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14 Utrecht L. Rev. 1 (2018)

handle is hein.journals/utrecht14 and id is 1 raw text is: UtrechtL ew This article is published in a peer-reviewed section of the Utrecht Law Review Auditing Standards and the Accountability of the European Court of Auditors (ECA) Alex Brenninkmeijer, Gaston Moonen, Raphael Debets, Branislav Hock* 1. Introduction Global regulation increasingly relies on alternatives of international legislation. Whether through various guidelines, standards, or declarations produced by organized transnational networks that involve public, private, or hybrid actors, the growing informality of international law making has been a recurring subject of legal analysis. These informal outputs, processes, and actors have been described as a rise in private-sector power that produces flexible, informal, and hence more effective institutions, while the regulatory state's role is decreasing.' However, the lack of legitimacy and accountability accompanying these processes has arguably resulted in major problems such as financial breakdowns or human rights violations.2 Therefore, while informal law-making brings many positives, we need to improve our understanding of how to balance them with public accountability.' Financial and compliance audits of the European Court of Auditors (ECA) are an example of the informality of international law making because they are governed by standards that concern the different aspects of the professionalism of auditors and their audits. These standards are developed in the context of international private-sector networks and, therefore, outside the EU's legal framework. Some of such standard-setting bodies are the International Accounting Standards Boards (IASB) and the International Federation of Accountants (IFAC). Being private-sector bodies, they differ from classical standard-setting bodies.' Hence, while competences of the ECA are based on the Treaty on the Functioning of the European Union (TFEU), international private bodies without legally founded decision-making powers are able to strongly influence the standards that the ECA follows. Therefore, it is necessary to answer the following question: How can audit standards determined by the private sector be better aligned to administrative law to reflect the realities of public-sector auditing in the framework of the ECA? This article aims to improve our understanding ofthe institutional complementarity between transnational private regulation and public regimes. It gives an overview of the question of democratic accountability when using standards emanating from the private sector in public-sector auditing and accounting. Then, it explains the structure of auditing and accounting standards and how they fit into the ECA's legal framework * Alex Brenninkmeijer is Member of the European Court of Auditors and Professor at the Institute of Constitutional, Administrative Law and Legal Theory at Utrecht University (a.f.m.brenninkmeijer@uu.nl). Gaston Moonen is staff member at the Directorate of the Presidency at the European Court of Auditors (antonius.moonen@eca.europa.eu). Raphael Debets is Head of the Private Office at the European Court of Auditors (raphael.debets@eca.europa.eu). Dr Branislav Hock is lecturer at the University of Portsmouth (branislav.hock@port.ac.uk) and member of the Tilburg Law and Economics Center (TILEC), which supports and encourages academic research on the governance of economic activity. The opinions expressed by the authors in this publication in no way commit the European Court of Auditors. The authors would like to express their sincere gratitude to Ms Charline Binard for her useful comments. 1 See the global administrative law literature, N. Krisch & B. Kingsbury, 'Introduction: Global Governance and Global Administrative Law in the International Legal Order', (2006) 17 European Journal of International Law, no. 1. 2 See generally D. Held, Global Covenant (2004). 3 D. Curtin & L. Senden, 'Public Accountability of Transnational Private Regulation: Chimera or Reality?', (2011) 38 Journal of Law and Society, no. 1, p. 187. 4 D. Kerwer, 'Rules that Many Use: Standards and Global Regulation', (2005) 18 Governance, pp. 611-632 at p. 615, Table 1 Key Standards for Sound Financial Systems. www.utrechtlawreview.org I Volume 14, Issue 1, 2018 1 http://doi.org/10.18352/ulr.417 I

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