EIDGENÖSSISCHE FINANZKONTROLLE CONTRÔLE FÉDÉRAL DES FINANCES CONTROLLO FEDERALE DELLE FINANZE SWISS FEDERAL AUDIT OFFICE

Annual Report 2009 on the Activity of the Swiss Federal Audit Office

Editorial

The Swiss Federal Audit Office, a politically out its duties in a highly dedicated and profes - neutral specialist authority, is the supreme sional manner. The deficiencies listed in this financial supervisory body of the Confederation. report are not intended to call this opinion into Its aim is to advocate proper and lawful finan - question. I would like to take this opportunity to cial conduct by the Administration. In an age thank the Finance Delegation and the Federal of results-oriented public management, it is Council, which understand the role of the Swiss increasingly committed to improving the effective- Federal Audit Office as an independent, critical ness of government activity via comprehensive audit authority. I would also like to express my audits and analyses. The Swiss Federal Audit gratitude to the numerous employees in the Office seeks to locate deficiencies and weak - audited offices who readily supported the work nesses by taking a critical view, and not only to of the Swiss Federal Audit Office in the interests achieve temporary improvements but also to of the cause at hand. Finally, I would like to fundamentally optimize government actions thank the employees of the Swiss Federal Audit thanks to professional advocacy. Consequently, Office, who go about their demanding work with the Swiss Federal Audit Office focuses on dedication and motivation in the interests of dialogue with those audited in order to ensure taxpayers. its recommendations are willingly accepted. During its audits, the Swiss Federal Audit Office Bern, March 2010 found that the Federal Administration carries Kurt Grüter 1 Key audit points 6

1.1 National defence 6 1.1.1 Federal contracts awarded to the RUAG technology group 6 1.1.2 Economic efficiency, deployment and control of military systems 7 1.1.3 Financial management at the ABC centre of expertise 9 1.1.4 Application of the tenant model in the Armed Forces 9 1.2 Transportation 10 1.2.1 Road traffic 10 1.2.2 Rail transportation 11 1.2.3 Settlement of the federal loan by Swissair 14 1.3 Education and research 15 1.3.1 Secondary occupation of university professors 15 1.3.2 Strategic planning and cost transparency in animal experiments 16 1.3.3 Management of energy research financed by the Swiss Confederation 17 1.3.4 Procurement in the ETH research institutes 18 1.4 Health and social welfare 20 1.5 Relationships abroad 21 1.6 Finance and taxation 23 1.6.1 Evaluation of corporate control in direct federal taxation 23 1.6.2 New fiscal equalisation and the re-delegation of tasks between the federal government and the cantons 23 1.6.3 Exchange rate hedging 25 1.7 IT in the Federal Administration 26 1.7.1 Norms and standards 26 1.7.2 INSIEME programme of the Federal Tax Administration 27 1.7.3 The eGovernment platform of the Swiss Official Gazette of Commerce 27 1.7.4 Security of the IT networks between the federal government and the cantons 28 1.8 Other task areas of the federal government 29

2 Audits of financial statements 32

2.1 State Account 32 2.2 Fund for Large-Scale Railway Projects 32 2.3 Infrastructure Fund 33 2.4 Social security systems 34 2.5 Companies and institutions 35 3 International organisations 36

4 Outstanding audit recommendations and notifications 37

4.1 Implementation of the SFAO’s recommendations 37 4.2 Outstanding audit recommendations as per Art. 14 of the Federal Auditing Act 37 4.3 Notifications as per Art. 15 of the Federal Auditing Act 37 4.4 Whistleblowing: valuable support for the SFAO 38

5 Legislative procedure and opinions 39

5.1 Revision of the Federal Auditing Act 39 5.2 Opinions and consultations 40 5.3 Participation in specialist committees 40 5.4 Communication of best practices 40

6 The SFAO and other supervisory bodies 42

6.1 Cantonal financial audits 42 6.2 Financial inspectorates at federal level 42 6.3 Courts of audit in other countries 43 6.4 Professional organisations and associations 43

7 Introduction to the Swiss Federal Audit Office 44

7.1 Institutional position and tasks 44 7.2 Employees 45 7.3 Finance 46 7.4 Risks 47

8 Outlook 48

A Annexes

A1 Overview of the audits in 2009 50 A2 Financial Inspectorates 62 A3 Organisational Chart 63 A4 Abbreviations 64 Overview

The Swiss Federal Audit Office (SFAO) is the In accordance with Art .14 of the Federal Audit - supreme audit institution of the Swiss Con- ing Act, the SFAO submits a report annually to federation. It is autonomous and independent the Finance Delegation of the Federal Assembly and, pursuant to Art. 1 of the Federal Auditing and the Federal Council on the scope and high - Act, is bound only by the constitution and the lights of its audit work, key findings and evaluat- law. It supports the Federal Assembly in exer - ions and on outstanding audit recommendations. cising superintendence and the Federal Council In the year under review, the SFAO conducted in fulfilling its supervisory role. One of the core some 140 audits of financial supervision and tasks of the SFAO is to audit the federal budget. financial statements, concluding with a written The SFAO intervenes at all levels of budget exe- report. The introduction of the New Accounting cution, e.g. conducting audits of annual finan - Model (NAM) brought some fundamental cial statements, on-site audits of the admin- changes to financial management within the istrative units, semi-governmental organisations Federal Administration. The SFAO found that and subsidised bodies within the scope of finan- the administrative units have embraced this cial supervision or through preventative controls, change wholeheartedly and, for the most part, before any liabilities are contracted. All federal with success. Its audits revealed, however, that government administrative units, subsidised the new accounting principles, the internal bodies and organisations of all legal forms out - service charges or the internal control system side of the Federal Administration entrusted with are not yet correctly applied across the board, the performance of public tasks by the Con- which – given the complexity involved – is hardly federation are subject to financial supervision. surprising. The SFAO will continue to lend its As set out in Art. 5 of the Federal Auditing Act, support in the future to help consolidate the the SFAO executes financial supervision accord- NAM, using its recommendations to optimise ing to the criteria of regularity, legality and econ- the costs/benefits trade-off rather than creating omic efficiency. Using efficiency audits and eval - further bureaucracy. In the procurement of uations, the SFAO seeks to contribute to the goods and services, the SFAO found itself development of New Public Management and repeatedly having to insist on compliance with raise the effectiveness of programmes. The procurement law and insist on competition in audit mandates are selected on the basis of the awarding of contracts. With regard to fiscal risk criteria. The audits cover the internal con trol equalisation, the SFAO noted further progress system, risk management and various aspects in the quality of data for the equalisation of of good governance. In its 2009 Country Report, resources and compensation of burdens. the International Monetary Fund ac knowledged the SFAO’s comprehensive scope of supervision and its independence.

4 Swiss Federal Audit Office SFAO Annual Report 2009 The SFAO’s workforce accounts for around The findings below relate to events and circum - three-quarters of its expenses of CHF 20 million. stances from the years 2008 and 2009 noted It completes 90% of its yearly programme using in the course of audits in the year under review. its own staff; the remaining 10% is done by ex - The complete list of audits is given in Annex 1. ternal consultants. The SFAO’s expenses make At the time of compiling this report, the extent up 0.3 per mil of the federal government’s over - to which the irregularities found had been recti - all expenses. fied and the SFAO’s recommendations already implemented could not yet be determined. The This report outlines the SFAO’s findings and follow-up audits provide an opportunity to eva l- working methods. Chapter 1 looks at the key uate the current status on a case-by-case basis. audit points of financial supervision, broken down by federal government task area. In addition to financial supervision, the SFAO also conducts various audit mandates of financial statements. The most important mandate is the audit of the State Account. Chapter 2 summarises the main findings of this audit and comments on the audit findings at the social security institutions, the Federal Institutes of Technology and other organisations. Chapter 3 gives an overview of the audit work carried out at international organisations. Chapter 4 provides information on outstanding audit recommendations and on whistleblowing. Chapter 5 looks at other services offered by the SFAO, such as issuing opinions in the legislative procedure, participat- ion in technical committees and communication of best practices. Chapter 6 gives an overview of the SFAO’s network of relationships with other supervisory bodies and professional associations, with whom it can share a wealth of ideas and experience. Chapter 7 contains a profile of the SFAO.

5 Swiss Federal Audit Office SFAO Annual Report 2009 Key audit points

1.1 National defence civilian contracts and that the best value for money is obtained for federal contracts. The In the DDPS the SFAO examined various areas, audit examined the individual subsidiaries with particularly procurements, issues concerning regard to the margins on federal contracts in RUAG, projects related to command and recon- comparison with third-party orders. The com - naissance systems and individual administra - parison aims to show whether any inadmissible 1tive units. The complete list of audits is given cross-financing occurs. in Annex 1. The SFAO concluded that the dependence of RUAG subsidiaries on DDPS contracts varies, there is no cross-financing in favour of third- 1.1.1 Federal contracts awarded party contracts, and the profit margins of RUAG to the RUAG technology group companies in Switzerland are higher than those In 2007, the National Council’s Defence in other countries. The provisions applicable Committee commissioned an Administration- to procurements in the armaments sector independent audit of RUAG’s business activities. were observed. There is some potential The matter was delegated to the Finance Dele - for optimisation in the area of defence procure - gation of the Federal Assembly, which mandated ment. Attention was drawn to the various the SFAO to conduct the audit. The RUAG interests and focuses relating to the armament technology group manufactures military and industry. Political, security policy, business civilian products and offers corresponding management and legal parameters conflict in services. RUAG Holding emerged from the some areas. The SFAO’s recommendations federally-run armament enterprises and was were taken up by the competent bodies and converted into a corporation under private law included in various projects. effective 1 January 1999. The Swiss Confed- A comparison with Finland and Norway showed eration is the sole shareholder. In 2007, sales that an independent guarantee of procurement, were CHF 1.4 billion, of which 34% went to the maintenance and support of armaments also Federal Department of Defence, Civil Protection forms a key criterion in these countries’ and Sport (DDPS). RUAG is expected to be defence policy. Nonetheless, both Finland and competitive in both the civilian and the military Norway have scaled back their State holdings field. A reasonable EBIT margin (earnings be - in defence companies in recent years. Finland fore interest and tax) of more than 6% should has consolidated its industrial position in the be achieved, without achieving "unreasonable" defence sector with the help of a major inter- profits on DDPS monopoly contracts. In 2007, national partner. Norway, by comparison, has earnings were 5.4%. Today, RUAG employs chosen to go public, combined with diversifi- 6,700 people, 3,800 of whom work in Switzer - cation into non-military markets. Also in Switzer- land. The audit seeks to determine, in particular, land, it has been recognised that an armaments whether there is any dis tortion of competition enterprise requires a certain size as well as between the DDPS mono poly contracts and diversification into other sectors in order to

6 Swiss Federal Audit Office SFAO Annual Report 2009 survive in the long term. In recent years, RUAG The priority in auditing electronic combat (EC) has primarily pursued this goal by acquiring was the operational readiness of systems, the other companies. The report is available for operating and maintenance costs as well as download at www.efk.admin.ch . economic efficiency. The SFAO also analysed project management in the procurement of 1.1.2 Economic efficiency, IFASS (Integrated Radio Reconnaissance and deployment and control of military Transmission System), ELINT-S (electronic systems intelligence) and COMMINT-HVU (radio intel- In the Armed Forces, the SFAO audited various ligence) for the Air Force. areas of the command (C4I) and reconnaissance The SFAO found that the operators (militia, system (ISTAR) under construction. The focus regular army, civilian personnel) can guarantee here was on issues of strategic planning and operational readiness of the electronic combat control of the C4I and ISTAR programmes, the systems within the scope of the defined mini - economic efficiency and deployment of elec - mum requirements. The deficiencies are primar- tronic combat (EC) systems and procurement ily due to technical problems, in some cases for certain projects or systems. related to the age of the systems. The mainte - The term “electronic combat” is used in Switzer - nance costs for all electronic combat systems land for signals intelligence and electronic war - amount to some CHF 20 million annually and fare comprising a variety of systems. Electronic are clearly posted. These costs are likely to combat as a whole is a subset of the command increase twofold with the introduction of new (C4I) and reconnaissance system (ISTAR) large-scale projects, such as IFASS. The oper - under construction. The command and recon- ation and maintenance of the systems is en - naissance system accounts for around one-third trusted almost exclusively to the in-house RUAG of the earmarked defence investments and, with technology firm, which thus practically holds a an investment volume of CHF 5.6 billion in the monopoly position. The savings potential through period 2003 to 2015, is one of the Swiss Armed outsourcing would be quite limited. Forces’ main expenses. The audited projects are characterised by a high degree of technical complexity and are mutually dependent. It is therefore all the more important to have an overall strategy, a transparent and comprehensive overview of costs, strict con- trolling and close cooperation between the vari - ous departments – requirements that are not adequately met at present.

7 Swiss Federal Audit Office SFAO Annual Report 2009 No clear EC strategy addressing both military ing position. It is unusual that armasuisse acts and civilian needs was clearly discernable. as project leader, purchaser and also general Electronic combat is a key element in obtaining contractor in the IFASS project. Such a con- intelligence for the intelligence service. The centration of roles in a project with costs of expansion of this service has raised its signifi - some CHF 400 million requires, at a minimum, cance. The strategy for electronic combat must strict supervision on the part of the client, be aligned with that of the intelligence service, which the SFAO did not find to be the case. which was not always done in the past. Despite In particular, the division of roles between the scarcity of resources, priorities should be the client and project supervision should be set between military and civilian requirements. more clearly defined. Cooperation among all those concerned within The precise investment volume for C4ISTAR is the DDPS could be improved, such coopera - very difficult to determine. The CHF 5.6 billion tion being crucial for cost-effective operation already mentioned represents only part of and maintenance of the systems. the overall costs, as the sub-projects already The SFAO found that the projects IFASS, completed, among other things, are not included. ELINT and COMMINT had a very long project The SFAO also found that the allocation of the duration for such an uncertain environment. various projects to the C4ISTAR programmes Major reforms in the Armed Forces and various is not clearly defined. Postponements, personnel changes during this time, combined cancellations and the redimensioning of with rapid technological developments, pose various projects threaten both the timing and a risk to the successful completion of these the content of the planned command and projects, despite the high personal commit- reconnaissance system C4ISTAR. Army ment shown by the project team. These pro - management has thus decided to draw up jects were start ed before the overall objectives an overview of C4ISTAR as a planning basis. and parameters had been sufficiently clarified The relevant dependencies of the different and formulated. The project structure plan was C4ISTAR projects among themselves and not sufficiently detailed and there were no clear with other weapons systems should be demon - guidelines. The various competencies were strated. On this basis it will then be possible also unclear. Some of the user organisations to define those elements that are crucial for had not adequat ely defined their requirements C4ISTAR’s contribution to Army XXI. In this in the planning phase and coordination was context, the roles of those involved in the poor, thus placing the vendor was in a bargain - programme should also be defined.

8 Swiss Federal Audit Office SFAO Annual Report 2009 The DDPS supports the SFAO’s recommend- 1.1.4 Application of the tenant ations and has set up several study groups to model in the Armed Forces devise possible solutions for their implement- The SFAO audited the role of the Armed Forces ation. Also, in response to the SFAO’s reports, Staff as a strategic tenant of the Defence group. Army management has imposed a temporary The introduction of the federal government’s lending moratorium for all projects related to New Accounting Model (NAM) and DDPS C4ISTAR, so as to assess the current situation. Property Management should help promote Based on an initial control, around two-thirds greater cost awareness and support the cost- of the projects have been approved for effective utilisation of resources. Within the continuation . scope of property management, the admin- istrative units are called upon to analyse care - fully their surface requirements, plan for the 1.1.3 Financial management at medium to long term and budget for the corre - the ABC centre of expertise sponding rental costs. The SFAO found that The SFAO audited financial management at important steps have been taken to manage the Armed Forces’ ABC (atomic, biological, the quantity structure. The Armed Forces’ chemical) centre of expertise in Spiez. The stationing concept was a first step towards audit findings were positive. Nonetheless, the defining future property requirements with SFAO recommended improving the cost trans - respect to specific systems and made an initial, parency by including all expenses for the ABC rough allocation of utilisation. The stationing centre of expertise in the accounts. The ABC concept has not yet been implemented, how- centre of expertise and the laboratory in Spiez ever, meaning that some important objectives are under the administrative control of the DDPS. have not been met. The property portfolio The laboratory in Spiez has its own admin- has thus not yet been adjusted, so the target istration, while the ABC centre of expertise is quantity structure has still not been definitively affiliated with a central structure. Moreover, defined, analysed and optimised. Regional and they are funded from difference sources and local concepts do not yet exist in full either. An the overall costs are not easily determined. important basis for formulating and evaluating The SFAO recommended raising ABC’s training the requirements of individual projects is thus costs for non-federal organisations, such as missing. Moreover, as the volume structure has emergency organisation and cantons, and not been adapted to the services, which have seeking a higher level of cost absorption. The already been reduced, military buildings have not fees charged for such courses do not cover the been sufficiently maintained. This unplanned actual infrastructure, teaching and preparation loss in value poses a threat to current and costs. In most cases, participants pay only future utilisation. their accommodation expenses. The feedback referred to the technical and financial difficulties in implement ing the recommendations. Cooper - ation between the laboratory and the centre of expertise should be optimised with the new performance contracts.

9 Swiss Federal Audit Office SFAO Annual Report 2009 The SFAO thus recommended that the lacking 1.2 Transportation use concepts be drawn up as soon as possible and the measures from existing concepts be 1.2.1 Road traffic implemented. From a purely cost point of view, At the Federal Roads Office (FEDRO), the the stationing and use concepts should be de - SFAO audited cost variance with respect to fined in accordance with business management ten motorway tunnels and the awarding of criteria and not consider any regional-policy contracts for national roads. interests. The master plan has not yet fully integrated the co-called “small” projects and The SFAO analysed the cost variance for maintenance activities. 10 motorway tunnels and found that the actual The property projects are steered by way of final costs exceeded the budget by an average investments and not the rental income. This of 20%. International studies show that the costs does not comply with NAM guidelines, under for underground projects are systematically which the rental income gives the administrative underestimated. With this audit, the SFAO sought units greater financial responsibility. Finally, to determine the cost variance of selected pro - from a purely investment point of view, there is jects and verify the quality of cost estimates. a greater risk of decisions being taken in favour The motorway tunnels under audit were built of a less costly investment or against a costly by the cantons and had to be approved by maintenance project. According to the Armed FEDRO. Forces Staff, effective steering by way of rental The SFAO criticised the lack of transparency in income is hindered by the absence of savings the cost variance. It found the documentation to incentives. In agreement with armasuisse prop - be incomplete and of inconsistent quality. It had erty, the Head of the Armed Forces has taken difficulty determining the costs. The analysis note of the audit findings and the SFAO’s recom- found that, in the ten audited projects, the in- mendations. flation-adjusted (i.e. real) costs came in at 77% to 187% of estimated costs, with, on average, an increase of 20%. The greatest discrepancies occurred at the contract-awarding stage. The final bids varied between 58% and 165% of the estimates. Even where bids were lower, how - ever, modifications in the form of contract riders could still be made during the construction phase. In almost all projects, the costs were higher than those originally agreed upon by contract. Between the contracted amount and final costs, cost variance was between -12% and +88%.

10 Swiss Federal Audit Office SFAO Annual Report 2009 In five projects, changes were made to procurement phase is given appropriate atten - quantities or services without any actual tion. project change, pointing to a certain degree of inaccuracy in the original estimates. The SFAO also found shortcomings with respect to controlling and reporting. With the new delegation of tasks, FEDRO took on full responsibility for the national roads network at the start of 2008 and now assumes the role of project owner, except for projects related to completing the network. The SFAO sees the introduction of new guidelines for project management and investment controlling as a step in the right direction. It formulated a number of recommendations based on the 1.2.2 Rail transportation new delegation of tasks between the federal The key audit points were AlpTransit, noise government and the cantons in the future. It abatement and regional transportation. sees potential for improvement in project and cost management, the tendering process, risk The SFAO plays an attendant role in the financial management and in FEDRO’s role as the pro - supervision of AlpTransit . The audits of the ject approval body. FEDRO has accepted the SFAO and the Federal Office of Transport recommendations and intends to implement (FOT), the external auditors under company these in the near future. The report is available law and the contractors’ internal supervisory for download at www.efk.admin.ch . bodies are coordinated. At the SFAO’s initiative, this coordination and information platform was For the most part, the awarding of contracts set up for all control bodies. This has helped to for national roads is in conformity with the improve the efficiency of supervision, rule out procurement rules. The SFAO recommended duplication, foster the “unité de doctrine” and entering into framework contracts or agreeing eliminate audit gaps in the case of high risks. on options in new contracts so as to avoid Comprehensive IT audits and systematic risk having to split contracts. FEDRO’s internal analyses by the individual control bodies were audits of procurement and contract-awarding initiated by the SFAO. The audits are evaluated are carefully planned and implemented. How - by the SFAO, providing indications for its own ever, the choice of acquisitions to be audited risk analysis and for use in quality assurance. should increasingly be made on a risk-oriented With an evaluation of the FOT’s status reports, basis. The issue of fighting corruption in the the SFAO can give the parliamentary NEAT supervisory delegation indications on key points and developments.

11 Swiss Federal Audit Office SFAO Annual Report 2009 In the case of AlpTransit Gotthard AG, the abatement wall projects were implemented in SFAO examined the proper implementation of Switzerland by the end of 2008, with a total the work contracts for the Ceneri Base Tunnel , volume of CHF 300 million. The programme for particularly with respect to activity recording, noise abatement walls is set to be implemented modifications, advance payments and monitor - by 2015, most likely resulting in final costs of ing of the contracting parties’ credit-worthiness. CHF 700 million. The overall outcome of the audit was good. The audit findings were positive overall. This For the Lötschberg axis , the SFAO examined was particularly evident in the steering of project- whether the transfer of the base tunnel from the specific milestones and detailed project imple - client BLS AlpTransit AG to the operator BLS mentation. The need for noise abatement walls Netz AG was done in an orderly manner. It found had been demonstrated by law and with respect that warranty monitoring was assured. The FOT to the project. The audit results revealed some also confirmed to the SFAO that the transfer weaknesses in the execution phase processes. to the new company was in order. The complete These deficiencies related to the recording of and timely execution of the remaining work and charging for services provided, including is also guaranteed. Through its various audit order modifications. However, there were also activities, the SFAO has a good overview of individual gaps concerning the guidelines in the the large-scale projects in AlpTransit, the most work contract, which affected the quality of the heavily controlled large-scale project in Switzer- accounting and the recognition of services pro - land with an extended controlling and reporting vided. In certain noise abatement wall projects, system. this situation affected the correct and orderly In the year under review, the SFAO also audited execution of the contract and the economic the FOT for its effectiveness of project steer - efficiency of the implementation work. To over - ing and supervisory tasks with respect to NEAT. come such weaknesses, the SFAO issued The SFAO concluded that the supervision is various recommendations to the Swiss Federal appropriate but that project steering should be Railways with the goal of strengthening the further reinforced. It recommended that the FOT project owner function and supplementing the assist AlpTransit Gotthard AG so that suggestions Swiss Federal Railways’ internal regulations and recommendations can be implemented in where necessary. The Swiss Federal Railways good time. The SFAO is also the auditor of the noted the SFAO’s individual recommendations Fund for Large-Scale Railway Projects (cf. 2.2). and intends to implement these by the end of 2009. The Federal Office of Transport also At the Swiss Federal Railways , the SFAO welcomed the SFAO’s recommendations in its audited contract execution for noise abatement feedback statement. In addition, it referred to walls . Based on a selection of construction the importance of correct activity recording as projects, an evaluation was conducted to see the basis for transparent and justified invoicing. whether the contracts had been implemented in The FOT will, in future, be informed regularly an orderly, correct and economical manner with by the Swiss Federal Railways on the progress respect to the work contracts. A total of 88 noise of these measures.

12 Swiss Federal Audit Office SFAO Annual Report 2009 The SFAO audited certain aspects concerning the financing of public regional transport- ation . The Confederation and cantons have jointly planned and ordered Switzerland’s regional transportation for over ten years. With their annual payments in the order of CHF 1.6 billion, they also make an important contribution to its funding. The SFAO examined at the Fed - eral Office of Transport (FOT) the Confed era - tion’s objectives for funding and the processes affecting the economic utilisation of payments earmarked for transportation. The SFAO found there is no clear overall objective for a nation - wide basic service. The federal government’s resources are steered by way of the “cantonal share”. Basically, this is an inflation-linked amount from the period preceding the 1996 revision of the Railway Act. It has thus grown t a r e t historically and may no longer meet today’s t o p transport requirements. Developments in trans - port demand are placing unnecessary restric - tions on the nationwide equalisation and free In its analysis of bids for transport services by utilisation of resources. The SFAO would prefer the FOT, the SFAO concluded that the FOT has a zero-based budgeting approach to steering formalised procedural instructions and uniform resources. However, as the cantons recognise processes. The evaluation of the material re - the cantonal share as a steering instrument, the quirements for a payment plays an important impetus for any reform would have to come role in evaluating the bid. In spot checks, the from the political end. The SFAO suggested SFAO found just a very small number of lines dividing up the financial resources by scope of that were co-financed by the FOT even though impact and steering in future on the basis of the minimum requirements were not met. The a differentiated tender strategy by the FOT. SFAO thus sees only a small risk of resources being used for regional lines not meeting the minimum requirements, such as an access function or number of passengers.

13 Swiss Federal Audit Office SFAO Annual Report 2009 However, the SFAO sees a greater risk of of different reasons. For two projects, the SFAO trans-port companies providing their services came across advance payments made at the inefficiently. This aspect should therefore be end of 2007 for which no services have yet addressed in the evaluation of bids. The key been provided. Advance payments should be figures model gives the FOT a tool for the syste- backed up by guarantees. The SFAO found matic and comparable evaluation of bids. How - that double financing was not possible. TPF ever, the quality of the data needs to be improved. took note of the audit findings and agreed to Evalua ting bids on the basis of almost 20 key implement the recommendations. figures is a complex and time-consuming task. Together with the cantons, the FOT should strive to develop a joint strategy for a risk- 1.2.3 Settlement of the federal oriented evaluation of bids. It should also look loan by Swissair into ways of simplifying the ordering process Under the public loan agreement of 5 October between trans port companies, cantons and the 2001 and the supplementary agreement of federal government without undermining the 24/25 October 2001, the federal government FOT’s superinten dence. The FOT agreed with financed Swissair’s reduced flight operations the recommendations and will implement these until 30 March 2002. Swissair undertook to in the 2012/2013 ordering process. account for the federal loan used and to use the federal funds only to allow flight operations At the Fribourg transport company (TPF), to continue and to permit such operations to the SFAO audited the calculation of the financial be handed over in the proper manner to a new compensation for regional public transportation, national airline. The supplementary agreement the comparison of planned figures with the also stipulated that the balance remaining after actual costs and income for 2008 and the correct paying off the loan was “not a mass claim but a utilisation of loans and financial aid for invest - normal third-class claim”. Under this loan ments and technical improvements. The main agreement, Swissair was paid some CHF 1.5 shareholders of TPF, which has share capital billion up until 30 March 2002. Part of this of CHF 16.7 million, are the Canton of Fribourg amount was used by Swissair as a liquidity with 57%, the Confederation with 22% and the reserve and did not have to be used within City of Fribourg with 17%. TPF provides public the meaning of public loan agreements. This transportation services in the Canton of Fribourg portion is not a legacy liability but a mass and in neighbouring areas of the Cantons of liability not included in the schedule of claims Berne, Vaud and Neuchâtel. While the value and can be reclaimed by the federal govern - flows were evident in the cost and performance ment in full. The prior elimination of the mass accounting, the documentation could be im - liability, however, requires the loan to be settled proved. Investments planned in 2008 came and is itself a prerequisite for the legacy to CHF 22.6 million, while the costs charged liability included in the schedule of claims to amounted to CHF 10.7 million. Several projects be reliably estimated. could not be started as planned for a number

14 Swiss Federal Audit Office SFAO Annual Report 2009 This loan settlement exists since April 2009, closing with a balance of CHF 9.4 million against the federal government. The SFAO subsequently announced a need to re-examine the situation on 23 April 2009, which it is entitled and obliged to do under Art. 8 of the Federal Auditing Act of 28 June 1967. At the SFAO’s request, the liquidator is making the required documents available. Due to the large number of documents and the need for clarification, the audit will take a considerable amount of time to complete. The initial findings are not expected until mid-2010. Furthermore, the liquidator is rightly assuming that, if agreement cannot be reached in the settle- 1.3 Education and research ment, the existence and extent of a federal claim would be decided in public law proceed - The SFAO has conducted several audits in the ings before the Federal Administrative Court. area of education and research. It examined the benefits and the risks of secondary occupa - tions of university professors, the planning and transparency of cost-intensive animal experi - ments and the steering of energy research funded by the federal government. In the ETH Domain it audited the procurement system at the research institutes. In addition, it acts as the external auditor for the ETH Domain (cf. 2.5).

1.3.1 Secondary occupation of university professors

The SFAO examined the rules and practice of secondary occupations at Swiss universities and concluded that greater transparency was needed to assess the opportunities and risks. At practically all universities and Federal Insti - tutes of Technology throughout Switzerland, professors have to a greater or lesser extent the possibility of pursuing a secondary occupa - tion on a pro rata basis during working hours. The SFAO estimates that some 2,500 persons could undertake such part-time work. If all of

15 Swiss Federal Audit Office SFAO Annual Report 2009 these were to apply on average 15% of their One of the SFAO’s recommendations was to working time to such activities, some CHF 75 have professors conduct their activities in the million would be turned over each year. Typical public and private sectors increasingly by way secondary occupations are consulting, free - of third-party assignments rather than as sec - lance specialist assessment, and appointments ondary occupations. To create greater trans - to boards of directors. The SFAO sought to de - parency, the SFAO recommended that the uni - termine whether secondary occupation is clearly versities should require self-declarations for defined and regulated, whether such regula - all secondary occupations and control these tions are implemented and supervised, and to appropriately. The ETH Board should harmonise what degree secondary occupations are being the regulations at the two Federal Institutes pursued. of Higher Education in Lausanne and Zurich. It found that each university has its own regula - The report is available for download at tions governing secondary occupation and that www.efk.admin.ch . these are not coordinated between the univer - sities. Practically all secondary occupations could be treated by the universities as third- 1.3.2 Strategic planning and cost party contracts. The primary motivation for of transparency in animal experiments most professors to carry out assignments as The SFAO audited the approval process, costs a private individual is generally the additional and financing of animal experiments. Working earnings. The SFAO found the rules at the with animals opens up new dimensions for Universities of Berne and Zurich to be the most research but also generates rapidly expanding stringent, with those of ETH Zurich the most costs. Animal housing facilities co-financed by liberal. Secondary occupation is considered by the Confederation are currently operated in the universities to be neither of priority nor as some 52 locations throughout Switzerland. involving any particular risk. There are thus no Animal experiments are co-financed by federal control tools for verifying whether the private funds via various channels, in particular by way activities are in the interests of the universities of contributions to universities, funds provided or have any relation to teaching or research, by the Swiss National Science Foundation and whether the infrastructure used is taken (SNSF) and the EU research programmes. For into account. As various universities do not the years 2009 to 2013, investments in new have the necessary data, the extent of such animal housing facilities alone are planned secondary occupation can only be estimated. to total some CHF 70 to 80 million. The SFAO The universities consider the positive effects estimates the costs for keeping 330,000 mice of secondary occupation to outweigh the risks at the two Federal Institutes of Technology and by far. The potential risks seen by the SFAO the universities at approximately CHF 82 million. include neglect of core tasks, use of the The part borne by the federal government university's resources without corresponding comes to some CHF 46 million annually. The payment, possible damage to the university’s subject is therefore not only of interest in terms reputation and conflict of interest, as well of fiscal policy; it also serves as an example for as problems concerning the use of and com - other infrastructural financing in research. pensation for patents.

16 Swiss Federal Audit Office SFAO Annual Report 2009 The SFAO found that the data needed to evalu - ate the economic efficiency of investments in animal housing facilities was not available. There is no information on the capacity, hygiene con - ditions and cost structure of existing facilities or on the synergy potential that might arise from consolidating animal housing facilities. There is thus a risk of the wrong decisions being made. Under the new Animal Protection Ordinance (April 2008), the Federal Veterinary Office (FVO) can now obtain such data and upgrade its super- vision of animal protection in animal experi - ments. The SFAO recommended making this data available to the State Secretariat for Edu - cation and Research, together with the ETH 1.3.3 Management of energy Board, as a basis for making planning decisions. research financed by the Swiss Strategic planning should be introduced for Confederation investments in cost-intensive research areas, The SFAO audited the management of energy thus including animal housing facilities. research. Research is one of the main elements The SFAO recommended that the Rectors’ of Switzerland’s energy policy. On average, for Conference of the Swiss Universities (CRUS) the period 2004/2005, the public authorities work toward the nationwide introduction of a invested approximately CHF 160 million a year. harmonised cost-accounting module. The At least CHF 120 million of this was contributed objective is not only to receive reimbursement by the federal government. On account of the of effective costs in EU-funded research numerous stakeholders, the SFAO examined projects but also to better evaluate the economic the question of how energy research is effectiveness of animal housing facilities. Animal managed by the federal government. The experiments are conducted in universities and areas evaluated covered priority setting, fund higher-education institutions at some 52 locations allocation and coordination among the various around Switzerland, more than half of which stakeholders. A comparison was made with are in the Zurich region. In 70% of cases, animals the practices applied in Germany and the are held not only for experiments for also for Netherlands. The SFAO found the process for breeding purposes. The SFAO recommended setting priorities to be structured. Priorities are utilising the synergy potential by centralising identified on the basis of precise criteria while the breeding of laboratory animals. The SFAO’s taking into consideration experiences observed recommendations did not meet with unanimous in other countries. Given their comprehensive approval, partly for reasons of research independ- character, it is hardly surprising that the priorities ence and partly because of the absence of a established conform to the federal government’s legislative basis. The report is available for energy objectives. Compared to the Nether - download at www.efk.admin.ch . lands, only a few research areas are excluded.

17 Swiss Federal Audit Office SFAO Annual Report 2009 In Switzerland, the priorities defined take account SFAO recommended that the Federal Energy of the needs of energy policy, the economy and Research Commission should increasingly set the academic world, whereas, in the Netherlands, priorities and non-priorities. The SFOE was the focus is clearly on the business sector’s called upon to apply the principle of competition requirements. Given the shortage of resources, more systematically when award- ing research the SFAO recommended concentrating more mandates and adopt a consistent approach to on fewer key areas. evaluating and selecting applications for all its Only the Swiss Federal Office of Energy (SFOE) research programmes. The Federal Energy systematically follows the priority areas set. Research Commission and the SFOE both The other sponsors pursue their own objectives appreciate these recommendations and will and funding systems. Likewise, the Energy take the appropriate action to implement them. Research Master Plan and its priorities have The report is available for download at no direct impact on the creation of centres of www.efk.admin.ch . expertise at the Federal Institutes of Technology. Nonetheless, the priorities have, to a certain extent, been taken into account in the develop - 1.3.4 Procurement in the ETH ment or refocusing of “centres of excellence”. research institutes Numerous stakeholders distribute their At the four research institutes, Paul Scherrer resources according to their own criteria. Such Institute (PSI), Federal Institute for Material distribution functions satisfactorily. The disad - Testing and Research (EMPA), Swiss Federal vantage, however, is that the contributions Institute for Forest, Snow and Landscape Re - allocated tend to be relatively low, thereby in - search (WSL) and the Federal Research Insti - creasing administrative costs and coordination tute for Water Supply, Wastewater Treatment work. The selection of quality projects is helped and Water Pollution Control (EAWAG), the by competition among the applicants and by the SFAO verified whether goods and services are decision-makers’ specialist know-how, although procured in a correct and orderly manner and the SFOE should make more systematic use whether procurement is organised economically. of competition. The SFAO found sufficient Procurement in the research institutes is largely coordination among the various stakeholders. decentralised. Improvements and savings can The SFOE and the Federal Energy Research be made through better coordination, a mutual Commission play an important role in the exchange of information and by adhering to the exchange of information and management. procurement guidelines more systematically. Compared to practices in the Netherlands, control To some extent, a central procurement depart - in Switzerland is rather low-key, more in keep - ment does exist in all research institutes. ing with that of Germany. The Dutch system However, the overall cooperation between the is characterised by strong supervision, with a research institutes is inadequate. The SFAO substantial share of public spending being recommended evaluating a merger of the specifically earmarked for the State energy individual procurement departments, particularly agency. In Switzerland, the SFOE finances only for the EMPA and EAWAG, which are on the about one fifth of public contributions. The same campus, and for similar goods.

18 Swiss Federal Audit Office SFAO Annual Report 2009 The internal control system complies with The individual institutes gave positive feed- the formal guidelines of the Federal Finance back on the reports and will implement the Administration. In general, however, the recommendations. The ETH Board noted “Procurement” process is insufficiently described. that it was not authorised to interfere in the Only isolated information is available on operational management and organisation accepting gifts or on the procedure for whistle - of the procurement department of the two blowing. The necessary rules here should be ETHs and the research institutes. Meanwhile, laid down and communicated without delay. it agreed to raise awareness at the ETHs in Procurement for the lower-end contracts audited Zurich and Lausanne of the deficiencies found was found to be correct and orderly and con - at the research institutes and to step up its ducted in a competitive environment. There is, information and communication in this area. however, potential for optimisation and savings, which could be exploited through active market observation and professionalisation of a central- ised procurement department. In open procedures, the SFAO found that only in the WSL were tenders opened in conformity with the law and, in several cases, the tender valuations were incomplete. The main reasons were found to be the decentralised procurement organisation and, to a certain extent, inadequate knowledge of the corresponding legislation. In the case of direct placements of orders, numerous contracts were issued as so-called “follow-up contracts” instead of being regulated by way of options in the original contract. In addition, the justification required in the case of direct placements was often missing, and the right to inspect the tenderer’s calculations was not syste-matically requested. The SFAO also sees a risk in concluding complex contracts without legal assistance.

19 Swiss Federal Audit Office SFAO Annual Report 2009 The SFAO is mandated by the National Council Control Committee to audit the procedure for premium approval in compulsory health insurance by the Federal Office of Public Health. In an interim report it informed the parliamentary committees of its initial findings on the data basis, the statutory reserve ratio and the investment regulations. The wide variety of information on compulsory health insurance that the Federal Office of Public Health receives from the insurers is used in supervision of the insurance companies and in premium approval. In addition to the detailed balance sheet and operating statements, the Federal Office also has a range of other data provided by the insurers at its disposal for supervisory purposes. In contrast, the information for premium approval is based both on definitive data and on estimates as well as forecasts. Using this data, the Fed- eral Office verifies whether the premiums are justified and the financial situation of the health 1.4 Health and social welfare insurers is secure. The legal reserve requirements are not based In this area, the SFAO focused on examining on a risk-oriented approach. These require - premium approval among the health insurers ments are governed by the Health Insurance and on the statutory audits of the AHV and Ordinance and are kept simple. The insurers’ unemployment insurance. The SFAO audits reserves must be a certain percentage of the the financial statements of the AHV and ALV premiums owed, depending on the number of compensation fund. The reports are submitted insured members. Experience has shown that to the Federal Council or the Board of the reserve ratio is not a suitable steering in - Directors (cf. 2.4). strument for setting the premiums. The Federal Council’s resolution to lower the minimum re - serve ratio and scale back existing reserves did not have any actuarial basis. The reserve ratio serves primarily as a key figure for evaluating a health insurer’s financial situation. The Federal Office has stated there are plans to change the way reserves are calculated for compulsory health insurance, taking more of a risk-based approach.

20 Swiss Federal Audit Office SFAO Annual Report 2009 There is no legal basis for calculating theoreti- cal reserves per canton. When calculating premiums, the health insurers take account of the different cost trends in the various cantons as well as the Switzerland-wide reserve ratio. A legislative “cantonalisation” of reserves could result in the reserve ratio being higher in a canton with few insured members than in a canton with many. Compared with the other social security systems, particularly occupational pensions and private insurance, the statutory investment requirements for basic insurance are formulated very generally way, are outdated and allow substantial leeway with respect to asset classes and instruments. 1.5 Relationships abroad One major difference compared with the invest - ment requirements of other social security In the 2006 audit of the Swiss Agency for systems is the absence of legal limits for the Development and Cooperation (SDC) in equities portion. The prevailing investment Berne and particularly the Cooperation Office guidelines have since been revised and over - in N’Djamena, the SFAO found serious defi - hauled, following in many respects the provi - ciencies in the areas of finance and personnel. sions of the Ordinance on Old-Age, Survivors’ An accountancy firm entrusted with control on and Disability Insurance. It is not yet known site raised reservations with respect to the ac - when the new guidelines will be introduced. counting in certain projects and criticised the The SFAO’s final report should be available internal control system. The more recent audit in the summer of 2010. in the year under review sought primarily to determine whether the recommendations had been implemented. It found that the SDC had only partially met its obligations with respect to the Cooperation Office. The SDC has sub- sequently given assurances that it intends to implement the recommendations as quickly as possible. In parallel to this, the Head of the Federal Department of Foreign Affairs announced the opening of an administrative investigation.

21 Swiss Federal Audit Office SFAO Annual Report 2009 At the State Secretariat for Economic Affairs audits the recipients of Swiss federal govern - SECO , the SFAO audited the control system ment subsidies. The European supervisory for the Swiss contribution to EU expansion . bodies have access to the premises, personnel The audit sought to conduct a detailed analysis and documents of participants in European of the organisation, procedure and internal con - programmes. The SFAO must first be informed trol system so as to take account of the most of such control missions on site. It must support important risks in the allocation and control of these audits and may join its European partners resources. The SFAO found that the control as an observer or for the purpose of carrying environment in place is expedient. Numerous out its own audits. It sometimes happens that a systematic audits are conducted. The employees subsidised body receives support from several are familiar with and apply the allocation of tasks, sources. A joint procedure can thus be followed competencies and responsibilities. There is to check whether the same activity or the same need for optimisation in risk management. investment is receiving two or even three sub- Although risk analyses are carried out in all sidies from the canton, the federal government sections and integrated into the projects’ and a European programme. operational management, the current docu - In the year under review, the European Court mentation does not give a complete overview of Audit intervened three times in Switzerland. of the risks in the individual countries. SECO The SFAO received prior notification of all inter - intends to step up its supervision, based on the ventions. The SFAO systematically supports SFAO’s recommendations. The preventative these audits, making use of its powers under and control measures for combating corruption the bilateral agreements. Apart from the Euro - will also be expanded. The award documents pean Court of Audit, the European Commission for public contracts will include an integrity also has in the European Anti-Fraud Office a clause in order to raise transparency and special office for dealing with the investigation reinforce the anti-corruption preventative and prosecution of fraud. The SFAO also parti- measures. cipated in these investigations. The SFAO determined that the irregularities Within the framework of the bilateral agree - found were serious cases involving participants ments with the EU , the SFAO has been from several European countries. As part of assigned new tasks. Under these agreements, these investigations, the SFAO is working closely European authorities may conduct audits in with the Office of the Attorney General and the Switzerland on recipients of EU subsidies or on Swiss Federal Customs Administration. their suppliers, in the same way that the SFAO

22 Swiss Federal Audit Office SFAO Annual Report 2009 Finance Directors challenged the SFAO’s legal competence to conduct such an evaluation and called upon the cantonal tax administration not to participate in such an evaluation. Following detailed discussions with the SFAO, it left it up to the cantonal authorities to participate in the audit on a voluntary basis. Given this scenario, the SFAO decided to suspend the analysis. Based on the Federal Council’s mandate, it in - tends to first wait on the revision of the Federal Auditing Act, which should accord the SFAO a clear legal basis for working in this central area of the federal budget (cf. 5.1).

1.6 Finance and taxation 1.6.2 New fiscal equalisation and 1.6.1 Evaluation of corporate the re-delegation of tasks between control in direct federal taxation the federal government and the

An important task of the SFAO is to examine cantons how the different offices exercise their super- The SFAO has a legal mandate to audit the vision in their special areas. In the past, for quality of the data used in calculating the instance, it examined how the Federal Tax equalization of resources and compensa - Administration exercises control of value added tion of burdens . No serious errors or short - tax. At the Federal Alcohol Administration it comings were found in the collection, process - examined whether the supervision of taxpayers ing or calculation of the fiscal equalisation data takes a risk-oriented approach. In the year under for 2010. The deficiencies in the cantonal data review, it planned to conduct a similar audit with were corrected as instructed by the Federal respect to direct federal taxation. The objective Department of Finance. was to determine how the cantonal tax adminis- The Federal Tax Administration (FTA) regularly trations responsible for assessing and collect - audits the quality of the individual tax data. ing the federal tax for legal entities perform this Although these audits are appropriate, they federal task. In consultation with the Federal Tax cannot guarantee that all errors have been Administration and the Swiss Tax Conference detected among the cantons. These tests have and in agreement with several cantonal tax been improved with the introduction of additional administrations, the SFAO initiated an evalua - parameters in the detailed specifications. tion of the controls conducted by the cantonal A considerable improvement has been made tax administration with the taxpayers. The with the formal validation of the definitive data cantonal administrations also hoped to obtain by the cantons. To date, however, only a few important indications for improvements and cantons have introduced a quality assurance comparisons with other cantons. However, mechanism. In determining the provisional data the Committee of the Conference of Cantonal for direct federal taxation, there are differences

23 Swiss Federal Audit Office SFAO Annual Report 2009 in the procedures used by the individual cantons. The SFAO carried out an audit on five federal The SFAO found that certain cantons do not agencies (Federal Office of Culture, Federal systematically charge the prescribed payments Office for Agriculture, Federal Office for the on account. The FTA will take the necessary Environment, the State Secretariat for Economic action. Affairs SECO, Swisstopo) to see whether The SFAO found that the processing and and how the programme agreements were correction of the fiscal equalisation data at the implemented in the new organisation of fiscal Federal Finance Administration (FFA) is clear. equalisation and task allocation between the However, the FFA has not yet been in a situation federal government and the cantons. The new to acquire a suitable IT environment. There are programme agreement instrument seeks to risks associated with the use of Excel tables simplify financial flows and improve funds at the interfaces with the FTA and the Federal management. Most federal contributions are Office for Statistics as in data processing. The still processed using individual orders. The FFA intends to implement a suitable IT solution classic form of subsidisation is favoured parti- by April 2010. cularly for structural measures, tailor-made Concerning the subsequent correction of data, proposals and complex projects that require the Federal Department of Finance and the the involvement of several players – cantons, Conference of Cantonal Finance Directors municipalities or private individuals. However, have approved the request to this effect from it appears that programme agreements are the Canton of Jura. The SFAO see this as a the more efficient subsidy instrument for decision in the wrong direction. Out of a fear of standardisable services, and further expansion one canton possibly making a complaint, the of their scope could ease the burden on the outcome of which would be uncertain in any agencies. In those federal administration units case, we now have a situation where the that have implemented their duties partially or retroactive correction of the data of all cantons wholly with programme agreements, business could be approved. This goes against the processes have been largely simplified. How - precept of legal certainty, challenges budgets ever, this did not result in job losses but in and accounts that have already been passed higher capacities and thus a more effective and creates additional administrative work. utilisation of federal resources. The role of the Furthermore, it questions the value of the Confederation has been increased. In contrast, certificates of conformity required by the business processes have tended to be more cantons.

24 Swiss Federal Audit Office SFAO Annual Report 2009 complicated in agencies that have mixed the 1.6.3 Exchange rate hedging former orders together with the new pro - An exchange-rate loss of CHF 18 million grammes. In future, the federal offices should was made in association with the hedging of communicate their subsidy policy and their exchange-rate risks of the Swiss contribution strategic goals in a more transparent manner, in 2008 to the EU’s research framework enabling the cantons to also set their own programmes . The SFAO was asked by the priorities. Financial incentives for controlling Federal President and the Head of the EDI to purposes in terms of genuine global subsidies investigate the facts and responsibilities that have been used only sporadically to date. With resulted in this loss. Recommendations were programme agreements, the Confederation also to be given on how to avoid such losses should determine the strategy and the can- in the future. The SFAO concluded that the tons should still have operational leeway for loss was ultimately due to a misunderstanding implementation. However, the room for manoeu - in dealing with foreign currencies. This was vre is restricted by legal provisions, the funds particularly aided by the fact that there are two available and the type of objectives. The degree separate ways of acquiring foreign currencies of operational freedom thus differs from one at the Federal Department of Finance (FDF). area to another. On the other hand, greater The services involved did not realise that EUR freedom and generally formulated goals can 170 million had already been ordered in the lead to difficulties in assessing the achievement, ordinary budget way for the same loan heading i.e. the degree of fulfilment of the programme by the State Secretariat for Education and agreement. To further promote the use of Research, for which another special order was flatrate subsidies, progress must be made in subsequently granted. The amount was thus the definition of goals and verifiable perfor - hedged twice. At the end of each year, the mance indicators. The SFAO is thus planning FFA has to release hedges that have not been to conduct financial supervisory audits, together used. Since then, the FFA has revised its with cantonal financial controls, at individual processes and built in corresponding control offices and in cantons from 2011 on, so as steps to prevent the reoccurrence of such to evaluate the extent to which programme losses. The Accounting Manual has also been agreements have reached their targets. adapted and the FFA’s directives for the budget The report is available for download at made more precise. The SFAO believes that www.efk.admin.ch . the measures taken and planned are expedient and well targeted. It will verify the implement- ation of the other recommended measures in 2010.

25 Swiss Federal Audit Office SFAO Annual Report 2009 and, on the other, by politics and how this deve- lops. In particular, the ICT strategy implements Switzerland’s eGovernment strategy at a federal level. At the FSUIT, the SFAO examined the role, mission and composition of the ICT steer - ing committee and the ICT staff organisations in the Federal Administration. It also asked how the ICT strategy is monitored, which instruments and structures exist to implement the norms and standards, whether these norms and standards are observed, and whether potential synergies are utilised or if there is any duplication. The SFAO concluded that the Federal Council’s mandate is not yet implemented, the adherence 1.7 IT in the Federal Administration of the ICT strategy to the norms and standards is only partially monitored, and further potential Pursuant to Art. 6 of the Federal Auditing Act, synergies still exist. The FSUIT has announced the SFAO verifies whether the IT applications and set a deadline for implementation of the have the required levels of security and function - recommendations. ality, and specifically whether the directives A special issue was the implementation of the passed by the IT Board are observed. The SFAO Public Key Infrastructure (PKI) at the Federal has a centre of expertise with proven specialists Department of Defence, Civil Protection and capable of fulfilling this legal mandate. Sport (DDPS) and the Federal Office of Infor m- ation Technology, Systems and Telecommuni- cation (FOITT). The Public Key Infrastructure 1.7.1 Norms and standards (PKI) is a tool used to protect systems and In 2006 the Federal Strategy Unit for IT (FSUIT) services in the Internet. From a technical and drew up the Federal Administration’s strategy security-policy point of view, the SFAO con - in information and communication technology cluded that the DDPS did not necessarily have (ICT) for the next five years. The strategy was to set up and operate its own infrastructure. approved by the Federal IT Council (FITC) at The FITC approved the DDPS’s application for the end of 2006. The ICT strategy indicates an exception, but only for a two-year trial oper - how the use of information and communication ation. By June 2010, the DDPS and the FOITT technology (ICT) will develop in the Federal should submit a proposal on operation of a uni - Administration up until 2011. It defines, with form Public Key Infrastructure and how these binding effect for the bodies responsible, the two solutions can be combined. This will also framework of action, the strategic directions allow for considerable cost savings. The DDPS and the objectives. These are determined, on does not share the SFAO’s recommendations the one hand, by future technical possibilities and challenges the cost calculations. The ball

26 Swiss Federal Audit Office SFAO Annual Report 2009 is now in the court of the FITC, which must should be decided at the Steering Committee decide on how to proceed after the trial level. The departments responsible should operation. The SFAO stands by its findings report directly to this Committee. The overall and will continue to follow the project with a manager and most of the project managers critical stance. are subject-field experts from the FTA main departments. These bring with them a wealth o f specialist know-how that is crucial for drafting 1.7.2 INSIEME programme of the specifications and later also for the test the Federal Tax Administration phase. However, most of these specialists lack The SFAO audited the INSIEME programme. an in-depth knowledge of IT, a situation that INSIEME is a strategic project of the Federal should be rectified by hiring the corresponding Tax Administration (FTA) for the replacement experts. A project controller should oversee the and integration of various central IT systems. The progress of the project. The integration proto - project has a long prior history. The pre viously type that has since been implemented can be planned implementation with an external firm used to test the extent to which the planned had to be revoked in 2007. The resulting legal architecture meets the requirements and where dispute had not yet been resolved at the time any corrections may still be necessary. of the audit. From autumn 2007 on, the project Of the credit line of CHF 71 million originally was then revised and divided into several approved in 2005, CHF 53 million remained at stages with different projects per tax type. At the time of the audit. Most likely, this will not the start of 2008, the FTA decided to imple- be enough to implement the complete project. ment the programme with the Federal Office The SFAO called upon the FTA to provide of Information Technology, Systems and Tele- information on its requirements in financial communication (FOITT) as the new strategic resources. The FTA intends to implement the partner. SFAO’s recommendations. The SFAO maintained an overview of the work being done and found that highly motivated specialists in both the FTA and the FOITT were 1.7.3 The eGovernment platform involved. The objective is to create a solid basis of the Swiss Official Gazette of for implementation, using the comprehensive Commerce documentation available, and to find an IT The audit concerning the eGovernment plat- architecture that can cope with the high demands. form of the Swiss Official Gazette of Com- Despite the joined forces and a common goal, merce (SOGC) was carried out in collaboration there are still certain critical factors that could with the financial inspectorate of the State jeopardise a uniform IT system for the two main Secretariat for Economic Affairs SECO. The departments of the FTA. At the time of the SOGC is the official publication journal of the audit, project organisation and management Swiss Confederation. The SOGC publishes were not yet optimised and were due to be daily the business-relevant legal circumstances improved. Contractual and financial aspects concerning corporations. Basically, the audit

27 Swiss Federal Audit Office SFAO Annual Report 2009 sought to evaluate the function and security of 1.7.4 Security of the IT networks the eGovernment platform, the effectiveness between the federal government of the steering and control processes and the and the cantons regularity and transparency of financial The Confederation requires numerous IT appli - reporting. cations for the smooth transposition of federal The SFAO found that the control environment, law into cantonal regulations. This is the case the information and communication flows and in the field of migration or unemployment the monitoring of external IT service providers insurance. The reliability of such applications were professionally structured. The business depends on all parties involved adhering to processes for data preparation and journal the minimum requirements with respect to IT production comprise multilevel control activities security. In 2005, the Swiss IT Conference that minimise the risk of error considerably. issued a directive governing the security of IT The SOGC website, online since 2002, is networks (Network Security Policy, NSP). The characterised by modern technical functionalities, cantons were given three years to implement user-friendly navigation and, in general, a high this policy. The SFAO audited implementation degree of user-friendliness. of the NSP in close cooperation with three To calculate SOGC’s fees in accordance with cantonal financial auditors. The findings were the General Fees Ordinance, certain calculation disappointing. Moreover, a study conducted basics still need to be taken into account. The by the Swiss IT Conference on behalf of the representation in the State Account should SFAO has shown that certain cantons are be more transparent. The SOGC platform’s seriously behind in implementing the NSP. protection requirements need to be re-evaluated. The Federal Office of Information Technology, A plan of action should be drawn up to safe - Systems and Telecommunication, as the guard business continuity in the event of emer - network operator, and the subject-specific gencies and catastrophes. SECO has already body of the Swiss IT Conference recognise taken the initial measures. The internal finan - the problems raised. In order to close the cial inspectorate will monitor implementation. security loopholes, the SFAO has recom- mended making adherence to the NSP a prerequisite in the agreement that the canton has to sign with the network operator. This recommendation was passed by the manage - ment body of the Swiss IT Conference.

28 Swiss Federal Audit Office SFAO Annual Report 2009 1.8 Other task areas of the the performance of tasks. Nonetheless, the federal government high demands in terms of availability are not adequately agreed on with the service providers Having already audited the catastrophe pre - and thus not safeguarded. In some cases there vention systems ( Business Continuity are no plans whatsoever, or important elements Ma¬nagement ) of service providers such as are missing and responsibilities have not been the Federal Office of Information Technology, clearly defined. Crisis management means that Systems and Telecommunication in recent the core processes can be continued without years, the SFAO conducted a horizontal audit any or only minimum disruption and steps can in nine federal offices in the year under review. be taken to restore normal operation. The offices were selected on the basis of their The SFAO’s report helped to raise awareness supervisory function laid down by law (Swiss among the federal offices of the various as - Federal Office of Public Health, Federal Office pects of catastrophe prevention. The General of the Police, Federal Office of Civil Aviation), Secretaries’ Conference declined to state in their financial relevance (Federal Finance Ad - any further detail whether minimum require - ministration, Federal Tax Administration, Swiss ments should be set, arguing that catastrophe Federal Customs Administration, unemploy - prevention was up to the departments and ment insurance, Central Compensation Fund) offices. In their report, the departments will look and their management function for the Federal into which are the strategically important areas Council (Federal Chancellery). The main ques - and whether action is required. tion was whether the maintenance and timely restoration of critical business function are as - The SFAO audited financial management at the sured in the case of a crisis or catastrophe. Federal Office of Culture (FOC). The main Business Continuity Management calls for all object of the audit was to evaluate the orderly precautions to be taken to ensure that the Fed - bookkeeping of the balance accounts, to which eral Administration and the Federal Council can the SFAO raised objections in 2007 and 2008. fulfil their core duties at all times, even in extra - The SFAO found that the balance accounts had ordinary circumstances. been adjusted in cooperation with the Federal To evaluate the impact of crisis situations, the Finance Administration. Clarifications were still business processes and the resources required underway at the National Library to complete must be defined. The SFAO found that the core the outstanding positions. Meanwhile, the doc - processes are defined in all administrative units umentation on the internal control system has audited but that the risks are analysed to differ - been revised and is optimised on an ongoing ent degrees of precision. In most cases, how - basis. In the future, the FOC will apply accrual ever, no consideration has been given to the accounting as decreed and restrict any advance impact of events like a natural catastrophe or payments to the minimum. The guidelines of an extended breakdown of IT resources. IT is the Federal Finance Administration and the one of the most important resources today for SFAO’s recommendation to list the insurance

29 Swiss Federal Audit Office SFAO Annual Report 2009 value of works of art in the notes to the balance data basics more transparent by 2011. The sheet were not implemented, as no insurance various projects will undoubtedly improve the value has been defined for around 10,000 works management of property. The SFAO mentioned of art. The FOC will clarify the future procedure the potential for improvement in information with the Federal Finance Administration. management. There should be a more intensive exchange of information between the departments and the FOBL so as to align the strategies more closely with each other. Also, the FOBL should be informed systemat- ically and as soon as possible about the decisions taken by the users. The definition and analysis of the property needs could also be optimised. The FOBL agreed with all of the recommendations.

The SFAO audited financial management at the

t General Secretariat of the Federal a r e t t

o Department of Economic Affairs (GS FDEA). p The object of the audit was the finance and accounting system, the 2008 financial state - The SFAO audited the organisation of the ments, the internal control system and the Property Management department at the implementation of previous recommendations. Federal Office for Buildings and Logistics The audit produced a good result. Contrary (FOBL) and also analysed the processes, to the opinion of the GS FDEA, the SFAO the internal control system and the property believes that the General Secretariat, as the strategy. The Property Management depart - loan-managing office, should determine the ment is currently in a phase of development, appropriate amount for the reserves of the with numerous projects underway. Many of Swiss Federal Institute for Vocational Educa - these projects originated from recommend- tion and Training and adapt the federal govern - ations made in previous audits by the SFAO ment’s financing contribution accordingly. and the parliamentary administration control. The FOBL plans to improve the communication of its strategy and make the analysis tools and

30 Swiss Federal Audit Office SFAO Annual Report 2009 In 2005 the SFAO conducted an economic Within the scope of the “Strategic Procure - efficiency audit at the Institute of Virology ment Controlling” project of the General and Immunoprophylaxis (IVI). In the year Secretariat FDEA , the SFAO audited the intro- under review, it enquired about the status of the duction of a uniform Confederation-wide implementation of the recommendations. The supplier number. Such a number, originally SFAO found that the Federal Veterinary Office proposed by the SFAO, will allow for an evalu- and the IVI have now implemented most of the ation of the federal government’s various recommendations or introduced measures for suppliers. The chosen solution is the one origi - their implementation. At the time, one of the nally proposed by armasuisse. The SFAO has SFAO’s recommendations was to increase the some reservations as to the functionality and capacity of the expensive animal stables. Since efficiency of this solution from the overall view then, the IVI has extended their use by raising of the federal government. The needs are not the biosafety inside. Certain animal stables sufficiently clarified. The SFAO also criticised can now also be used for animals with zoonotic the fact that neither the alternative “VAT agents (viruses that can be transmitted from number” nor the synergies with the project for animals to humans). a uniform operator ID number from the Federal The IVI believes that the use of high-security Office for Statistics have been clarified. The laboratories should not only be view from an General Secretariat supports in principle the economic point of view but also with respect introduction of the operator ID number. to the stakeholders’ needs. The SFAO may revisit the economic efficiency of high-security laboratories in the future.

31 Swiss Federal Audit Office SFAO Annual Report 2009 Audits of financial statements

Based on various federal laws and ordinances, believes that the liabilities calculated according the SFAO exercises the external audit mandate to IPSAS 25 for unfunded pension liabilities, for institutions, funds and affiliated organisa - such as loyalty bonuses, should be posted on tions. These SFAO mandates are in the public the Liabilities side of the federal balance sheet. interest and also allow for synergies with the The Federal Finance Administration does not financial supervision. Through these audits, wish to post unfunded pension liabilities on the 2the SFAO obtains detailed information on the balance sheet but does intend to amend the organisations subject to financial supervision exception clause of the Federal Budget Ordi - in accordance with the Federal Auditing Act. nance correspondingly. Finally, the procedure The most important mandate is the audit of for calculating the provision for withholding tax the State Account. to be reimbursed should be examined.

2.1 State Account 2.2 Fund for Large-Scale Railway Projects

The SFAO confirmed that the State Account of the Swiss Confederation for 2008 meets the legal The 2008 annual financial statements of the requirements and the provisions of Art. 126 Fund for Large-Scale Railway Projects (FinöV of the Federal Constitution on financial man - Fund) are based on the transitional provisions agement and the debt cap. The SFAO has thus to the Federal Constitution ratified by the People recommended that the Joint Committee on and the cantons in November 1998 on the Finance of the Federal Assembly ratify the State construction and funding of public transport Account. In its report, which is published on its infrastructure projects. According to these pro - website www.efk.admin.ch , it notes its various visions, the large-scale railway projects are the findings. For instance, the SFAO has no legal New Transalpine Rail Link (NEAT), Rail 2000, competence in financial supervision of receipts the link from eastern and western Switzerland from direct federal taxation. A revision of the to the European high-speed network and rail - Federal Auditing Act should overcome this super- way noise abatement. The projects are funded visory loophole (cf. 5.1). Based on its experience by the capacity and consumption-linked heavy from 2009, the SFAO must decide whether the goods vehicle tax, the mineral oil tax, the VAT per 2009 State Account should not be submitted for mil and capital market financing. The accounts approval with a reservation. Further clarifications of this fund, which is legally dependent on the are required concerning the timing of third-level Confederation, are disclosed in order to show education subsidies, as the “reference year” the financing and withdrawals for these projects given by the Federal Department of Home Affairs in a transparent manner. For the individual in the corresponding decree does not match projects, loans are granted by way of separate the accounting year. Furthermore, the SFAO federal resolutions. Based on its audits, the

32 Swiss Federal Audit Office SFAO Annual Report 2009 SFAO has determined that the accounting and 2.3 Infrastructure Fund annual financial statements for 2008 of the FinöV Fund have been conducted in an orderly The Infrastructure Fund is used to manage the manner and in compliance with the legal and resources made available to urban transport, regulatory requirements. The SFAO has rec om - the national roads network and main roads in mended that the Joint Committee on Finance of mountainous and outlying regions. The fund the Federal Assembly ratify the special account is in the form of a legally dependent fund with of the FinöV Fund for the 2008 financial year. its own accounting (Special Account). This In light of the deteriorating economic situation, comprises an income statement, a balance future income is likely to come in lower than sheet and a liquidity statement. The SFAO initially forecast and the advance limits could audited the 2008 Special Account. In a federal well be exceeded. These fundamental changes resolution of 4 October 2006, the Federal should be analysed in further depth within the Assembly approved a credit line of CHF 20.8 scope of financial planning for the FinöV Fund. billion. Several tranches of the overall funds have already been released: CHF 8.5 billion for completion of the national roads network, CHF 2.6 billion for implementing urgent and ready-to-build projects in urban transport, and CHF 800 million for main roads in mountainous and outlying regions. The competent federal offices can make the relevant commitments and secure the contributions. Once the projects for clearing bottlenecks on the national roads and for the co-financing of urban programmes are presented, the Federal Assembly will rule periodically on releasing the tranches required for their implementation. The SFAO found that the books were kept in an orderly fashion and that the 2008 annual financial statements meet the legal and regulatory requirements. It recommended that the Joint Committee on Finance of the Federal Assembly approve the accounts of the Infrastructure Fund. It also re - ferred to potential improvements to the internal control system and the controlling directives. In addition, it called for the missing agreements in urban transport systems to be obtained. FEDRO has noted the recommendations and will implement them.

33 Swiss Federal Audit Office SFAO Annual Report 2009 founder. The internal control system and the payment system of the Geneva Unemployment Fund are being examined by an accountancy firm.

Pursuant to Art. 9 of the Ordinance on the administration of the Old-Age and Survivors' Insurance Compensation Fund of 2 December 1996, the SFAO audited the bookkeeping and the annual financial statements of the Compens ation Fund of the Old-Age and Survivors’ Insur ance (AHV), the Income Compensation Scheme (EO) and the accounts of the Disability Insurance (IV) for the financial 2.4 Social security systems year ended 31 December 2008. The SFAO recommended that the Board of Directors of The unemployment insurance compensa - the AHV Fund and the Federal Council approve tion fund (ALV Fund) is run by SECO. The ALV the accounts. Within the scope of the interim Fund consolidates the 25 public and 15 private audit, the SFAO found that various secretarial unemployment funds and makes payments to employees were assigned to the higher category, the cantonal offices. In 2008, the ALV Fund which is only partly in keeping with the posted income of CHF 5.7 billion and expenses provisions of the Federal Personnel Ordinance. of CHF 5.1 billion. The accounts closed with net Also, bonuses were paid in 2008 and 2009 income of CHF 617 million. Debt at the end of that did not completely correspond to the legal 2008 came to CHF 3.0 billion. As the external provisions. Discussions are currently underway auditors of the ALV Fund, the SFAO audited the with the competent authorities in Berne to 2008 annual financial statements. These were obtain clarification of these cases. found to comply with the legal requirements. The SFAO advised the Supervisory Committee, Pursuant to Art. 68 of the Federal Act on Old-Age for the attention of the Federal Council, to and Survivors’ Insurance and Art. 159 of the AHV approve the 2008 annual financial statements. Ordinance, the Federal Compensation Fund Another case of embezzlement was found at in Berne and the Swiss Compensation Fund the Geneva Unemployment Fund in 2008, in Geneva, both entrusted with implementing with, as far as is currently known, an adminis - the AHV, are audited annually with a main audit trator paying themselves some CHF 100,000. A and a financial statements audit. The scope is request was made to return the misappropriated based on the directives issued by the Federal funds, and any deficit must be borne by the Social Insurance Office on the auditing of the Canton of Geneva, based on its liability as the AHV compensation funds. As set out in the Ordinance, the SFAO is entrusted with the audit- ing of the Confederation’s compensation funds.

34 Swiss Federal Audit Office SFAO Annual Report 2009 The reports are sent to the audited compensa - The SFAO also audited the 2008 financial tion funds and the Federal Social Insurance statements of the Swiss Federal Institute of Office, which exercises supervision of all com - Intellectual Property , the Swiss National pensation funds. The SFAO confirmed that the Science Foundation , the Federal Alcohol legal provisions were adhered to and that the Administration and the Building Foundation supplementary directives of the Federal Social for International Organisations (FIPOI). The Insurance Office had been observed. SFAO unreservedly recommended these finan - cial statements for approval. The accounting 2.5 Companies and institutions and annual financial statements met the legal requirements. It also audited the opening The consolidated 2008 annual financial state- balance sheet of the Federal Financial Market ment of the ETH Domain , the Federal Institutes Supervisory Authority as at 1 January 2009. of Technology in Lau¬sanne and Zurich, the ETH The complete list of the SFAO’s audit mandates Board and the four research institutes were is given in Annex 1. audited by the SFAO on the basis of Art. 35a of the Federal Act on the Swiss Federal Institutes of Technology. The consolidated financial state - ments meet the legal requirements. The SFAO unreservedly recommended the 2008 annual financial statements for approval. The account - ing and annual financial statements met the legal requirements. For the Paul Scherrer

Institute, the SFAO noted insufficient reserves t a r e t t o

for the disposal of the accelerator plant. p

Swissmedic is a federal institution under public law, formed by merging the Intercantonal Office for the Control of Medicines and the Therapeutic Products section of the Federal Office of Public Health. It is affiliated to the Federal Department of Home Affairs, and its legal basis is the Federal Act on Medicines and Medical Devices (Therapeutic Products Act). The SFAO has been appointed the external auditor by the Federal Council. The accounting and the annual finan - cial statements for 2008 met the International Financial Reporting Standards (IFRS) and comply with the Therapeutic Products Act. The SFAO thus recommended that the Institute Council approve the 2008 financial statements.

35 Swiss Federal Audit Office SFAO Annual Report 2009 International organisations

Pursuant to Art. 6 of the Federal Auditing Act, The audit findings are submitted to the respons- the SFAO carries out the control mandates at ible committee at the relevant organisation. international organisations. It audits the accounts In the year under review, the SFAO also recom - of three special organisations of the United mended that the Member States’ delegates Nations: World Intellectual Property Organization accept the annual financial statements. In (WIPO) in Geneva, the International Telecom - addition, it has conducted various special 3munication Union (ITU) in Geneva and the audits related to IT and construction. Universal Postal Union (UPU) in Berne. The SFAO is thus a member of the United Nations In 2009 the SFAO also performed the following Panel of External Auditors. The other member mandates for Switzerland: of the Panel are the Courts of Audit of China, Deutsch-land (Chair), France, India, Canada, I Intergovernmental Organisation for International Pakistan, the Philippines, South Africa and the Carriage by Rail (OTIF) in Berne: The Federal UK. Only State supervisory bodies that are Council entrusted this mandate to the Deputy members of INTOSAI may classify as UN Director of the SFAO. auditors. The Panel seeks to coordinate the I European Free Trade Association (EFTA) auditing within the UN system and exchange in Geneva and Brussels: The SFAO appointed information and findings with a view to Switzerland’s member on the Supervisory achieving uniform audit procedures and audit Committee. standards. Since its foundation the Panel I Eurocontrol: The SFAO is on the Supervisory has discussed a number of topics on account - Committee. ing and auditing and formulated recommenda - I World Meteorological Organisation (WMO): tions. The focus has been on reporting of the The SFAO is on the Supervisory Committee. financial situation, audit strategies, IT audits, control systems, internal audits, HR and pro - curement, development cooperation, the intro - duction of IPSAS standards and efficiency audits. The SFAO’s commitment within this international committee offers it a useful exchange with other audit courts, safeguards the “unité de doctrine” for supervision of the UN system and allows it to develop valuable relationships. In addition, the know-how obtained can be used in its own audit work.

36 Swiss Federal Audit Office SFAO Annual Report 2009 Outstanding audit recommendations and notifications

4.1 Implementation of the SFAO’s Likewise, an outstanding recommendation need recommendations not be reported if the deadline for its implemen - tation has not yet expired by the end of the year Each recommendation made by the SFAO is under review or the follow-up audit has not yet recorded in electronic form and its implementa - been conducted. tion is monitored within the scope of controlling. The SFAO noted various findings and recom - 4As part of follow-up audits, the SFAO can thus mendations in the year under review. The recom- ascertain whether the recommendations have mendations were accepted by the agencies actually been implemented. and have been scheduled or implemented in good time. The SFAO will monitor the status of implementation in follow-up audits. There is 4.2 Outstanding audit no need for action on the part of the Federal recommendations as per Art. 14 Council or Parliament. of the Federal Auditing Act

The outstanding audit recommendations in 4.3 Notifications as per Art. 15 accordance with Art. 14 refer to recommend- of the Federal Auditing Act ations not yet implemented at the audited agencies. In its Message dated 22 June 1998 Art. 15 (3) of the Federal Auditing Act states: on t he revision of the Federal Auditing Act, the “Should the Swiss Federal Audit Office identify Federal Council stated: “The Federal Council particular occurrences or deficiencies of a funda- intends to assume its responsibilities with mental or considerable financial importance, respect to the flawless functioning of the admin- then besides that particular division it shall also istration and monitor implementation of the out - inform the head of the department in charge as standing audit recommendations noted in the well as the head of the Federal Department of SFAO’s annual report. It will ensure that the Finance. Should the ascertained deficiencies deficiencies found and recognised by the concern the financial management of a division SFAO are resolved in good time and also that of the Federal Department of Finance, the complaints are handled rapidly in the interests President, or the Vice President of the Federal of improving the efficiency and effectiveness Council shall be notified. At the same time it shall in the public sector”. Such outstanding recom - inform the Finance Delegation of the Federal mendations at the end of a financial year exist Assembly. If it shall regard it as expedient, it if an agency has recognised the deficiency and shall inform the Federal Council instead of the the proposed measures but has failed to act Department head responsible”. upon them within the time set by the SFAO. However, this need not be mentioned in the annual report if, for example, the agency has advertised for a position in its finan cial depart - ment but has not yet filled the vacancy.

37 Swiss Federal Audit Office SFAO Annual Report 2009 Examples of such particular occurrences are The SFAO received a number of interesting offences with major losses or fundamental reports in the year under review. The individual deficiencies in the Internal Control System. who contacted the SFAO did so by telephone, If the accounting or bookkeeping is not found e-mail or letter. Approximately half of the infor - to be in order or legal provisions have been mants asked for their identity not to be revealed systematically ignored, this classifies as a to the suspected individual. Depending on the deficiency of fundamental importance. The severity of the accusation, it may be followed SFAO did not make any notifications under by investigations within the framework of Art. 15 in the year under review. scheduled audits, preliminary investigations by the federal police, referral to the federal prosecutor or closure of the proceedings. In 4.4 Whistleblowing: valuable general, the SFAO finds that such information support for the SFAO is useful and, in certain cases, permits it to direct its audit work to particularly high risks. Surveys by the major accountancy firms show Whistleblowing can thus help to improve the importance of whistleblowers in combating the quality and effectiveness of the SFAO’s fraud. Individuals are often witness to criminal audit work. offences and wish to report such information so that the irregularities may be punished. The Federal Council already recognised the impor - tance of such informants in 2003 and entrusted the SFAO with receipt of the relevant informa - tion. The principles of fighting corruption and the measures taken by the Confederation on the basis of the Country Report from GRECO (Group of States against Corruption, the Council of Europe’s anti-corruption body) have confirmed the SFAO in its role in this area. In a brochure for federal staff, employees are asked to report any suspicions they may have with respect to bribery of the SFAO. A legal provision is also set to be embodied soon in the Federal Employees Act. This will expressly mention the SFAO’s role and anchor the principle of protecting the whistleblower.

38 Swiss Federal Audit Office SFAO Annual Report 2009 Legislative procedure and opinions

5.1 Revision of the Federal solution had to be abandoned, however, as Auditing Act very few canton were willing or able to meet the requirements of the audit programme on The motion “Superintendence in direct federal a regular basis. taxation” of the National Council Committee Art. 16 and 17 of the Federal Auditing Act are on the reform of fiscal equalisation and task to be adapted in accordance with audit-specific 5allocation between the Confederation and the and legislative changes made in the past 40 cantons was submitted on 14 June 2007 with years. Since the reform of fiscal equalisation the following wording: “The Federal Council is and task allocation between the Confederation requested, in cooperation with the cantons, and the cantons, financial supervision with to investigate possibilities for improving the respect to the cantons has focused less on the control mechanisms in the collection and use of federal funds and more on the execution distribution of direct federal taxes.” Since then, of federal tasks and programme agreements. the SFAO has drafted a proposed revision to The proposal reinforces the SFAO’s existing, the Federal Auditing Act in response to this flourishing cooperation with the cantonal finan - motion. Discussions were held with the finan - cial auditors. This provides scope for a federal, cial auditors of the cantons and the Federal fact-based formulation of task performance. Tax Administration. The proposal is currently Art. 17 Federal Auditing Act will be designed with the Federal Department of Finance with such that it may be applied to all of the SFAO’s a request to start the consultation process audits in the cantons. The existing principle will with the interested parties. be upheld that the SFAO has no right to issue The revision of the Federal Auditing Act seeks instructions to the cantonal agencies but con - to close the current loopholes in direct federal tinues to direct complaints by way of the rele - taxation. At present, no independent financial vant federal office with the authority to issue supervisory body is explicitly responsible for instructions. auditing in this area. In other words, more than The provision by which the SFAO must a quarter of federal receipts are not audited regularly audit the VAT net tax rates determ- by a financial supervisory body. The SFAO ined by the Federal Tax Administration for their has sought in recent years to close such gaps appropriateness entered into effect already with voluntary audits of the cantonal finan- at the start of 2010 (Art. 6 (k) Federal Auditing cial auditors. An audit programme was drawn Act). The SFAO is prepared for this new up on the basis of a joint risk analysis. The mandatory audit and will conduct an audit as early as 2010.

39 Swiss Federal Audit Office SFAO Annual Report 2009 5.2 Opinions and consultations for supporting the economy as it promoted neither free competition nor the economical The SFAO should be consulted in advance use of public funds. Raising the thresholds is concerning issues of financial supervision under thus contrary to the principles of the Federal the Federal Auditing Act, such as the SFAO’s Act on Government Procurement. The Federal findings, implementation of recommendations Council differed in its opinion and raised the and regulation of financial auditing in draft laws. threshold, as proposed. In complex cases, an informal consultation is In one case, the SFAO made use of the co- held while the draft is being drawn up. In most report procedure, as an incorrect accrual cases, the SFAO is invited to state its opinion division between the auditors and financial within the scope of the internal consultations supervision had crept in after the internal with the federal offices. During the year under consultation phase. These proposed changes review, the SFAO dealt with some 50 consult- by the SFAO were accepted in full by the ations, suggesting content-specific changes in relevant department. 12 cases. The opinions related to issues such as the implementation of the Corporate Governance 5.3 Participation in guidelines in general and specifically in the specialist committees Therapeutic Products Act or the draft legislation related to social security, such as the evaluation The SFAO is a member of the FLAG steering on management and supervision of unemploy - group (steering with performance contract ment insurance by the Confederation, the inte - and global budget) and is on the “Federal gration of military insurance into SUVA and the Procurement Commission” and the “Expert first package of measures on the sixth revision Group for Quality Assurance in Equalisation of disability insurance. With respect to subsidy of Resources and Compensation of Burdens” reports in Messages, the SFAO ensured that in fiscal equalisation. It plays an active role the rules on financial supervision with respect in the interdepartmental anticorruption study to the cantons were not omitted. Within the group, appointed by the Federal Council in the framework of the revision of the Ordinance year under review. The SFAO contributes its on Government Procurement, the SFAO was experience to these committees and draws against raising the thresholds for services. It attention to the audit requirements; however, argued that such a measure was not suitable its role is merely consultative, so as not to jeopardise its neutral and independent stance.

40 Swiss Federal Audit Office SFAO Annual Report 2009 5.4 Communication of best practices

In the year under review the SFAO published an Audit Letter on the risks associated with a federal office opening a bank account. In principle, such an operation requires the official approval of the Federal Finance Administration. However, the SFAO occasionally comes across accounts not posted in the federal balance sheet. Strictly speaking, this situation is not correct and entails the risk of irregularities, as such accounts are often omitted from any internal control measures. Another topic was the lessons learnt from the horizontal audit of time recording in the Federal Administration. The SFAO found that such data was not being used sufficiently, pointing to the high costs of recording working hours, broken down by service and activity. Registering such information only makes sense if the admin- istrative units actually make use of the data collected. Time recording is a business and personnel management tool used as a basis in cost and performance accounting. If this tool is not actually used for such purposes, the costs involved do not generate any obvious benefit. In such cases, controlling merely serves to populate a costly “data graveyard”. The Audit Letter is available for download from the SFAO website at www.efk.admin.ch .

41 Swiss Federal Audit Office SFAO Annual Report 2009 The SFAO and other supervisory bodies

The SFAO cooperates with the cantonal auditors. These help to establish a common auditors and the Confederation’s internal understanding and advance the level of financial inspectorates, plays an active role professionalism of financial auditing in the in Swiss professional organisations and Swiss federal system. associations, seeks to exchange information with courts of audit in other countries and 6.2 Financial inspectorates 6participates in study groups of the international audit organisations INTOSAI and EUROSAI at federal level with one and the same goal: to improve the quality of auditing. Fifteen federal offices now have a financial inspectorate as set out in Art. 11 of the Federal Auditing Act. These audit services are respon - 6.1 Cantonal financial audits sible for scrutinising financial conduct. In most cases they report to the managing director of The Swiss Conference of Financial Auditors is their respective offices, although they have an annual meeting of those responsible for the complete independence and autonomy in fulfill - cantonal financial supervisory bodies. In 2009, ing their audit tasks. For the managing director, the Conference focused on supervision in the they are an effective and appropriate manage - area of public transportation (cf. 1.2.2). The ment support tool, also supporting the SFAO at first stage was to draw up a set of rules of the same time. Art. 11 sets out the requirements interpretation for all supervisory bodies, which to be met by a financial inspectorate. Mean - must then be adhered to by the public trans- while, SFAO takes charge of technical super- port companies. This starts with a technical vision; specifically, it assesses the financial inspection, followed by an assessment of the inspectorate’s effectiveness in fulfilling its tasks correct and economical deployment of State and also ensures that the staff of the financial funding, completed by an audit of their annual inspectorate receive appropriate training and accounts. The Conference also looked into continuing education. Thus, in general, the whether the various supervisory bodies actually SFAO’s internal training offering is also available cover all risks. Various measures were taken to to the financial inspectorates. enhance the dialogue with the cantonal super - Regular meetings have helped to promote greater visory bodies and the financial inspectorate of understanding and coordination between those the Federal Office of Transport and the SFAO. responsible for the various internal financial A number of joint study groups work on audit inspectorates. For example, a project has been areas of common tasks between the Confed- passed to introduce an audit software applica - eration and the cantons and present these at tion that will achieve time and cost savings in the annual conference. The SFAO conducts the determination of requirements, software joint audits annually with the cantonal financial rollout and training organisation. Contact was

42 Swiss Federal Audit Office SFAO Annual Report 2009 also stepped up with the internal auditors of Delegations from China, Korea and Senegal Swiss Post and the Swiss Federal Railways, have visited the SFAO to learn about Switzer - who also have the status of a financial inspect- land’s supervisory system. And, at the invitation orate within the meaning of Art. 11 of the of the Chairs of the Courts of Audit of Sweden Federal Auditing Act. and Albania , an experience exchange event was held on the topics of administration, peer review, and construction and procurement audits. 6.3 Courts of audit in Finally, together with the SAIs of Germany and other countries Denmark, the SFAO participated in the Peer Review of Austria's Court of Audit . Since the 1950s the SFAO has been a member The Regional Courts of Audit and the Federal of the International Organisation of Supreme Court of Audit of Germany regularly hold Audit Institutions ( INTOSAI ), which is divided con ferences on issues of topical interest in finan - into Regional Groups. The Regional Group for cial auditing. The Chair of the Court of Audit of Europe, the European Organisation of Supreme Austria, Germany’s member of the European Audit Institutions ( EUROSAI ), was founded in Court of Audit and the Director of the SFAO are June 1989 and currently comprises the Supreme regularly invited to these conferences. Audit Institutions (SAIs) of 47 European States. The SFAO has been a member of this Regional Group since its creation. The Director of the 6.4 Professional organisations SFAO has been a member of the EUROSAI and associations Governing Board since 2005. The SFAO is involved in several EUROSAI Representatives of the SFAO are members Working Groups. It holds the Chair of the IT of the leading professional associations. This Working Group , which has developed a series allows the SFAO to participate in creating the of self-assessment tools for IT and IT audits that future standards for the profession, gives it have been successfully deployed in several access to the methodologies and tools used by European countries. It also organises educa- other audit specialists, and provides a network tional events on the role of the supervisory of subject field experts when dealing with bodies in auditing IT systems. In the year under special issues. The SFAO is particularly active review, the SFAO held such sessions in self- in the field of IT audits with ISACA (Information assessment for IT and IT auditing at the Courts Systems Audit and Control Association) and of Audit of Hungary and Austria. The SFAO is the Swiss Institute of Chartered Accountants. also a member of the Environmental Working The SFAO holds the Chair of the Swiss Group , chaired by Norway, which organises Evaluation Society ( SEVAL ) and is on the joint audits and training events with concrete Board of the Swiss Institute of Internal Auditors experiences and case studies. (SIIA ). Through the SFAO’s involvement in these leading professional associations, it also helps to ensure ongoing quality assurance and the harmonisation of working methods.

43 Swiss Federal Audit Office SFAO Annual Report 2009 Introduction to the Swiss Federal Audit Office

The institutional position and tasks of the SFAO The SFAO’s supervisory mission covers all are laid down in the Federal Auditing Act. The of the federal government’s areas of activity of Federal Council appoints the Director for a six- relevance to finance. One of the SFAO’s core year term of office. This appointment is ratified tasks concerns the some 40 mandatory audits, by the Federal Assembly. The current Director’s particularly the audit of the federal government’s tenure expires at the end of 2013. The staff of State Account and the various special accounts, 7the SFAO are appointed by the Director within the AHV fund, the unemployment insurance the framework of the Personnel Law of the and numerous mandates with international general federal administration. The Federal organisations. It conducts its second core task – Council forwards the SFAO’s annual budget un- financial supervision – by means of numerous altered to the Federal Assembly. The Finance special audits, whether in the area of procure - Delegation of the Federal Assembly inspects ment, IT or subsidies. Increasing importance is the SFAO’s proposal and forwards it to the attached to evaluations and horizontal audits. Joint Committee on Finance of the Federal The scope of audit extends beyond the Federal Assembly. Administration and implementation of the budget at all levels to also include all subsidised bodies, the sponsors of public tasks and the federal 7.1 Institutional position and tasks companies. The Federal Auditing Act provides for the Pursuant to Art. 1 of the Federal Auditing Act, registration of the public-sector financial the SFAO is the supreme audit institution auditors as audit firms provided that they of the Swiss Confederation . It supports meet the requirements of the law. Like other the Federal Council in its supervision of the financial auditors at cantonal and municipal Administration and, at the same time, the Fed - level, the SFAO has initiated such registration eral Parliament in exercising superintendence by making an entry in the commercial register over the Federal Administration and the admin- and submitting an application. It was also istration of justice. The SFAO operates autonom- necessary to register a minimum number of ously in both preparing the annual audit pro - SFAO employees as expert auditors. The gramme and in designing the individual audits provisional licence was granted in 2007, with and drawing up the reports. As set out in Art. 5 the SFAO receiving its full licence on 8 Sept- of the Federal Auditing Act, it executes super- ember 2009. The SFAO is not obliged to obtain vision of finance according to the criteria of such registration to execute the mandates regularity, legality and performance. Using entrusted by the Federal Council or by law as efficiency audits and evaluations, the SFAO an auditor. However, being authorised as an seeks to contribute to developing New Public expert auditor does mean that the SFAO fulfils Management and raise the effectiveness of all the quality requirements and that its staff State programmes. The agencies audited are selected on the basis of risk criteria.

44 Swiss Federal Audit Office SFAO Annual Report 2009 are sufficiently qualified. The International 7.2 Employees Monetary Fund also examined the SFAO’s tasks and operations as part of its country test. The SFAO conducts its audits on a risk-oriented It concluded that the SFAO’s area of supervision basis and according to the standards set by is adequately regulated and that the SFAO the Swiss Institute of Chartered Accountants has the required level of autonomy. and international professional associations. The SFAO has systematically conducted In the year under review it had a budget evaluations and horizontal audits since 2002. of CHF 19.50 and a workforce of some 90 Evaluations are conducted with a view to employees. The organisational chart in Annex 3 improving the implementation and impact of shows a two-dimensional matrix organisation State measures by issuing a series of recom - with six mandate areas and six specialist fields. mendations. Horizontal audits compare various The lead auditors promote the viewpoint of administrative units with each other in order to the audited agencies. The SFAO auditors are determine the best approach to solving tasks. each assigned to one of the specialist fields At the SFAO’s request, the Court of Audit for financial audits, construction matters and of Norway conducted a Peer Review . The procurement audits, IT and evaluations. Their questions to be answered concerned the quality job is to maintain and expand the knowledge and professionalism of these demanding required for the specialist areas and assure audits as well as compliance with internationally the quality of the audits. The SFAO has an recognised standards. The SFAO also wanted experienced workforce that is particularly well to discover the extent to which these tests con - qualified in the entire area of auditing and tribute to improving the work of the Federal evaluation and in the tasks, process and Administration and support Parliament and the structure of the Federal Administration. A Federal Council in their supervisory functions. combination of knowledge, professional The Peer Review examined the entire process, experience and social skills forms the basis from selecting the topics and planning through for the successful performance of financial to actual implementation and the reporting supervision, serving to ensure continual stage. The Court of Audit of Norway ratified optimisation within the public sector, for the the high standards of quality of the SFAO’s benefit of the citizens. The SFAO thus places audits. The processes were described as being great importance on training and continuous functional and appropriately structured. A education. In January of each year it organises suggestion was made to improve the choice a 10-day internal training and continuing of topics and the planning of horizontal audits. education session for staff of the SFAO and More specifically, the reasons underlying the the financial inspectorates at federal level as choice of topics were to be more clearly stated, well as some of the cantonal financial auditors. and employees were to be given a greater Participants are expected to absorb and com - role in the process than is currently the case. municate the knowledge thus gained and use The report is available for download at this in the interests of their legal mandate. www.efk.admin.ch . The knowledge carriers must keep abreast of developments in their specific areas and share this information with the SFAO. Some of the

45 Swiss Federal Audit Office SFAO Annual Report 2009 SFAO’s main sources of knowledge are other 7.3 Finance countries’ SAIs, professional associations and chartered accountants. For individual audits, The SFAO had expenses of CHF 20.0 million the SFAO may also call upon the expertise of in the year under review, with income of external consultants, either because it lacks CHF 1.4 million. The details of income and the specific knowledge or if reinforcements are expenses were as follows: required on account of time constraints. In all cases, project management and responsibility lie with the SFAO, which also takes charge of knowledge transfer.

Expenses and income

2008 2009 2009 Deviation

accounts budget accounts from the b udget In CHF ‘000 In ‘000 As a %

Expenses 18 897 21 129 19 977 –1 152 – 5,5 Personnel expenses 15 520 17 155 16 826 – 329 – 1,9 Rent 1 112 1 113 1 112 –1 – 0,1 IT operating expenses 924 1 017 733 – 284 – 28,0 Consulting expenses 691 995 645 – 350 – 35,2 Other operating expenses 625 809 629 – 180 – 22,3 Write-downs 25 40 33 –7 – 18,6

Income 1 322 1 011 1 381 + 248 + 24,5 Remunerations 1 212 1 000 1 239 + 239 + 23,9 Other income 11 11 20 + 9 + 82,0 Drawdown from reserves 99 – 122 ––

46 Swiss Federal Audit Office SFAO Annual Report 2009 The 2009 accounts show a credit of CHF 1.2 7.4 Risks millions with respect to the budget. This results primarily from IT and consulting expenses, The potential risks that the SFAO has identified which comprise experts’ fees and educational for itself include wilful misinformation, technical and training spending. The SFAO uses approx- errors, loss of independence, loss or disclosure imately 0.3 per mil of the federal budget for its of confidential information and poor execution resources. of the legal mandate. In its annual risk assess - The SFAO has its own Fees Ordinance for ment, and based on the internal control system, the audit mandates it conducts under public the SFAO concluded that the probability of such law. It charges for the time spent on financial risks occurring as well as the loss of image and statements audits in accordance with the fees financial consequences of such risks are low. of the Federal Finance Administration, which are based on the labour costs of the relevant salary categories. These fees amounted to CHF 1.2 million. Financial supervision is not included, however, as this is a sovereign task.

47 Swiss Federal Audit Office SFAO Annual Report 2009 Outlook

Apart from the statutory audits of financial There are, however, tight restrictions on the statements, the SFAO will also conduct financial possibilities for coordination, given the sub- supervisory audits in 2010 in the federal govern- stantial differences between the audit object ment’s various task areas. The focal points will and methods of parliamentary committees and be tests on subsidised bodies, procurements, the way in which a specialist body operates. IT and financial management. The SFAO thus The SFAO’s sees its primary task in taking on 8aims to play its role in helping to consolidate fresh challenges and deploying its resources the New Accounting Model, raise awareness in a risk-oriented manner. It strives to meet the on the efficient and effective use of federal ever-evolving requirements of the profession resources, inform about the rules of procure - by ensuring its staff receive ongoing training ment, and help to perform complex IT projects and continuing education. It is thus prepared to in a more professional manner. As decided by extend its supervision of the audited agencies, Parliament, it will now also test the appropriate - in the taxpayers’ interests, in a spirit of critical ness of the VAT net tax rates. The SFAO cooperation. endeavours to discuss its supervisory tasks with the financial inspectorates and the cantonal financial auditors and play a coordinating role in parliamentary supervisory committees.

48 Swiss Federal Audit Office SFAO Annual Report 2009 A1 2009 Annual Report Annex 1

Overview of the audits of authorities and courts, within the Federal Departments and at other operations, affiliated and international organisations

Federal Administrative Court

I Audit of financial management

Federal Chancellery

I Audit of the costs of hosting www.ch.ch I Audit of financial management

Federal Department of Foreign Affairs

Directorate for Resources I IT Services Centre: Service Level Agreements and Follow-up I Orderly management of credit lines and SAP authorisations

Swiss representations abroad I Audit of financial management at the Bangkok representation

Swiss Agency for Development and Cooperation I Follow-up audit at the N’Djamena Cooperation Office and the West Africa department I Audit of financial management at the New Delhi Cooperation Office I Audit of financial management at the Western Balkans department I Audit of implementation of the Agreement of 1 November 2005 with Angola

50 Swiss Federal Audit Office SFAO Annual Report 2009 A1 Federal Department of Home Affairs

Federal Office for Gender Equality I Audit of financial management

Federal Office of Culture I Audit of financial management and follow-up

Swiss Federal Archives I Audit of the accounts for the EU “Planets” project

Federal Office of Public Health I Evaluation of premium approval in the compulsory health insurance system, interim report I Audit of the Swiss Olympic “Cool and clean” subsidies

Federal Social Insurance Office I Audit of direct supervision of occupational pensions I Audit of the contributions paid to organisations providing care for the elderly I Audit of the contributions paid to organisations providing private disability assistance I AHV employer checks, implementation of the recommendations from the evaluation

State Secretariat for Education and Research I Animal experiments; Audit of the approval process, costs and funding I Construction and equipment contributions for universities

51 Swiss Federal Audit Office SFAO Annual Report 2009 A1 Federal Department of Justice and Police

General Secretariat I Audit of financial management

Federal Office of Justice I Audit of financial management I Federal Civil Status Office, organisation and financial supervision I Operating contributions to educational institutions for minors and young adults, Audit of subsidies

Federal Office of Police I Audit of 2008 expenditure on national security

Federal Office for Migration I Audit of data quality and integrity with respect to the Central Migration Information System ZEMIS I Audit of financial management

Office of the Attorney General I Audit of financial management

Federal Gaming Board I Audit of financial management

Federal Department of Defence, Civil Protection and Sport

General Secretariat I Federal contracts with the RUAG technology group; Audit of the awarding of federal contracts I Library Am Guisanplatz: Financial management and status of the libraries’ amalgamation I Strategic Intelligence Service: Audit of the 2008 State Account

Federal Office of Sport I Audit of the settlement of the federal loan for UEFA EURO 2008 I Audit of financial management in relation to infrastructure and operations as well as payroll processing

52 Swiss Federal Audit Office SFAO Annual Report 2009 A1 Defence – Armed Forces Staff I Performance of the duties of the strategic tenant V I C4I and ISTAR programme inspection – Status report I Artillery Fund Foundation: Audit of financial management I Armed Forces Counselling Service: Audit of financial management

Defence – Armed Forces Command Support Organisation I Electronic Combat; Audit of the economic efficiency and deployment of DDPS systems I nformation and Communication Technology: Goods procurement, resource management and deployment planning

Defence – Armed Forces Joint Staff I ABC centre of expertise in Spiez: Audit of financial management

Armed Forces Logistics Organisation I Military pharmacy; Audit of warehousing and financial management of stocks I Defence personnel accounting: Audit within BV PLUS

Defence – Air Force I Aeromedical Centre: Audit of financial management

armasuisse – Procurement I Command and reconnaissance systems: Price inspection at Thales Suisse SA, Zurich I Audit of project implementation at IFASS, ELINT-S LW and COMMINT-HVU LW

armasuisse – Competence Sector Science and Technology I Audit of financial management

armasuisse – Property I Audit of credit lines

53 Swiss Federal Audit Office SFAO Annual Report 2009 A1 Federal Department of Finance

General Secretariat I Federal Strategy Unit for IT: Audits in relation to the Federal IT Strategy I “Strategic Procurement Controlling” project: Audit of selected issues

Federal Finance Administration I Audit of the 2008 State Account I Quality Assurance Audit of the equalisation of resources and compensation of burdens in six cantons, at the Federal Finance Administration, the Federal Tax Administration and the Federal Office for Statistics I Exchange rate hedging losses in 2008

Federal Employees’ Savings Bank I Audit of the 2008 annual financial statements

Central Compensation Office I Audit of IT management I Audit of the 2008 annual financial statements of the AHV and EO compensation fund, the IV accounts and family allowances I Interim audit of the 2009 annual financial statements of the AHV and EO compensation fund, the IV accounts and family allowances

Federal Compensation Fund I 2008 Supreme Audit I Audit of the 2008 annual financial statements

Swiss Compensation Fund I 2008 Supreme Audit I Audit of the 2008 annual financial statements

54 Swiss Federal Audit Office SFAO Annual Report 2009 A1 Federal Personnel Office I Audit of the 2008 annual accounts of the Federal Personnel Benevolent Fund I Audit of BV PLUS processes at the Personnel Services Centre

Federal Tax Administration I Audit of IT project INSIEME I Audit of the organisation, processes and the ICT of the section Personnel and Organisation

Swiss Federal Customs Administration I Audit of the “Transito” project I Analysis of the processes involved in processing arrangements and for inventories of agricultural products I Joint procedure and IT audit with the Financial Inspectorate

Federal Office for Buildings and Logistics I Audit of the organisation, processes and ICS in the Property Management department I Audit of the organisation, processes and cooperation between the FBL and the FCA in property

Federal Office of Information Technology, Systems and Telecommunication I Audit of implementation of Switzerland’s Network Security Policy. Information Technology Conference in the cantons I Office automation and support: Audit of the organisation and challenges of the new main department

55 Swiss Federal Audit Office SFAO Annual Report 2009 A1 Federal Department of Economic Affairs

FDEA General Secretariat I Audit of financial management of the Central Office for Civilian Service I Audit of financial management

State Secretariat for Economic Affairs I Audit of financial bookkeeping I System test of control measures in the EU enlargement process (contributions to cohesion and enlargement) I Audit of the SOGC eGovernment platform together with the Financial Inspectorate

Unemployment insurance I Audit of the 2008 AHV statement of the ALV compensation fund I Audit of the 2008 annual financial statements of the compensation fund

Federal Office for Agriculture I Audit of the IT strategy and organisation I Audit of financial accounting and reporting in association with the 2008 State Account results I Audit of the 2008 annual financial statements for Agroscope and the Swiss National Stud

Institute of Virology and Immunoprophylaxis I Audit of the performance contract and financial management I Efficiency audit and control of recommendations

Federal Housing Office I Audit of financial accounting and reporting in association with the 2008 State Account results

56 Swiss Federal Audit Office SFAO Annual Report 2009 A1 Federal Department of the Environment, Transport, Energy and Communications

Federal Office of Transport I Audit of the 2008 annual financial statements of the Fund for Large-Scale Railway Projects I Audit of the economic efficiency of IT projects I Analysis of the compensation for regional public transport and infrastructure of the Canton of Fribourg’s transportation company I Audit of contract fulfilment for the Swiss Federal Railways noise-abatement walls I Audit of the funding of regional public transport systems I Audit of project management and supervision within NEAT I Audit of the implementation of work contracts for the Ceneri base tunnel I Audit of outstanding works and warranty monitoring for the Lötschberg base tunnel

Swiss Federal Office of Energy I Evaluation of focal points, resource allocations and coordination of energy research funded by the Confederation

Federal Roads Office I Audit of the 2008 annual financial statements of the infrastructure fund for urban transport, the national roads networks and also main roads in mountainous and outlying regions I Audit of the awarding of contracts for national roads I Analysis of cost variance in the construction of road tunnels

Federal Office for the Environment I Audit of subsidies for individual projects in relation to risk prevention

57 Swiss Federal Audit Office SFAO Annual Report 2009 A1 Intra-office and intra-departmental inspections

I Business Continuity Management at the Confederation I Implementation of programme agreements within the framework of fiscal equalisation and the delegation of tasks between the federal government and the cantons

Foundations, agencies, funds and special organisations

Building Foundation for International Organisations in Geneva I Audit of the 2008 annual financial statements

Marcel Benoist Foundation I Audit of the 2008 annual financial statements

General Herzog Foundation I Audit of the 2002-2007 annual financial statements

Pro Arte I Audit of the 2008 annual financial statements

Pro Helvetia I Audit of the 2008 annual financial statements

Future for Swiss Itinerant Communities I Audit of the 2008 annual financial statements

Centre of Accreditation and Quality Assurance of the Swiss Universities I Audit of the 2008 annual financial statements

Rectors’ Conference of the Swiss Universities I Audit of the 2008 annual financial statements I Evaluation of the secondary occupation of university professors

Swiss National Science Foundation I Audit of the 2008 annual financial statements

58 Swiss Federal Audit Office SFAO Annual Report 2009 A1 Swiss Coordination Centre for Research in Education, Aarau I Audit of the 2008 annual financial statements

Swiss University Conference, Berne I Audit of the 2008 annual financial statements

Swissmedic I Audit of the 2008 financial statements I Interim Audit of the 2009 financial year

ETH Domain I Audit of the 2008 consolidated financial statements I Horizontal audit of the procurement system of the four research institutes

ETH Council I Audit of the 2008 annual financial statements

Swiss Federal Institute of Technology Zurich I Audit of the 2008 annual financial statements

Swiss Federal Institute of Technology Lausanne I Audit of the 2008 annual financial statements

Federal Institute for Forest, Snow and Landscape Research I Audit of the 2008 annual financial statements

Federal Laboratories for Materials Science and Technology Dübendorf I Audit of the 2008 annual financial statements

Swiss Federal Institute of Aquatic Science and Technology I Audit of the 2008 annual financial statements

Paul Scherrer Institute Villigen I Audit of the 2008 annual financial statements

Federal Audit Oversight Authority I Audit of the 2008 annual financial statements

59 Swiss Federal Audit Office SFAO Annual Report 2009 A1 Swiss Federal Institute of Intellectual Property I Audit of 2008 project accounts of Intellectual Property for Vietnam and Azerbaijan I Audit of the 2008/2009 annual financial statements I Audit of the 2008/2009 annual financial statements of the Personnel Fund

Social Fund for Defence and Civil Protection I Audit of the 2008 annual financial statements

Federal Alcohol Administration I Audit of the 2008 annual financial statements

Federal Financial Market Supervisory Authority FINMA I Audit of the opening balance sheet as at 1 January 2009

Swiss Landscape Fund I Audit of the 2008 annual financial statements

Fund for Forest and Timber Research I Audit of the 2008 annual financial statements

Swiss National Park foundation I Audit of the 2008 annual financial statements

60 Swiss Federal Audit Office SFAO Annual Report 2009 A1 International organisations

Intergovernmental Organisation for International Carriage by Rail I Audit of the 2008 annual financial statements

Universal Postal Union I Audit of the 2007-2008 annual financial statements I Audit of the 2008 annual financial statements of the pension fund and the insurance fund I Audit of the 2008 annual financial statement of the Quality of Service Fund

International Telecommunication Union I Audit of the ITU’s 2008 annual financial statements I Audit of the 2008 annual financial statements of the pension fund I Audit of the 2008 annual financial statements of the health insurance fund I Audit of the special accounts of Telecom exhibitions

World Intellectual Property Organisation I Audit of WIPO’s 2008 annual financial statements I Audit of the 2008 annual financial statements of the pension fund I Design and construction test of the new Administration building

International Commission for the Regulation of the Rhine I Audit of the 2007/2008 annual financial statements

61 Swiss Federal Audit Office SFAO Annual Report 2009 A2 2009 Annual Report Annex 2

Financial Inspectorates (Internal Audit) of the central and decentralised Federal Administration in accordance with Art. 11 of the Federal Auditing Act

I Internal Audit of the Federal Department of Foreign Affairs I Financial Inspectorate of the State Secretariat for Education and Research I Internal Audit of the ETH Board I Financial Inspectorate of the Federal Department of Justice and Police I Internal Audit of Defence I Financial Inspectorate of armasuisse I Internal Inspectorate of the Central Compensation Office I Financial Inspectorate of the Federal Tax Administration I Inspectorate of the Federal Customs Administration I Financial Inspectorate of the Federal Office for Buildings and Logistics I Internal Audit of SECO I Financial Inspectorate of the Federal Office for Agriculture I Audit of the Federal Office of Transport I Financial Inspectorate of the Federal Roads Office

62 Swiss Federal Audit Office SFAO Annual Report 2009 A3 2009 Annual Report Annex 3

Organisational Chart

Management International Relations Legal Services Human Resource s/ Support Director: Communication K.Grüter A. Taugwalder B. Riedi I. Strobel G. Roux

Deputy Director: Mandate Sector A. Vuillemin Deputy Director: A. Vuillemin Vice Director: M. Huissoud DFI/DDPS FDF A/ Intl. DETEC FC h/ PS/ FDF Social Security/ Organisations SE R/ FDEA FDJP /Courts of Justice J.-M. Blanchard D. Monnot B. Hächler E.-S. Jeannet A. Meyer W. Risler

Competence Fin. Supervision Centers and Audit 1

M. Köhli Vice Director: M. Huissoud Fin. Supervision and Audit 2

H.-R. Wagner

Fin. Supervision and Audit 3

R. Durrer

IT Audits

M. Magnini

Construction and Procurement

P. Zumbühl

Evaluations

E. Sangra

63 Swiss Federal Audit Office SFAO Annual Report 2009 A4 2009 Annual Report Annex 4

Abbreviations

A

AHV Old age and survivors’ insurance ALV Unemployment insurance

D

DDPS Federal Department of Defence, Civil Protection and Sport

E

EC Electronic Combat EFTA European Free Trade Association EO Income compensation scheme ETH Swiss Federal Institute of Technology EUROSAI European Organisation of Supreme Audit Institutions

F

FDFA Federal Department of Foreign Affairs FDHA Federal Department of Home Affairs FEDRO Federal Roads Office FFA Federal Finance Administration FinöV Fund for Large-Scale Railway Projects FITC Federal IT Council FLAG Steering with performance contract and global budget FOBL Federal Office for Buildings and Logistics FOC Federal Office of Culture FOITT Federal Office of Information Technology, Systems and Telecommunication FOT Federal Office of Transport FSUIT Federal Strategy Unit for IT FTA Federal Tax Administration

64 Swiss Federal Audit Office SFAO Annual Report 2009 A4 G

GRECO Group of States against corruption

I

IFASS Integrated Radio Reconnaissance and Transmission System IFRS International Financial Reporting Standards ICT Federal Administration’s information and communication technology INTOSAI International Organization of Supreme Audit Institutions ISACA Information Systems Audit and Control Association ITU International Telecommunication Union IV Disability insurance

M, N

NEAT New Transalpine Rail Link NAM The Confederation’s New Accounting Model

O, R

OTIF Intergovernmental Organisation for International Carriage by Rail RUAG Swiss technology group in Aerospace, Defence and Technology

S

SAP A standard financial accounting software system SECO State Secretariat for Economic Affairs SEVAL Swiss Evaluation Society SIIA Swiss Institute of Internal Auditing SFAO Swiss Federal Audit Office SFOE Swiss Federal Office of Energy SOGC Swiss Official Gazette of Commerce

U

UPU Universal Postal Union

V, W

WIPO World Intellectual Property Organization

65 Swiss Federal Audit Office SFAO Annual Report 2009 potterat