‘Disappointment’ as auditors reject EU accounts

Pottering_Caldeira_AR07.jpg

The majority of payments made by the EU in 2007 were regular, according to a report published on 10 November. But some members of the European Parliament have expressed ‘acute disappointment’ after auditors failed to sign off the EU accounts for the fourteenth consecutive year, identifying errors in two to five percent of payments made to the bloc’s member states.

The European Court of Auditors report for 2007, published on 10 November, asserts that “errors are still too frequent in some areas”. 

Indeed, the report’s opinion on EU payments “remains broadly similar to last year,” when auditors also failed to approve the figures for 2006 (EURACTIV 14/11/07). 

Nevertheless, the 2007 report finds that for most budget areas, including research grants and humanitarian aid, “between 95% and 98% of payments are error-free”. 

As in previous years, the report shows that the highest rates of error lie in regional and cohesion policy spending, which is managed by national authorities. Errors here account for 42bn euro, with the court estimating that “at least 11% of the value of reimbursed costs should not have been paid out”. 

Administration and Anti-Fraud Commissioner Siim Kallas responded by saying that the EU executive would redouble its efforts to recover funding money where necessary. Indeed, this year the Commission had imposed financial corrections on member states to the tune of 843m euro, he announced. He expects another 1.5bn euro to be recovered by March 2009. 

“The Commission shall not hesitate to take a tough stance and suspend payments until all member states implement adequate corrective measures. And where errors have a financial impact, we shall recover the money,” Kallas said. 

Meanwhile, parliamentarians said they were concerned by the report’s findings. “It is disappointing to note that the Court of Auditors is still not able to validate the execution of payments, in particular concerning structural funds,” said Dutch liberal MEP Jan Mulder, Alliance of Liberals and Democrats for Europe (ALDE) coordinator in Parliament’s budgetary control committee. 

“The national declarations that are presented by member states on the Community funds they manage are not good enough,” Mulder lamented, welcoming an announcement by the Commission that it would seek an inter-institutional agreement on “the concept of tolerable risk of error” for EU-funded programmes. 

The Court of Auditors report provides a basis for the 2007 budgetary discharge procedure between the European Parliament and the Council. MEPs are set to vote on the discharge in April 2009. 

"The European Commission welcomes the auditors' constructive analysis and will continue efforts to improve its financial management to address the weaknesses identified," said the EU executive's Vice President Siim Kallas, responsible for administration and anti-fraud. "I do hope the report will also mobilise member states to do their job better so that errors on the ground are prevented and corrected," he added. 

"As in previous years, we give a number of recommendations on how the management of EU funds can be improved within the current set-up," said Vítor Caldeira, president of the European Court of Auditors

"However, under the current review of the budget, the Court has also stressed the need to think radically about the design of expenditure programmes. This can be about simplification but also considering critically the appropriate level of national, regional and local discretion in managing programmes," Caldeira continued. 

"We feel acute disappointment that for the fourteenth consecutive year, a positive declaration could not be given, despite thorough reforms of the accounting and finance system over the last few years," said Dutch liberal MEP Jan Mulder, Alliance of Liberals and Democrats for Europe (ALDE) coordinator in Parliament's budgetary control committee. 

French centre-right MEP Jean-Pierre Audy (EPP-ED), Parliament's rapporteur on the 2007 discharge procedure, described the report as "a good working basis for the process of discharge undertaken for the 2007 fiscal year". "This process should allow the budgetary control committee, on the basis of the rapporteur's report, to issue recommendations to Parliament for its vote on the discharge of the 2007 financial year," he continued. 

Calling for closer cooperation between Parliament and Council in preparing the budgetary discharge, Audy welcomed the report's positive statements on the consolidated accounts for 2007, but expressed concern over "the persistence of a negative statement of assurance on many sections of the budget". 

German centre-right MEP Ingeborg GrässleEPP-ED Group coordinator in the budgetary control committee, declared: "It is not without a certain frustration that we come to this result for the fourteenth consecutive year. The Barroso Commission has made the increase of financial controls its battle cry, without recording the progress we had the right to expect. 2007 is the last year for which the Barroso Commission bears responsibility for the discharge of the budget."

"While the Commission's improved book keeping is a step in the right direction, the most fundamental flaws remain: the EU's budget is misspent, badly targeted and wide open to fraud. There has hardly been any improvement in terms of the actual amount of taxpayers' money that is being wasted on fraud," said Mats Persson, research director at Open Europe, a think tank.

"Equally importantly, a large amount of EU funding that is technically legal is being squandered on projects that just don't make sense. This will continue to be the case as long as the EU focuses its spending on vast and complex schemes such as the Common Agricultural Policy and structural funds. The budget is designed to accommodate yesterday's political agreement, not the rapidly evolving challenges of the modern world. These problems show how the EU budget and the EU as a whole are in need of fundamental reform," Persson continued.

The EU budget for 2007 amounted to 114 billion euros, an increase of seven billion from the previous year. 

The European Commission is responsible for implementing the budget. It does so solely or in conjunction with national governments, depending on the policy area concerned. 

The implementation of the budget is audited externally each year by the Luxembourg-based European Court of Auditors, providing a basis for the budgetary discharge procedure in the European Parliament and the European Council. 

In October, the EU executive launched the 'Financial Transparency System' search engine, making details of the beneficiaries of EU funding publicly available for the first time (EURACTIV 03/10/08). The website forms part of the wider transparency initiative launched by Administration and Anti-Fraud Commissioner Siim Kallas in 2005. 

  • End 2008: Deadline by which member states must publish information on structural fund and rural development grant allocations online.
  • By March 2009: Commission expected to have recovered 1.5bn euro of misspent funds. 
  • April 2009: Parliament to vote on 2007 financial discharge. 
  • End 2009: Deadline by which member states must publish information on farm subsidy allocations online. 

Subscribe to our newsletters

Subscribe