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

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