Brussels, 09/11/2010 (Agence Europe) - Improvements were observed, in particular, in the domain of structural funds but still no full marks for the way in which the EU budget for 2009 was executed. The annual report from the European Court of Auditors concluded that payments from the 2009 budget were affected by a significantly high level of errors, with the exception of two areas of spending: economic and financial affairs (€0.7 billion) and administrative spending (€9.1 billion). Publication of this report on Tuesday 9 November provides a boost to the discharge procedure, for which the European Parliament is responsible in its execution of the 2009 budget.
Vítor Caldeira, the president of the European Court of Auditors, informed members from the European Parliament's budgetary control committee that “the estimate for the level of error for the budget as a whole is, therefore, lower in 2009 than in 2008, confirming again the downward trend reported last year. But there is no guarantee this trend will continue. Systems remain only partially effective in all policy groups except administrative expenditure”. He explained, in brief, that the most probable estimated rate of errors involving payments increased in comparison to rates for 2008, in the area of agricultural policies and natural resources, but fell significantly in the area of spending on cohesion policy.
Accounts reliability. The Court of Auditors concluded that the European Union accounts accurately reflect the financial situation, as well as the results of operations and funding flows from the Treasury. Caldeira affirmed that “for the third year in a row, the Court has observed that there were no significant anomalies in the accounts and they were, consequently, reliable”.
Legality and underlying regularity of operations. The Court pointed out that with regard to legality and regularity, similarly to previous years, revenue was not characterised by any significant errors and that control and monitoring systems were effective. Similarly to previous years, commitment appropriations contained no significant errors. Nonetheless, the annual report indicates that “payments from the budget continue to be materially affected by error, except in two areas of expenditure. The two exceptions are administrative expenditure (where systems have for many years been assessed to comply with the Financial Regulation) and economic and financial affairs”.
In all other areas of expenditure or “policy groups”, the Court found “material levels of error”, as pointed out by the president of the European Court of Auditors. It should be said that the total amount of payment commitments in 2009 rose to € 118.4 billion.
Agriculture and natural resources. Agriculture and natural resources account for almost half of the budget (€56.3 billion in 2009). The Court estimated that the rate of error was between 2 and 5%, a percentage that is somewhat higher than last year. Most errors were caused by an over-declaration of eligible land by beneficiaries under the Single Payment Scheme and the Single Area Payment Scheme. Caldeira explained that the Court of Auditors was recommending that the risk of error be reduced by “improving the quality of information in the databases used for establishing entitlements and calculating payments, and by clarifying and enforcing rules on land usage and maintenance”.
Cohesion. Cohesion is the second largest group of policy areas, accounting for almost a third of the budget (€35.5 billion). It is the only budgetary area where the estimated rate of error is above 5%. Approximately three quarters of the estimated rate of error is linked to “serious failures of national authorities to apply the rules on public procurement”, explained the president of the Court. The European Court of Auditors estimates that almost a third of the errors detected in interim and final payments tested could have been detected and corrected by member states before certifying expenditure to the Commission. The Court makes four recommendations to the Commission: - to encourage the national authorities to strictly apply corrective mechanisms before submitting expenditure claims; - to ensure that, when ineligible expenditure is detected, it is not replaced by national authorities with new expenditure, which is itself irregular; - to use its supervisory role to ensure the appropriate functioning of the national management and control systems for 2007-2013; - and to follow closely member state application of EU directives on public procurement.
Research, energy and transport. In these fields (which account for €8.0 billion), payments continue to suffer from a significant rate of error and systems in place are only partially effective. Similarly to 2008, the Court estimates that the rate of error is between 2 and 5%. In this policy group, the majority of errors involve reimbursement of overestimated personnel and indirect costs, claimed by beneficiaries involved in research projects.
External aid, development and enlargement. The situation in these areas, which account for a total amount of €6.6 billion, is similar to last year: there is a significant level of error affecting payments and control systems are only partially effective. The estimated rate of error is once again between 2 and 5%. For the most part, these errors involved spending eligibility, although the Court has also observed several cases of non-respect of EU rules on awarding public markets. With regard to European Development Funds, the Court is categorical that the 2009 accounts were reliable and operations were legal and regular. Nonetheless, it is necessary to point out that the systems in place are only partially effective.
Education and citizenship. The Court pointed out that Commission systems had not helped to detect or correct a significant number of errors affecting the programmes and projects for previous programming periods closed in 2009.
The Commission is reassured by the observation made by the Court. Algirdas Šemeta, the commissioner responsible for the fight against fraud declared: “We can be pleased with the improvements in EU financial management, which are recognised today by the Court of Auditors. But, there is always more that can be done, and the Commission will continue its intense efforts to ensure that EU funds are properly accounted for and well spent”. With regard to payments, the Commission succeeded, for the first time, in bringing the overall rate of errors for EU spending to below 5%. In a press release, the Commission welcomed the fact that this meant that at least 95% of all payments made in 2009 were correct.
For so-called “cohesion” spending (aid to EU regions and employment), the Commission welcomed the fact that the Court of Auditors had recognised the progress accomplished in this sector. The Commission explained that it intended to significantly increase efforts in this area to consolidate this positive development.
In the area of agricultural payments, the situation has stabilised over recent years and the rate of error hovers around the 2% threshold set for awarding a “clean bill of health”. This is a “very good result” given the complexity and scope of agricultural payments directly paid to millions of farmers working throughout Europe.
Better protection of the EU budget. The fact that the Commission is determined to protect the EU budget in these times of financial austerity can be seen by the increasing amount of funds withdrawn from projects where errors were identified and where funds have been taken away from the national authorities responsible. Recoveries and financial corrections confirmed or decided on in 2009 involved €3.3 billion in funding as opposed to €2.9 billion in 2008. The Commission will continue to encourage member states to improve reporting of any recoveries carried out. (L.C./transl.fl)