Pursuant to Article 100 of the Italian Constitution, the Corte dei conti carries out ex ante auditing over the legitimacy of Government measures and ex post auditing regarding the management of the Budget of the State. The Corte dei conti audits the financial management of entities, including undertakings, receiving regular budgetary support from the State.
It reports directly to Parliament on the results of audits performed. It is autonomous and independent from all the other powers of the Italian State. Its members are judges and are autonomous and independent from the Government.
The “ex ante” compliance audit
The “ex ante” compliance audit is performed on the most important measures and administrative directives issued by the Government, such as programming documents, provisions adopted on the basis of the Council of Ministries’ decisions; administrative regulations; instruments implementing European Union legislation; measures allocating and distributing funds; the most important supply contracts and awards of tenders; measures taken in relation to State property; orders issued by the Minister of the Economics and Finance relating to the State budget (variations, short term debts, etc.).
The main characteristics of the ex-ante control performed by the Corte are:
(i) It is an audit of legitimacy, i.e. it controls the statutory compliance (including the Budget Act) of instruments and measures. Ex ante audits are carried out to guarantee compliance with Parliament’s budget decisions and to prevent any irregular use of public money. No assessments are made as to the merits of the measures;
(ii) Its formal functioning is strictly regulated: when the Corte has ruled the measure lawful it applies a 'visa' to clear the measure. If the Corte rules that the measure is unlawful, it withholds clearance and it provides a reasoned decision;
(iii) Accordingly, the audited measures become effective and entry into force only after the Corte dei conti’ ‘visa’ clearance has been issued;
(iv) This audit has a strict timing: sixty calendar days within which the Corte’s audit procedure has to be concluded (not considering the time – no more than thirty days – for the Government’s answer).
(v) Government initiative: if the Corte dei conti has declared a measure to be unlawful and has refused to give it clearance, the government may issue a resolution requesting the Corte to 'clear' the unlawful measure;
(vi) Guarantees: this request, which obliges the Corte to issue ‘qualified clearance’ to a measure which it deems to be ‘unlawful’, is perfectly consistent with the theory (and in Italy with the practice) of an audit which, while retaining the features of independence and safeguarding the public interest, may under no circumstances hamper the implementation of the ‘political program’ for which the government has obtained a vote of confidence in Parliament. This has a ‘political’ consequence, indicated below;
(vii) The Corte must notify Parliament within 15 days of the measures which have been ‘cleared’ upon the request of the government. It is therefore Parliament's task to take the ‘political’ decision whether or not to ratify the government measure that the Corte dei conti has ruled to be unlawful.
The list of the measures under the compliance audit are laid down by Article 3 of Law N.20/1994.
The ex post performance audit
The performance audits involve the entire activity of public administrations and bodies with the aim of assessing the respondence and compliance of results with the objectives laid down by law. It is carried out on:
– Public authorities and state agencies, including independent authorities;
– Public funded bodies;
– Regions, provinces, municipalities, metropolitan cities and their in-house providing companies.
At the beginning of the year, the Corte dei conti approves its general audit plan, covering audit policies, strategies and criteria for Central Audit Chambers as well as indications for Regional Audit Chambers. Moreover, each Central and Regional Audit Chamber creates its own audit plan.
The performance audit handled by the Corte dei conti has two main schemes:
(i) recurrent/mandatory audits: this audit deals with: (a) State financial decisions, which the Corte is required to certify for the accuracy and completeness of the accounting results set out in the balance sheet and financial account. Together with this certification, the Corte grants and submits to the Parliament a report on the audits and inspections on different Ministries performed during the year, and the assessments of the Corte regarding macro-economic aspects of government policy; (b) the civil servants staff costs; (c) the functioning of the system of public universities; (d) the functioning of the public IT’s systems; (e) the off-budget revolving fund management; (f) the primary school education. The results of all these audits are also submitted to the Parliament in separate reports;
(ii) programmed audits: these audits are based on annual programmes delivered by the United Chamber for the Performance Audit of the Corte. It should be emphasized that the ex-post audit is essentially a performance or value-for-money audit, which is based on the principle of ‘collaboration’ (not punishment) with the government department being audited. This kind of audit is designed to underpin the political scrutiny of the audited government department and to propose corrective measures with the aim of ensuring a regular and cost-effective management.
The general principles of the performance audit activity are:
- Relationship between the Audit Chamber and Internal Audit offices; proceedings should be inter partes with the audited administrations and bodies.
The cooperative relationships between internal auditors and external auditors is based on the fact that the Corte is an impartial guarantor of the economic and financial equilibrium of the public sector, and in particular of the sound management of public resources in terms of effectiveness, efficiency and cost-effectiveness (value for money audit).
Continuous and direct relationships between the Corte and the administrations is deemed fundamental in the performance audit activity. Accordingly, the Corte receives and exchange information and opinions of the auditees before completing its report to the Parliament. It is deemed necessary to have information flows and exchange of opinions between the audited administrations and the Audit Chambers.
For its performance audits, the Corte dei conti publishes documents with evaluations, observations, and recommendations. The auditees must follow these recommendations to address issues in the area of the management of public finances and to improve their administration. The audited bodies and entities must inform the Corte dei conti about the measures undertaken based on the Corte’s recommendations.
Every year the Central Chamber for the Performance Audit over the Management of the State Administrations elaborates a report on the level of implementation of recommendations.