Brussels, 17/02/2015 (Agence Europe) - The complexity of rural development policy and member states' weak control systems are the chief causes of the high error rate in spending, said the EU Court of Auditors on Tuesday 17 February.
In a special report, Errors in rural development spending: what are the causes, and how are they being addressed?, the Court estimated that the average error rate during the three years 2011-2013 was 8.2 %.
The Court believes that the member states' control authorities could and should have detected and corrected most of the errors affecting investment measures in rural development. Their control systems are deficient “because checks are not exhaustive and are based on insufficient information”.
According to the Court, investment measures (mainly grants to purchase agricultural and food processing machinery) accounted for two thirds of this error rate, and “area-related” aid (including compensation for additional costs incurred by using more environmentally friendly farming techniques) accounted for the remaining third.
The auditors found that, in relation to investment measures, the information required to detect and correct the errors was available to the member state authorities but was either not used or not requested in many instances. The auditors found that only 16% of the error rate resulted from non-compliance with direct provisions of EU regulations, while the largest proportion - 84% - was due to breaches of conditions set at member state level.
As regards investment measures, the audit revealed public bodies to be a significant source of error because of noncompliance with public procurement rules. The Court found two main reasons for this: first, rural infrastructure projects were commonly implemented by small municipalities, which often had limited experience of conducting public procurement procedures; second, certain beneficiaries preferred to work with specific contractors, most of whom had previously provided similar goods or services, and therefore awarded contracts directly. On no occasion did the paying agencies object to this, even though the basic procurement principles of transparency, objectivity, non-discrimination and appropriate disclosure had not been observed.
The auditors found that the measure supporting the processing of agricultural products, where public aid can amount to several million euro per project, was the most prone to error. Unintentional breaches of eligibility criteria by public and private beneficiaries accounted for a quarter of the error rate, while suspected intentional infringements by private beneficiaries contributed an eighth of the error rate.
For area-related aid, the main cause of error was non-compliance with farming commitments, which occurred due to low incentives for farmers to comply, a low control rate for commitments and a low sanction rate for non-compliance.
The auditors found that the Commission is moving in the right direction in addressing the causes of error through action plans. However, one weakness is that the action plans implemented by member states mainly have a reactive role and do not systematically address all the problems that caused the errors. Moreover, there is a lack of preventive action against the main widespread weaknesses at EU level.
The auditors recommended that the Commission complete the corrective actions it has taken to date by continuing to focus on the root causes of error for rural development spending. In this regard, where relevant, preventive and corrective actions should be taken by the member states concerning public procurement, the intentional circumvention of rules and agri-environment payments.
Over the 2007-2013 programming period, the European Union and the member states devoted more than €150 billion to the rural development policy, split virtually evenly between investment measures and area-related aid. Rural development spending is governed by the system of shared management between the member states and the Commission.
The European Commission said that, since 2012, it has been addressing the issue of error rate by requesting national action plans from the member states. This, it says, is beginning to bear fruit, with the error rate falling slightly in 2013. (Lionel Changeur)