Brian Gray has dedicated almost all of his career to the same employer and ideals. The former chief accountant of the European Commission has worked in the European administration for almost 50 years as accountant, auditor, adviser and consultant. In that time, he has helped instil rigour and transparency into how the EU spends its money and helped steady the budgetary ship after the greatest political crisis in the bloc’s history.

Gray was a pioneer member at the European Court of Auditors, finance director for agriculture and structural funds, and later director-general of the Commission’s Internal Audit Service, responsible also for some 40 EU Agencies, before retiring in 2012.

Since then, he has chaired the Audit Committee of the European Council and served on audit committees across the EU, including Fusion for Energy and the Committee of the Regions.

A new approach to EU audit

When Gray joined the newly created European Court of Auditors (ECA) in Luxembourg in 1978, the Commission’s accounting and auditing function had few professional accountants, making him, fresh from Deloitte in London and Lusaka, something of an exception.

“The Brits employed qualified accountants, the Italians employed lawyers, and the French basically government officials,” Gray recalls. “And so it was very easy to shine in a fairly small pond when you're one of the very few able to understand and audit the accounts.”

Introducing greater scrutiny and controls

With Gray’s involvement, the ECA shifted emphasis away from simply checking that the figures added up to closer scrutiny of how money was actually being spent.

Working on agricultural policy in the 90s, Gray discovered something inconceivable today: for EU agricultural expenditure, then roughly half of the total budget, there were virtually no structured budget control systems among member states. “The Commission was under pressure with agricultural expenditure seemingly out of control and it was trying to overhaul the EU funding system,” Gray recalls. “So they set up a committee, inviting somebody from the Court of Auditors, and they sent me along.” 

By 1995, they had secured unanimous approval for multi-level financial rules, and by the early 2000s, a system robust enough that the EU could withhold up to 10% of requested funds if state authorities failed to comply. Establishing those controls prepared Gray for his most transformative contribution: introducing accrual accounting and international public sector standards into the Commission in 2005.

A new opportunity from chaos

In 1999, the entire EU executive, under President Jacques Santer, resigned amid accusations of fraud, mismanagement, nepotism and cronyism. The reform campaign included the appointment of Marta Andreasen as Commission Chief Accountant. In 2002, four months into the post, Andreasen publicly declared the EU budget was open to fraud and abuse. She was suspended that August and dismissed two years later. Gray took up the chief accountant role during her suspension.

Due to his success in running the agriculture budget and structured funds, he was charged with overhauling the Commission’s accounting operations.

Accrual accounting: a two-tier challenge

First, he introduced accrual accounting which – unlike the cash-based approach – aimed to give “a correct picture of your economic situation” by recording financial events as they occur, rather than when cash changes hands.

But Gray also had to change habits among civil servants: recording invoices as soon as they arrived; treating advance payments as debts until justified; thinking in terms of assets, liabilities and obligations, not just cash outgoings.

“Communicate, communicate, communicate,” was the mantra that drove Gray and the institution through the process: explaining why the new system mattered, how it worked, and how it would improve management rather than simply imposing bureaucracy.

Secondly, a robust and capable IT system was needed to replace the existing “very amateur” setup. All with a non-negotiable deployment deadline of three years.

Gray led the design of the SAP-driven Accrual-Based Accounting (ABAC) platform, with customised workflows, a central database of beneficiaries to prevent payments to the wrong entities – “I did discover some payments were being made to the wrong people” – contract handling, and functionality to distinguish pre-financing from actual expenditure.

“The net result is that the Court of Auditors, which by [2006] had become far more professional and competent, gave us a clean opinion that the accounts were compliant with our accounting rules and were true and fair.” Compliance with the newly applied International Public Sector Accounting Standards (IPSAS) swiftly followed.

The public interest role of the accountant

Everything in the public sector happens by rules and regulations, Gray points out. “In the corporate sector you're used to an accounting manual, which is guidance, but here you have a rule for this and a rule for the other, and unless you master the legal background, you can't influence much.”

The accountant ensures the public sector meets private sector standards for recording and reporting on financial events, he says. “They provide management information which supports the efficient use of public funds and tracking the use of budgets, decision making, expenditure from claim to disbursement and of due taxes to their receipt.”

He adds that the public service accountant acts as gatekeeper “to identify irregular uses of funds, ensure prudent treasury management, the collection of debts and the mitigation of risks.”

“My personal experience of filling this role was very satisfying, interesting and I believe successful in improving the management of public funds,” says Gray, whose achievements very much speak for themselves.