Brussels, 05/01/2000 (Agence Europe) - The Court of Auditors annual report for 1998 was published in the Official Journal C/349 last year, EUROPE will show the main points:
As with the previous four years, the Court of Auditors has noted that the rate of errors in the spending (payments made for non-eligible expenses, transfers of incorrect amounts) is so significant that it refuses to approve the regularity and legality of the payments made by the European Commission. The weaknesses noted with regard to the accounting systems result in the fact that some information presented to the Court are wrong or incomplete. Problems remain for the running of the internal management and monitoring systems on each administrative level, from the Commission, through intermediaries such as national bodies, to the final beneficiaries. The Court invites the Commission to speed up and deepen the process of reforming financial management. It recalls that there where the Commission confides in Member States the responsibility of the day-to-day management of Community programmes, it remains, in accordance with Article 274 of the Treaty, held to insure that this management is adequate. At the same time it underlines that the Community institutions are not the only ones who have to adopt a new culture and method of financial management and deplores the numerous serious shortfalls noted with respect to the management and monitoring of Community funds by the Member States.
Here are the Courts central observations in relation to:
1) Common agricultural policy: the accounts relating to the EAGGF-Guarantee spending are generally trustworthy, but the Court notes that the substantial number of errors remain too high. In most cases, the mistakes consist of the exaggerated declaration of surface area or the number of animals by the individual beneficiaries in their requests or a bad application of Community Regulations.
2) Regional policy: the Court notes a significant number of serious errors in the declarations of spending made by Member States (non-eligible spending, non-respect of rules of tender, spending that is not supported with receipts). Aid to EAGGF-Guideline should go in the direction of the measures taken in view of limiting surplus production. Asserting that the development of biological agriculture and forms of non-polluting agriculture represents an important field for CAP, the Court deplores the EAGGF-Guidelines does not foresee any specific inciting measure to this end and that the support of biological agriculture remains limited. Furthermore the Court also regrets that the co-ordination in the employment sector between the Funds and the other Community financial instruments has not progressed.
3) Internal policies: the Courts audits have shown the several undertakings have been written into the accounts, though they have never been the object of contracts. A certain number of contracts concluded a short time after the end of the year where even backdated by the Commission. Especially in the field of research, the Court noted errors and inaccuracies including excessive declarations, in nearly two thirds of the cases. As for these declarations, the costs where rounded up by a third on average.
External policies: The 1998 financial year once again knew a strong concentration of engagements at the end of the year due to undeveloped administrative practices. Payment credits of some EUR 400 million remained unused while payments had to be suspended for certain actions due to a lack of available credit. The viability of the accounts is affected by the fact that they are incomplete. Especially, regarding the Phare and Tacis programmes (funding for countries from Eastern Europe and the former Soviet Union) predictions of potential debts relating to quasi-contractual agreements in view of mobilising funds of the coming year have been underestimated by EUR 2,794 million. The Court also noted that the Commission contracted, in the framework of international fishing agreements, legal costs in excess by EUR 352.7 million the credits made by the budgetary authority. While noting that the Humanitarian Office Echo considerably reinforced its numbers and clarified its recruitment procedures, the Court notes that the number of temporary agents are still occupying strategic posts. It insists for the creation of a "teams" of humanitarian aid experts.
European Investment funds: The Court noted that on December 31 1998, the EIF did not use the funds received for the technological Facilities of the SMEs. It underlined that, that which is for the monitoring of the EIF own funds, which the Community is 30% shareholder, the Court has not always gained access to the means of monitoring Community funds.
4) A separate report concerns the European Development Fund (which is not part of the Community "budget" but of Member States), for which the Court considers that the accounts for the fiscal year 1998 provide a faithful picture of the revenue and expenditure of the 6th, 7th and 8th EDF for the year and of the end-of-year financial situation. It provides a positive opinion, under certain reservations, regarding the regularity and legality of payments made by these three EDFs. The Court does, however note that problems remain: one-to-one markets (instead of calls for tender) based on geographic distribution distorts competition; complementary markets concluded with those who gained the initial market; the lack of evaluation by the providers; lack of cost-analysis; lack of evaluation of technical cooperation. The Court notes that the existence of two sources of funding (EDF and budget) for actions in favour of ACP countries, with different rules, considerably complicates management. It considers that procedures should be reviewed to achieve coherent management of the instruments.
The report also contains, chapter by chapter, the responses of the European Commission and other institutions concerned to the remarks of the Court of Auditors. EUROPE recalls that the Commission has already taken a large number of measures aimed at remedying the shortcomings pointed out by the Court in view of defining and gradually implementing "the new culture regarding financial management" as requested by the Court. Reforms are underway. At the same time, the European Parliament has strengthened and improved its controls over Community spending and budget management, and the EcoFin Council is taking a closer look.
For the details of the Court's observations and Commission's responses and those of the other institutions, one has obviously to refer to the full text of the report now available in the aforementioned Official Journal.