goal Moving from manual to automated procedures 27
  28. 28. Scope of the pilot project 3 lines of action • Robotic Process Automation • Scripting on full population extraction • Natural Language Processing (AI) on documents Page 28
  29. 29. RPA is a software solution executing a business process by following a pre-programmed sequence of events and integrating pre-defined business rules. 29 Opening email and attachments Logging into web/ enterprise applications Moving files and folders Copying and pasting Filling in forms Reading and writing to databases Scraping data from the web Making calculations Connecting to system APIs Extracting structured data from documents Collecting social media statistics Following “if/then” decisions/rules RPA is… RPA is not… Computer-coded software Programs that replace humans performing repetitive rules-based tasks Cross-functional and cross-application macros Walking, talking auto-bots Physically existing machines processing paper Artificial intelligence or voice recognition and reply software What it can do What is Robot Process Automation (RPA) ?
  30. 30. RPA in action Video Page 30
  31. 31. •Extract data from ABAC Datawarehouse •Payments and commitments •Legal commitments •Invoices •Workflows •Framework contracts •Partial import data on ECA Datawarehouse (quality checks) •exploring analytics on the 100% data population Page 31 Data analysis: scripting
  32. 32. ABAC Datawarehouse to ECA Datawarehouse Page 32 + Import Process Drop Zone Export Files DWH
  33. 33. ABAC Datawarehouse Page 33 Queries to Reports
  34. 34. Brainstorming sessions •Business data experts •IT data analysts •ETL experts •Data modelisation experts •Reporting specialists
  35. 35. Use of the combined data will allow users to : • make their own reports • By selecting or hiding columns • By adding and formatting visual graphics • Share their reports with their colleagues by publishing them to the Datawahouse Web portal Reporting options
  36. 36. Page 37
  37. 37. Page 38
  38. 38. Page 39
  39. 39. Process mining
  40. 40. Process mining
  41. 41. Full population audit
  42. 42. Zoom in process details
  43. 43. Zoom in process details
  44. 44. Closing remarks Page 45
  45. 45. Many opportunities and challenges  New Technology, return on investment  New Skills , redundant jobs  Teams vs. Individuals  Big data, Quality, Reliability, Trust, Legal compliance, GDPR Page 46
  46. 46. Collaboration • ECALab within ECA • In contact with other EU Institutions (EC, Council, ECB etc.) • Cooperate with academia: Summer School in public auditing and accountability (Pisa) 2018: Data mining and analytics for auditing 2019: Digital transformation of audit • Network with Supreme Audit Institutions •IntoSAI - EuroSAI •EU Member States - Stakeholder network on Blockchain - Technology and Innovation in Audit (Conference on Big and Open data) Page 47
  47. 47. Contact details Konstantinos Chatzis Program Manager Directorate of Information, Workplace and Innovation konstantinos.chatzis@eca.europa.eu Want to know more about our work: Visit our website: eca.europa.eu Follow us on Twitter @EUAuditors Check our page on LinkedIn and Facebook Watch our videos on YouTube: EUAuditorsECA Contact us at: ECA-info@eca.europa.eu

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