Brussels, 11/12/2013 (Agence Europe) - In a special report published on Tuesday 9 December, the European Court of Auditors concludes that the Commission's verification of GNI (Gross National Income) data was not sufficiently structured and focused. GNI is a macro-economic indicator measuring the wealth of a country. It is used as the basis for calculating the most significant part of income to the EU's budget. Contrary to GDP, GNI incorporates net income from abroad.
The Court found that the verification of GNI data used for own resources for the years 2002-07 was completed late by the Commission and the major revisions carried out by member states between 2008 and 2011 were not sufficiently examined by the Commission. There was an excessive use of general reservations; Eurostat did not plan and prioritise its verification work in an appropriate way, as the risks relating to member states' compilation of national accounts were not appropriately assessed in the selection of areas to be verified. The Court also considers that Eurostat did not apply a “consistent” approach when carrying out its verifications in member states.
The Court's audit demonstrated that a more structured and better focused approach would improve the effectiveness of the Commission's verification
Member states' gross national income (GNI) is the basis for the calculation of the most significant share of the revenue in the EU budget. Revenue derived from this source has increased from around 50 % of the budget in 2002 (€46 billion) to 70% in 2012 (€98 billion).
GNI is a macroeconomic aggregate whose compilation process should comply with ESA95 (European system for national and regional accounts). The Commission verifies GNI data provided by member states in order to ensure that their contributions to the EU budget are correct. The GNI Committee assists the Commission in its verification work. The Court says that any overestimate or underestimate of a member state's GNI (even if this does not affect the GNI's resources overall) can reduce or increase the respective contributions of the other member states.
The court's audit focused on the efficiency of the verification by the Commission, the GNI data for the 2002-2007 tax year is used for own resources. This data was finalised in 2012. The audit attempted to work out the risks linked when calculating the GNI and assessing how the Commission managed to reduce these risks. The countries audited include Germany, France, the United Kingdom, Italy, Spain, the Netherlands, Belgium, Sweden, Poland and Austria.
The Court auditors carried out a more structured verification that by the Commission, by focusing on a limited number of significant components exposed to risk. The Commission could also adopt a similar approach without necessarily increasing Eurostat staff involved in the verification of GNI data used for own resources.
The Commission completed its verification cycle in January 2012. Excessive use of general reservations was highlighted in the fact that the Commission had not sufficiently examined major revisions carried out by the member states since 2008 and 2011.
The verification carried out by the Commission is expected to improve the quality of GNI data from member states. The court considers, however, in conclusion, that this verification was not sufficiently structured and targeted for the following reasons: - verification strategy/approach: the Commission did not plan and prioritise its work in an appropriate way, as the risks were not appropriately assessed; - the verification process: the Commission did not apply a consistent approach when carrying out its verifications in member states resulting in particular in weaknesses in the performance of direct verification and a lack of criteria for setting country-specific reservations, and it did not carry out sufficient work at that level; - reporting: the verifications have not been adequately reported.
During its audit, the Court's found cases of material non-compliance with ESA95 or lack of quality of GNI estimates in terms of their reliability, comparability and exhaustiveness, which the Commission had not detected.
Milan Martin Cvikl, the member of the Court of Auditors responsible for the report said: “One might expect that the Commission's verification would ensure the quality of member states' GNI data. However, the Court concludes that verification work was not sufficiently structured and focussed”. He concluded that, “although we found cases of non-compliance and lack of quality in the audited verification cycle, the effectiveness of the Commission's work in the next cycle after September 2015 is likely to be improved through the implementation of our recommendations”. (LC/transl.fl)