End of the Court of Auditors’ prior approval: simplification or risk to financial oversight?

The role of prior approval in the current framework

In the interview, Ricardo Maia Magalhães begins by outlining the role of prior approval within the Portuguese system:

“Under the current Portuguese framework, prior approval by the Court of Auditors constitutes the main mechanism of preventive external oversight of public expenditure. (…) In practical terms, prior approval operates as a genuine condition for effectiveness in relation to higher-value contracts, preventing unlawful or irregular financial commitments from becoming binding.”

It is therefore a preventive mechanism, distinct from concurrent and subsequent audits, as it operates before financial effects are produced.

Administrative simplification or increased risk?

When asked about the potential elimination of this model, the lawyer highlights the associated risks:

“The general abolition of prior approval represents, in my view, a significant risk to the financial oversight of public finances. Ex ante control (…) prevents unlawful expenditure from producing effects. By removing this preventive filter, the system becomes primarily dependent on reactive mechanisms.”

Although the proposed change may result in formal procedural simplification and potentially accelerate the implementation of public investment, questions remain regarding its impact on the prevention of irregularities and the protection of public funds.

Comparative experience and necessary safeguards

In his comparative analysis, Ricardo Maia Magalhães notes that in other European jurisdictions, the absence of a generalised model of prior external control is only sustainable where it is offset by:

• Highly professionalised internal structures;

• Swift and effective financial accountability mechanisms;

• A high degree of institutional maturity.

Should the reform proceed, he further argues for the need to retain a minimum core of mandatory prior control for acts involving higher value or financial risk, as well as to strengthen the technical and human resources of the Court of Auditors and internal control systems.

The full interview can be read in its entirety on the Advocatus by ECO website.