Fiscal Institutions Austrian Court of Audit and the Federal Financial Statements

1. FiscalInstitutions Austrian Court of Audit andthe Federal Financial Statements MMag. Günter Bauer, MBA

2. Austrian Court of Audit

3. Austrian Court of Audit • The Austrian Court of Audit (ACA) is an independentbodyofthefederalgovernment, theLaenderandthemunicipalities • The Austrian Federal Constitution lays down the tasks, function, organisational set-up and position of the ACA • The ACA isheadedbyitspresident • The presidentiselectedbythe National Council for a termofofficeof 12 years • The ACA hasfulfilleditstasksformorethan 250 years

4. General tasksofthe Austrian Court of Audit • Performance auditsofthefederalgovernment, theLaenderandmunicipalities (> 10,000 inhabitants) • Performance auditsofotherlegallydefined legal entities (chambersandsocialsecurityinstitutions) • Audit ofthe Federal Financial Statements andpublicationofthe Report on the Federal Financial Statements • Participation in drawingupthefederalbudgetwithregardtooutcomeorientation • Providing ongoinginformationaboutbudgetexecutionandoverrunsofbudgetallocations • Special tasks: Report on averageincomes

5. Tasks ofthe Austrian Court of Audit • Core tasks: auditandadvisoryactivities • Audits based on thefollowingcriteria: • economy • efficiency • effectiveness • Audits of financial operations are the ACA’s strategically most important area of task delivery • The ACA‘sevaluationisderivedfromitsauditfindings

6. Reporting tothe National Council • The ACA acts as a body of the National Council • The ACA submits its reports to the National Council and publishes the reports on its homepage • The reports of the ACA are dealt with by the Court of AccountsCommittee (CAC) • The presidentofthe ACA hastherighttoparticipateandtakefloor in thesessionsofthe Court of Accounts Committee.He standsavailabletorepresentativesforanyquestions.

7. Reporting tothe National Council • Afterwardsthereportsofthe ACA arediscussed in theplenarysessionsofthe National Council • Duringthediscussionofthereports in theplenarysessions, thepresidentofthe ACA ispresentandavailableforanyquestionsoftherepresentatives • The presidenthastherighttoattendtheplenarysessionsofthe National Council andtocomment on topicsconcerningthe ACA

8. Federal Budget Statement (partofthe Federal FinanceAct)

9. Federal Budget Statement • The Federal Budget Statement isbased on the Federal Medium-Term Expenditure Framework Act • The Federal Medium-Term Expenditure Framework Acthastobesubmittedtothe National Council by April 30thandhastocontaintheexpenditureceilingsforthefollowing 4 financialyears • The Federal Budget Statement isa plan concerningthefinancialrevenueandexpenditureofthefederalgovernmentfortheframeworkof 1 year

10. Federal Budget Statement • The Federal Budget Statement containsthebudgetbased on an operatingstatementandthebudgetbased on a cash-flowstatement • Systematicstructureofthe Federal Budget Statement • Headings, Chapters, • Global Budgets, • Detail Budgets (1stand 2ndlevel) • The Federal Budget Statement hastocontaininformationaboutoutcomeorientationforeach Chapter and Global Budget

11. Participationofthe Austrian Court of Audit • The presidentofthe ACA hastherighttoplacenotes/recommendationsderivedfrom relevant performanceauditswithregardtotheoutcometargetsofthe Federal Budget Statement (in theframeworkofimpactorientation) • The ACA hastosubmitthecomparativecalculationsofthe Federal Budget Statement ofthepreviousfinancialyearby April 30thThese calculationsservethe National Council as a basisforitsdecision on theFederal Medium-Term Expenditure Framework Act

12. Budget Execution

13. Participationofthe Austrian Court of Audit • Participationin thecreationoffinancialdebt: • all financialdebtinstruments must becountersignedbythepresidentofthe ACA • Participation in thetransferofbudgetfunds: • reportingobligationofthe Federal Minister ofFinance in caseofoverrunsofapprovedbudgetallocations

14. Report on the Federal Financial Statements

15. Report on the Federal Financial Statements

16. Report on the Federal Financial Statements • The Report on the Federal Financial Statements hastocontain a textpartand a setoffigures • The Federal MinistryofFinancedrawsuptheConsolidated Financial Statements (setoffigures) • The ACA auditsthe Financial Statements in accordancewithSection 9 ofthe Court of Audit Act • The ACA prepares an analysisofthefiguresand a reportoftheaudit in accordancewithSection 9 ofthe Court of Audit Actforthetextpart

17. Report on the Federal Financial Statements • The ACA submitsthe Report on the Federal Financial Statements tothe National Council (textpartandsetoffigures) • The Report on the Federal Financial Statements isdiscussed in theBudget Committeeofthe National Council • The presidentofthe ACA ispresentduringthediscussionofthe Report on the Federal Financial Statements andstandsavailabletotherepresentativesforanyquestions

18. Report on the Federal Financial Statements • Afterwardsthe Report on the Federal Financial Statements isdiscussed in theplenarysessionsofthe National Council • Duringthediscussionsofthe Report on the Federal Financial Statements in theplenarysessions, thepresidentofthe ACA ispresentandstandsavailableforanyquestionsoftherepresentatives • The National Council adoptsthe Report on the Federal Financial Statements, whichthenhastheforceoffederallaw • The Report on the Federal Financial Statements ispublishedbythe ACA (accessibletothepublic)

19. Report on the Federal Financial Statements • Content: • 5 Statements: • Comparison Budget Statements ofthecash-flowstatement • Comparison Budget Statements oftheoperatingstatement • Consolidatedstatementoffinancialposition • Consolidatedoperatingstatement • Consolidatedcash-flowstatement • Detailednotes • Financial Statements for all levels

20. Audit ofthe Federal Financial Statements • Section 9 Court of Audit Actstipulatesthat all Line Ministers havetosubmittheprepared Financial Statements tothe ACA • The ACA conductstheauditofthe Financial Statements • The ACA hastocomplywith national and international standards => • Applicationofthe ISSAIs (International Standards of Supreme Audit Institutions) • Applicationofthe ISAs (International Standards on Auditing)

21. Audit ofthe Federal Financial Statements • Relevant Standards forauditplanning: • ISSAI 1300 Planning an Audit of Financial Statements • ISSAI 1315 IdentifyingandAssessingtheRisksof Material Misstatementthrough Understanding theEntityandits Environment • ISSAI 1320 Materiality in PlanningandPerforming an Audit • ISSAI 1330 The Auditor‘s Responses toAssessedRisks

22. Audit ofthe Federal Financial Statements • Accordingto ISSAI 1300 and 1315, an auditofthe Internal Control System hastobeconducted • Fortheauditofthe Internal Control System, theresultsoftheACA‘sperformanceauditsareusedasfaraspossible • Special functionalauditsforparticularlyimportantor relevant businessprocesses • Selectionofauditfields on thebasisof a risk-orientatedaudit

23. Audit ofthe Federal Financial Statements Risk-Orientated Audit: • DeterminingtheMaterialityaccordingto ISSAI 1320 • Determiningthe Overall Materiality: 1% ofthefederalexpenditure (75 billioneuros)=> 750 millioneuros Overall Materiality • Sumofthefindings max. 750 millioneuros • Reductionof 30% fortheMaterialityof individual businessprocesses=> 525 millioneurosPlanningMateriality

24. Audit ofthe Federal Financial Statements • Adjustmentofthereductionaccordingtothequalityofthe Internal Control System:effective Internal Control System => high reductiondefectiveor absent Internal Control System => lowreduction • ProcessesorpositionsbelowthePlanningMaterialityare not audited • As to material processesorpositionsthesumof non-auditedpositionshastoremainbelow 525 millioneuros

25. Audit ofthe Federal Financial Statements • Exampleofguarantees: Total amountoftheprocessguarantees: 1,830.11 millioneuros Allocationto global gudgets: 46,01 Financial stability 1,336.61 millioneuros 45,01 Federal guarantees 493.50 millioneuros Result: The amountofthe global budget 46,01 isabovethePlanningMaterialityandhastobeaudited. The amountofthe global budget 45,01 isbelowthePlanningMaterialtyof 525 millioneurosanddoes not havetobeaudited.

26. Audit ofthe Federal Financial Statements • Functionalauditsof Internal Control Systems ofbusinessprocesseswith high transactionvolume. • Forthefinancialyear 2013, thefollowingprocesseswereselected: • PersonnelProcess (about 8.6 billioneuros) • FinancingProcess (about 7.3 billioneuros) • Labour market (about 6.4 billioneuros)

27. Audit ofthe Federal Financial Statements Other auditprocedures: • Substantive audit:Selectingsamplesfrom all Chapterstoaudittheregularityandlegality (randomsamples)

28. Audit ofthe Federal Financial Statements Other auditprocedures: • Analytical auditproceduresto check theplausibilityofchanges: • Definition und comparisonofexpectedtargetfigureswithactualchanges • Iftheactualchanges do not correspondwiththeexpectedtargetfigures, additional auditprocedureshavetobeconducted

29. Audit ofthe Federal Financial Statements Process • The auditproceduresareconductedbytheresponsibleauditorsofthe ACA in coordinationwithexperts • The ACA describesthefindings in thereport on theresultsoftheaudit in accordancewithSection 9 ofthe Court of Audit ActanddepositsrequeststoremedydeficienciestotheresponsibleLine Ministers • The ACA drawsup a report on theauditresult in accordancewithSection 9 ofthe Court of Audit Act.This reportissubmittedtotheNational Council togetherwiththeReport on the Federal Financial Statements.

30. Audit ofthe Federal Financial Statements Have a pleasantday!