MEPs shift blame to Member States

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Series Details Vol.11, No.41, 17.11.05
Publication Date 17/11/2005
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Date: 17/11/05

Members of the European Parliament responded to the latest critical report on EU finances from the European Court of Auditors (ECA) by directing their fire at national administrations.

The court, which is the Commission's external auditor, refused for the eleventh year running to give assurance on the legality and regularity of the bulk of EU spending. It said that improvements to the EU's financial administration were being made but much work still remained to be done.

Presenting the ECA's annual report on the EU accounts, the President of the court Hubert Weber said: "The court found that the vast majority of the payment budget was again materially affected by errors of legality and regularity in the underlying transactions." He blamed "inherently risky transactions" and ineffective supervisory and control systems.

There had, he said, been improvements, particularly a new system operated by the national administrations for controls on farm payments.

At the level of the Commission, improvements were "a sound legacy of the administrative and financial reform process started in 2000". But he said that in the member states, legislation, rules and procedures governing expenditure often remained "overly complex".

Responding to the report, Siim Kallas, the commissioner for audit and the fight against fraud, drew attention to the court's comments on complicated rules. He appealed for greater co-operation between the EU institutions on simplifying those rules.

"Everybody talks about the need for simplification. But when [it comes to] the details, it is not so simple anymore. The big number and big part of the complexity comes often not from the officials, but from the clients, policymakers, politicians, member states, members of Parliament. And the changes are often resisted by the same clients."

Jan Mulder, who will draft Parliament's report on the 2004 accounts, was critical of the court, saying that it should publish what it considered an acceptable error rate.

"A further major failing is the absence of any evaluation of the role and responsibilities of member states in the part they play in implementing and controlling 80% of EU spending," he said.

The criticism of national administrations was taken up by many MEPs. Last week EU finance ministers rejected demands from the Parliament and the Commission that they should sign assurances as to the proper use of EU money in their territory.

Terry Wynn, who drafted Parliament's report on the 2003 accounts, said: "Only when accountability of EU spending is linked to politicians' reputations will we see detailed accounts of where the money from EU coffers is going. Each country has to take responsibility for their EU spending."

He added: "There is still a long way to go until we can account for every euro spent but the improvement seen this year is as much as we could have hoped for in 12 months."

British Conservative MEP James Elles said: "The court's refusal to give a positive statement of assurance will become a permanent feature of the EU unless member states face up to their responsibility to ensure funds channelled through them are better accounted for."

Szabolcs Fazakas, who chairs Parliament's budgetary control committee, said: "The fact that the court is again unable to deliver a positive declaration of assurance concerning the regularity of EU funds will, of course, give ammunition to Eurosceptics but the fact of the matter is that it is the member states where the fault lies for any failings, not the EU."

The ECA noted that the performance in implementing the allocated budget was much improved: underspending had been considerably reduced through better planning and management.

For the future, the court noted that the timetable for the modernisation of the Commission's accounting system was "very ambitious" and complained that the Commission had not yet issued an opening balance for 2005, which was "initially forecast to be established by the end of 2004".

The Commission responded that the opening balances would be established "in good time".

What the Court of Auditors said:

  • On the reliability of the accounts

A qualified opinion. The court could not be certain that the transactions for "sundry debtors" were correctly and completely recorded.

  • On the legality and regularity of the underlying transactions

For most of the budget, the court refused to provide assurance that transactions were not affected by material error. The improvement on past years was that the court was satisfied by parts of the Common Agricultural Policy controlled by the Integrated Administration and Control but there are still problems with the rest of the Common Agricultural Policy, structural funds, internal policies and external policies.

  • On the accounting system

The system used for 2004 was not designed to ensure recording of all assets and liabilities. The switchover to accrual-based accounting remains "very ambitious". The court is concerned that it has still not received an opening balance sheet for 2005

The European Court of Auditors on 15 November 2005 published its Annual Report for the fiscal year 2004, and although it recognised improvements to the EU's financial administration it refused for the eleventh year running to give assurance on the legality and regularity of the bulk of EU spending. Article brings together reactions from the European Parliament.

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European Court of Auditors: Audit reports and opinions: The Annual Reports: Annual Report concerning the financial year 2004, 15.11.05
European Commission: Press Release: ECA/05/11, European Court of Auditors publishes today its Annual Report on the implementation of the 2004 EU general budget, 15.11.05

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