1. 1 GR-PBA 22 September 2011

2. This presentation covers  What does an AC do? ToR & Vision  Work done by AC in the16 months  Assurances to CM on:  internal control statement  the external & internal audit function  the evaluation function  enterprise risk management  fraud awareness and prevention  Implementation of recommendations 2

3. 3 Peter Maertens, -- Chair from April 2011 European Investment Bank, retired Peter Maertens, -- Chair from April 2011 European Investment Bank, retired Bettina Jakobsen, -- Chair to April 2011 Bettina Jakobsen, -- Chair to April 2011 Rigsrevisionen, Denmark Rigsrevisionen, Denmark Sergei Kutukov, -- Member Accounts Chamber, Russia Accounts Chamber, Russia Ladislav Langr, -- Member Ladislav Langr, -- Member Ernst & Young Ernst & Young

4. 4 Bettina Jakobsen, Bettina Jakobsen, Chair 2008 to April 2011 Chair 2008 to April 2011 Rigsrevisionen, Denmark Rigsrevisionen, Denmark AC appreciates her significant contributions and leadership as first Chairperson of the AC

5. 5 Terms of Reference of AC ToR Role AC is an independent body AC is an independent body Consultative function to CM Consultative function to CM Advisory to the SG. Advisory to the SG.

6. 6 Relating to the Audit Committee CM decisions:  In January the CM considered the AC should continue  The CM added evaluation to the remit of the AC  The CM reappointed Sergei Kutukov and Ladislav Langr and appointed Peter Maertens each for a three year term

7. 7 Terms of Reference of AC ToR Scope  Internal and external controls  Risk management  Internal and External audit  Evaluation  Implementation of recommendations  Corporate governance related to controls  Policies and procedures relating to controls

8. 8 Relating to the Audit Committee Please note that the AC does not:  do audits  do evaluations  do risk management  follow up of recommendations  create policies or procedures It verifies if these areas are working properly

9. 9 Vision, Mission & Goals of the AC Vision -- A significant factor to strengthen:  Accountability function  Corporate Governance function Mission -- Support CM & Management to fulfill their governance functions by:  Scrutiny of CoE control & oversight  Give a means for them to demonstrate effectiveness of governance/ oversight Goals -- 1 – 2 – 3 – 4

10. 10 Vision, Mission & Goals of the AC Goals: 1.E 1.Evaluate the effectiveness, quality, and performance of the oversight functions 2. 2.Understand the integrity of internal and external controls 3. 3.Review core governance, control, and risk initiatives and policies 4. 4.Understand (Enterprise) Risk Management and key risks facing the organization.

11. 11 Vision and Mission of Audit Committee Goal 4 Understand (Enterprise) Risk Management and key risks facing the organization. Goal 3 Review core governance, control, and risk initiatives and policies. Goal 2 Understand the integrity of internal and external controls. Goal 1 Evaluate the effectiveness, quality, and performance of the oversight functions. Mission: To support the Committee of Ministers and management in fulfilling their governance functions through independent scrutiny of the Council of Europe control and oversight mechanisms and providing the means for them to demonstrate their effectiveness to stakeholders. Vision: To be a significant factor in strengthening accountability and corporate governance functions of the Council of Europe.

12. 12 What did Audit Committee do?  Four meetings of Committee  Reviewed the 2009 and 2010 Financial statements and audit opinions  Discussed with external auditors  Presentations from senior managers  Met with Budget Committee  Reviewed reports and policies  Reported to CM

13. Assurances to the CM  Positive assurance –Internal control statement of SG is best practice –External audit is working well –Internal audit is catalyst for change (10 Years) –Evaluation is off to a good start –Good response to external audit recommendations  Not a positive assurance –Enterprise risk management – but in reform process –Attention areas for new Director of IO 13

14. Internal Control Statement  SG issues an Internal Control Statement accompanying the financial statements.  The AC reviewed those for 2009 and 2010 including the areas for development.  It provides assurances and transparency to the CM on the nature and effectiveness of Internal controls.  It identifies areas for strengthening controls.  It reflects best practice. 14

15. External Audit at the CoE  AC confirms that external audit is: –Working according to applicable standards –Adequate scope of work – Financial  Opinion on CoE, Eurimages, and North South Centre  Observations and control letters for these  Observations on Pension Fund, Ankara mission  Observation letters to management –Adequate scope of work – Performance  Human resource Management; joint programmes of the CoE; receipts; renovation works; and management of Parliamentary Assembly –Good response to external audit recommendations 15

16. Internal Audit at the CoE  AC confirms: –Internal audit is working according to applicable standards and its external quality assurance gave them the highest rating o Initiator of change for – 10 years o Dedicated and professional staff o Good collaboration with external auditors o Credibility with Information Technology –3 of 4 performance indicators mostly met –Focus on status recommendations in 2010 –New director of IO takes over a robust internal audit function 16

17. Internal Audit at the CoE  Attention areas for new Director IO –Rebuilt internal audit staff –Expand auditee involvement in the audits –Agreement / ownership recommendations –Audit reports to emphasize actions –Create internal control awareness amongst CoE staff –Expand annual audit plan and accountability to assignment level 17

18. Evaluation at the CoE  Evaluation made a good start –CM(2008)156 is the evaluation –Mission Statement adopted in July 2010 –Constructive attitude to evaluation: –First 3 evaluations by DIO provided lessons learned  Migrants; Expert Council on NGO law 2008-2010; EU/CoE “efficient prison management in Bosnia Herzegovina –For 2011: three evaluations; two supporting roles; plus activities to promote evaluation 18

19. Evaluation at the CoE  CoE needs to build upon the good start to establish an evaluation activity 19

20. Risk management definitions  “Enterprise Risk Management” (ERM) i –The process of identifying and assessing the organization wide risks that the CoE is exposed to and reviewing the control in place and other actions to be taken to mitigate these. It is also the monitoring and periodic reporting of these risks.  “Risk Management” (RM) –The same as ERM but related to risks of one or more programs, departments, processes or projects rather than the CoE wide risks. 20

21. Risk management at CoE  The SG sees the introduction of RM as part of the reform in process and has referred to this as an area for development in his 2009 and 2010 statement on internal control that accompanied the financial statements.  Efforts to introduce RM in certain areas in 2007 and 2009 have not been followed up.  Building management, information technology, administrative support services, & project management  ERM & RM requires attention and ways forward need to be found. 21

22. Fraud awareness and prevention Policy has been approved in early 2011.  Its objectives are: –Strengthen governance –Demonstrate CoE commitment –Pursue a policy of zero tolerance –Apply itself what it recommends to States –Investigation procedures transparent  The implementation of the policy is an area for further development in 2011. 22

23. 23 Thank you Questions? Peter Maertens, CA, RE