Recommendations in peer review of the Netherlands Court of Audit contribute to strategy for 2021-2025 and consultations with Parliament

At the request of the Netherlands Court of Audit, the national audit offices of Sweden, the United Kingdom and Canada carried out a peer review of the Court’s audit selection and the quality of its audit methods and publications. In the international peers’ opinion, the Court of Audit has the required mandate, staff and culture for high quality public auditing to improve the performance and functioning of central government. The peer reviewers made recommendations for improvement. The recommendation to demonstrate the Court’s independence in external financial audit calls for an amendment to the applicable laws and regulations.

The Court’s Board has decided to translate the recommendations into working arrangements as soon as practicable, taking compliance with the International Standards of Supreme Audit Institutions (ISSAIs) where possible as a basis. In response to the review report, the Board said: ‘We are pleased with the peer review report’s main conclusion that the Netherlands Court of Audit – benefitting from a broad mandate, highly skilled staff, a well-functioning operational framework, and a culture of exploring innovative audit techniques – has key elements in place for high quality public auditing. The report provides us with valuable observations and findings to help us improve our work.’

Practices and products under review

Between October 2019 and the autumn of 2020, the three supreme audit institutions reviewed the Court of Audit’s practices and products against international standards. The review focused on the quality of the Court’s audit selection and programming, the quality of its financial audits, and the quality of its performance audits. The reviewers examined internal documents, interviewed several dozen internal and external stakeholders, and reviewed a sample of nine audit reports. The Court of Audit published the peer review report on 25 January 2021. In its accompanying letter to the House of Representatives, the Court points to the Dutch system for auditing the central government’s financial reporting information and its unique set-up from an international perspective. The Central Government Audit Service (ADR) conducts audits at the ministries, while the Court of Audit, in its capacity an external auditor, assesses the quality of that work and performs its own additional audit work.

Recommendation poses a dilemma

The international reviewers recommend that the Court of Audit perform more financial audit work and risk assessments, with a view to safeguarding its independence. One of the Court’s tasks under its exclusive statutory mandate is to provide Parliament with an opinion on the ministers’ annual reports and the central government accounts for the purpose of granting discharge. This recommendation poses a dilemma requiring Parliament’s attention. Its implementation would detract from the audit system’s efficiency and cause a major shift in the Court of Audit’s work. The Court would have less available capacity to conduct performance audits examining the efficiency and effectiveness of government policy.

In the letter to the House of Representatives, the Court of Audit suggests modernising the financial audit system. In the proposed set-up, the Court, in its capacity as the central government’s external auditor as enshrined in the Constitution, would exert more control over the audit work done by the ADR. The Court would also perform more risk assessments and audit work to underpin its independent opinion.

New strategy addresses strengthening the Court’s position

The reviewers praise the high quality of the Court of Audit’s staff and data analyses, as well as the impartial tone and the use of graphics in its reports. The Court is commended for exploring innovative audit methods.

Many of the reviewers’ recommendations are designed to further strengthen the Court of Audit’s audit practices and position. The Court has incorporated some of the recommendations directly into its new strategy for 2021-2015, entitled Trust in Accountability and published simultaneously with the peer review report.