Court of Auditors’ authority reform enacted – impact on public officials’ liability and insurers

Law of 7 January 2026 no. 1 has introduced important changes to public officials’ liability towards the public purse and new insurance requirements for public officials handling public funds.

The reform applies from 22 January 2026.

These are the main changes.

• Clarification on liability: The law defines what constitutes gross negligence for public officials, specifying that clear violations of applicable law, misrepresentation of facts, or denial of facts clearly established by the record are considered gross negligence. However, actions based on prevailing jurisprudence or competent authority opinions aren’t considered gross negligence.
• Liability for damages to the public purse: Responsibility is limited to intentional misconduct (dolo) in specific cases, such as settlements in mediation or judicial proceedings by public administration representatives, and certain tax-related agreements.
• Calculation of damages: When quantifying damages, the possible contribution of the damaged administration is considered. Save in case of fraud, the court must reduce the amount owed, with a cap of 30% of the ascertained damage and in all events not exceeding   twice the gross annual salary/compensation of the responsible party.
• Presumption of good faith: Political office holders are presumed to act in good faith unless proven otherwise, especially when their actions are supported by technical or administrative officials.
• Sanctions: In severe cases, the court can suspend convicted officials from managing public resources for six months to three years.
• Insurance requirement: Anyone assuming a role involving management of public resources has to take out insurance against damages caused to the public purse by gross negligence. Insurers will be added to the relevant action before the Cour of Auditors.
• Statute of limitations: The law clarifies the timing for liability actions, including cases of deliberate concealment of damage.

These provisions also apply to pending actions.

 

Amendments to public contract controls

• Thresholds and procedures: Updates the thresholds for public works, services and supply contracts subject to prior legitimacy control by the court, aligning them with current public procurement codes.
• PNRR/PNC projects: Special provisions for contracts related to the National Recovery and Resilience Plan (PNRR) and its complementary investments, including mandatory and expedited controls.
• Regional and local autonomy: Regions and local entities may choose to subject certain contracts to prior control by the court.

 

Advisory activities

The central section of the court provides advisory opinions on public accounting matters, especially for projects related to the PNRR/PNC, upon request from central administrations or other public bodies. Opinions must be issued within 30 days, and compliance with these opinions excludes gross negligence.

 

Government delegation for reorganisation

• The government is delegated to reorganise the Court of Auditors within 12 months, aiming to increase efficiency and regulate reimbursement of legal expenses for public officials acquitted of administrative liability.
• Key principles for reorganisation:
• Central and territorial sections to perform unified consultative, control and judicial functions.
• Strengthening the binding effect of joint section rulings.
• Regulation of the prosecutorial function, including coordination and oversight powers.
• Introduction of rotation and training requirements for magistrates.
• Regulation of disciplinary actions and access to the magistracy.
• Rationalisation of the legal framework and codification of relevant laws.
• Introduction of mechanisms to reduce litigation and allow for early settlement of liability cases.

 

Sanctions for delays in PNRR/PNC procedures

Public officials responsible for delays exceeding 10% of the established timeframe in PNRR/PNC-related procedures could face financial penalties ranging from EUR150 to two years of gross annual salary, depending on the severity of the fault.

 

Conclusion

This reform aims to clarify and modernise the rules governing the liability of public officials, strengthen the preventive and consultative functions of the Court of Auditors, streamline procedures for public contracts (especially those linked to EU recovery funds), and reorganise the court for greater efficiency and transparency. It also introduces new safeguards for public officials and mechanisms to reduce litigation and ensure timely execution of public projects.