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

1. Digital Audit at the
European Court
of Auditors
Presentation by
Konstantinos Chatzis
07 November 2019

2. The European Court of Auditors

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. 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. 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. 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. 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. 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. 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. The ECA’s audit work in practice

11. Foresight, Strategy and Plans

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. 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. 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. 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. the ABCDof digital audit:
A for Artificial Intelligence
B for Blockchain
C for Cyber-security
D for Data Analytics
Robert Hodgkinson
ICAEW

17. ECA developed framework
Page 17

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. ECALab
Page 19

20. ECALab: A physical space
Page 20

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. ECALab home page
Page 22

23. Automating the audit on EU agencies

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. Definition of objectives
Mixed teams
Mapping
Design of automated procedures
Testing & optimization
The pilot goes live
Plan overview
25
Done
On going

26. Full scope of the agencies’ audit

27. Scripting
RPA
Manual work
Today Goal
Moving from manual to automated procedures
27

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. 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. RPA in action
Video
Page 30

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. ABAC Datawarehouse to ECA Datawarehouse
Page 32
+
Import
Process
Drop
Zone
Export
Files
DWH

33. ABAC Datawarehouse
Page 33
Queries to Reports

35. Brainstorming sessions
•Business data experts
•IT data analysts
•ETL experts
•Data modelisation
experts
•Reporting specialists

36. 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

37. Page 37

38. Page 38

39. Page 39

40. Process mining

41. Process mining

42. Full population audit

43. Zoom in process details

44. Zoom in process details

45. Closing remarks
Page 45

46. 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

47. 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

48. Contact details
Konstantinos Chatzis
Program Manager
Directorate of Information,
Workplace and Innovation
konstantinos.chatzis@eca.europa.eu
Want to know more about our work:
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Contact us at: ECA-info@eca.europa.eu