The arrival to the throne of Felipe VI caused the Royal Household to undergo for the first time a external audit of your accounts. Until that moment, the control of the financial management had fallen solely on the auditor, an internal figure present in Zarzuela only since 2007 and selected for the position. But the promise of the new King of a “integrity, honest and transparent” conduct, made in his coronation speech, was translated into a commitment to a greater control.
In 2014, the Casa del Rey signed a collaboration agreement with the General State Intervention (IGAE) to audit your accounts annually. Zarzuela made it clear then that he did “voluntarily” because article 65 of the Constitution establishes the economic independence of the Monarch. “The King receives a global amount from the State Budgets to support his Family and House, and freely distributes it,” he says.
But the decision was wrapped up among many other decisions – a code of conduct for the House staff, a regulation of gifts – with the aim of ending years of opacity. The first IGAE report was released in May 2016, relative to the 2015 financial year, the first complete one by Felipe VI. The latest available is 2020. What happens is that this inspection is very superficial, designed to verify that accounting standards have been applied correctly.
An accounting audit
There are three types of audit in the State Administration and the one that the General Intervention performs on the Royal Household is the most basic of all, aimed at certifying that the information that is collected in their accounts is truthful and that it allows to know the economic, financial and patrimonial situation and the execution of income and expenses for the year.
In short, a audit of accounting and not of legality, of compliance, whose objective is much more ambitious since it consists of verifying that the acts, operations and procedures of economic-financial management have been developed in accordance with the rules that are applicable. For example, certify if the expenses have been made in compliance or not with the law of public contracts.
This reinforced level of control is the one that exists throughout the public administration, ministries, autonomous communities, and their public companies. First, by the General State Comptroller itself, and later by the Court of Accounts. When referring to an “external audit” the most natural thing is to think of a thorough audit of financial management. This is what seemed to reflect the landing of three IGAE auditors at the end of 2014 in Zarzuela, which was projected as a historic change.
But it is not what happens in the Royal House and this has been confirmed in successive reports. The conclusion of the first of them in 2015 already put white on black what it was limited to. “The annual accounts express, in all significant respects, the true image of the assets and financial situation of the House of His Majesty the King.” “The accounting includes the state of liquidation of its budget corresponding to the year ended, in accordance with the regulatory framework of financial information that results from the application and, in particular, with the accounting and budgetary principles and criteria contained therein”. That is to say, block the debit and the credit, and the amounts quantified in the different items correspond to the Accounting Plan.
The auditors themselves assume in the 2020 report that their objective is only “to obtain reasonable assurance that the annual accounts as a whole are free from material inaccuracy, due to fraud or error“Without further ado. They point out that the contracts in Casa Real are governed by the“Contracting Instructions (another milestone of internal regulation) that Zarzuela began to apply from October 1, 2015 and by the rules of private law that are applicable according to the type of contract. “All the contracting, concludes the IGAE, has been carried out” in agreement “with this internal order.
The Royal House publishes contracts on its website that you sign with data such as the start date, end date, bid amount, award, number of invited companies, bidders and final winner. But on this there is no subsequent audit, which would occur if a level two legality audit were carried out. The only control over the expenses is the one made by the Zarzuela inspector. According to its 2020 report, “the adequate compliance with current legislation and of the applicable procedures in relation to the management of the economic, budgetary and accounting activities carried out by the House of HM the King “.
The institution of the Monarchy has suffered in recent years a deep reputational crisis. First of all because of the scandals that affected Iñaki Urdangarin and then by those who pointed directly to Juan Carlos I. Felipe VI has tried to quell them with some changes in Zarzuela, especially at the beginning of his reign. But they have not yet succeeded in extinguishing the demand for a greater transparency in this new stage.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.