Brussels, 13/11/2001 (Agence Europe) - Presenting the Annual Report on the 2000 Financial Year to the European Parliament in Strasbourg on Tuesday, the President of the European Court of Auditors, Jan Karlsson, highlighted that the implementation of the 2000 budget had been characterised by "the emergence of a very large surplus of revenue over expenditure, amounting to EUR 11.6 billion, equivalent to more than 14% of final payment expenditure. The main factors which led to this situation were a higher revenue yield than budgeted and lower payments on Structural Measures, in particular those for the 2000-2006 programming period. The Court recommends that the Commission examine how it can better use the supplementary and amending budget procedure to avoid excessive budget surpluses".
The Court discovered "persistent weaknesses" "in Member States' checking of community operations concerning programmes where management is shared between the Commission and the Member States. This was the case for Integrated Administrative and Control System (IACS), export refunds and the control regulation for Structural Measures." He added that "the setting up of national systems of internal control and the external audit of EU funds made available to the candidate countries require closer co-operation between the institutions even before accession". In terms of collaboration between European and National Supreme Audit Institutions, "I have arrived at the conclusion that a good result in this respect requires initiatives at a higher level than purely technical cooperation between the Supreme Audit Institutions of the Member States and the European Court of Auditors", stressing "the importance of collaboration between the national parliaments and the European Parliament" which would be a "key factor in the field of Financial Control". "With regard to the Statement of Assurance, the Court is of the opinion that the revised accounts for the financial year ended 31 December 2000 reflect reliably the Communities' revenue and expenditure for the year and the financial situation at the end of the year. As for the legality and regularity of underlying transactions are concerned, the audit of the principal management and control systems applicable to Agriculture and Structural Measures revealed weaknesses in the functioning of control procedures aiming to secure the legality and regularity of the transactions. The audit of operational expenditure revealed an unacceptable incidence of error affecting the amount of the payments or the reality or the eligibility of the underlying transactions. In view of the results of its audit work taken together, the Court is of the opinion that the transactions underlying the financial statements are, taken as a whole, legal and regular in respect of revenue, commitments and administrative expenditure but declines to provide this assurance in respect of payments in operational expenditure", said Mr Karlsson.
In terms of the follow-up of the observations made by the Court in its previous Annual and Special Reports, Mr Karlsson said that "some action has been taken" in all of the subjects examined. "The extent and effectiveness of the action, however, vary considerably". In some cases, the Commission's "corrective action has been slow, in others staff and financial resources allocated have been insufficient to achieve the desired level of improvement" (for example, concerning nuclear safety in the PHARE and TACIS programmes, Ed). He stressed that "Structural rigidities have often to be overcome, and in the areas of shared or decentralised management, which account for more than 80% of the general budget, the Commission requires action from others, such as Member States". He felt that progress had also been slow in terms of reorganising the EU's anti-fraud units, but "The new arrangements for OLAF provide a more appropriate administrative framework, with greater independence for the Office than its predecessor".
Mr Karlsson also stressed that the 18 Special Reports adopted since the last Annual Report "indicate significant positive findings: in the agricultural area the reformed clearance of accounts system and the Integrated Administrative and Control System have contributed to improved management of large amounts of EU fund" although the latter is not yet wholly satisfactory; "with regard to Structural Measures, the URBAN Community Initiative has helped the implementation of many urban development projects and has enabled local authorities to access Union funds"; "in the External Actions area, the work of the Agency charged with the reconstruction of Kosovo, was found to be both efficient and economical. The TACIS cross-border co-operation programme is an instrument which has the potential to play a useful role in addressing issues relating to the new Eastern border following the next accession". However, he added, "it was also found that major objectives had either not been achieved, or only limited progress had been made. Further it was frequently found that there was either insufficient or no evaluation by the Commission of the achievement of the objectives"."deficient, if it even exists" and its reform programme has still to face up to major challenges.
The President of the Court welcomed, moreover, the inclusion of new proposals aimed at allowing the establishment of a coherent legal framework in the field of budgetary execution, based on primacy of the financial regulation. He pointed out that "it is also important if the Court is to place at least some reliance for its own audit purposes on the checks carried out by the various audit and supervisory services in the Commission and in the Member States". As far as enlargement is concerned, on the subject of which the annual report this year contains a new chapter (preaccession aid), he felt that the establishment of national internal and external audit systems of EU funds made available to candidate countries requires closer cooperation between the institutions even before accession.
Commissioner Michaele Schreyer declared that the 2000 Report from the Court of Auditors is "encouragement for the Commission" and that she felt backed up by its internal reform action. She was mainly pleased about the positive conclusions reached by the Court on reconstruction of Kosovo ("the financial management of the agency responsible for reconstruction was good") and on the recasting of the financial regulation. She recalled it is the Commission that has the responsibility of ensuring that Member States' control procedures are reliable. "Each Member State should not be able to make its own interpretation of control procedure (…) it is unacceptable for certain Member States, which complain about the complexity of such procedures, to propose that, concerning structural funds, flat rate payments should be paid to them as they are then responsible for implementation". Ms Schreyer shared the Court's criticism about agricultural preaccession aid (SAPARD), stating that over one billion euro are allocated for 2000 and 2001 while payments only amount to EUR 16 million.
During a brief debate, Diemut Theato (CDU), Chair of the Committee on Budgetary Control, insisted on the fact that, although it is a good thing to make savings, it is not good for large sums from the Community budget (EUR 11.6 billion this year, making up 14% of the budget) to be paid back to the States because they have not been used. In her view, one should ask which policies were not implemented in a satisfactory way, and what aims were not reached because these sums were not used. This is partly due to the complex nature of the system, concluded Ms Theato, urging for simplification. In her view, what is important is not to control everything but to control effectively. The most serious problems are still noted for agricultural spending and structural funds, noted Welsh Labour member Elinud Morgan, who, moreover, criticises the Member States (Belgium, Denmark, Ireland and the Netherlands) that have not yet ratified the convention of 1995 on the protection of the Union's financial interests. Regarding reform of the European Commission, Ms Morgan told the European Executive: "keep going, you're on the right track", although she told Member States to "stop hiding behind the Commission". Dutch Liberal Jan Mulder stated one should be able to set oneself the aim of having a positive SOA for 2002. In his view, it would also be necessary to allow the Commission to impose penalties for incorrect use not only of CAP funds but also of structural funds. The Court's report is better this year, noted Belgian Green member Bart States. He says there is more clarity, and names are given, while considering that further simplification is required. This is true, put in Jean-Louis Bourlanges (UDF), as the complexity of the exercise is also one of the causes of under-use of funding. Other causes are the lack of coordination between the Commission and Member States and the effect that often finicky controls have of removing responsibility.