Strasbourg, 13/11/2007 (Agence Europe) - The European Court of Auditors has refused to sign off most of the European Union's financial accounts for 2006 as legal and properly accounted for - this is the thirteenth time in a row that the auditors have failed the EU's accounts. The publication on Monday 12 November of the Court of Auditors' annual report now sends the 2006 budget to the European Parliament for its examination and discharge, a process expected to last until April 2008.
The Court of Auditors gives an 'unqualified opinion' (the go-ahead in EU jargon) to the European Commission on transactions underlying revenue, commitments and a small proportion of spending (administrative expenditure and the non-agricultural pre-accession spending). The president of the Court of Auditors, Hubert Weber, said when presenting the report to the members of the European Parliament's budgetary control committee that 'external actions' payments managed directly by Commission delegations in 2006 showed only a low incidence of error.'
Huber Weber explains that the Court of Auditors 'again gives an adverse opinion on the majority of EU expenditure: primarily the part of agricultural spending not covered by IACS (Ed: the Integrated Audit and Control System), structural policies, internal policies and a significant proportion of external actions. In these areas there is still a material level of errors found in the payments to final beneficiaries, although to different levels.' In addition, 'the Court is of the opinion that, taken as a whole, the underlying transactions of the European Development Funds, except payments authorised by the Commission's delegations in the beneficiary states, are legal and regular.'
For agriculture as a whole (€49.8 billion in 2006), 'the Court found a marked reduction in the estimated overall level of error' and 'concludes that IACS, which covers about 70% of Common Agricultural Policy (CAP) spending, is an effective system for limiting the risk of irregular expenditure, where properly applied. In Greece, however, problems with IACS still remain unresolved. While the Single Payment Scheme (Ed: for farmers, introduced in the 2003 CAP reform) brings with it simplified claim and payment procedures, it has brought about side effects, such as the allocation of entitlements to landowners who never exercised previous agricultural activity, and has led to substantial redistributional effects of EU aid away from farmers to landlords.' Weber explains that 'among new beneficiaries for EU agricultural aid, are railway companies (the United Kingdom), horse riding or breeding clubs (Germany and Sweden) and golf or leisure clubs and city councils (Denmark and the United Kingdom). In addition, the Single Payment Scheme regulations also gave member states discretion in relation to the allocation of entitlements, leading to unequal treatment of beneficiaries from one member state to another, and even within the same country.'
For spending on structural policies (€32.4bn in 2006), Weber explained that 'the situation remains similar to previous years. The Court identified a material level of error estimated to represent at least 12% of the total amount reimbursed to beneficiaries. The supervisory and control systems in the member states were generally ineffective or moderately effective, and the Commission maintains only a moderately effective supervision of their functioning.' For administrative expenditure (€6.7bn in 2006), 'the Court's work showed no material level of error in the sample of transactions, and an adequate framework of systems operated by the institutions. However, there remain specific weaknesses in certain systems - including those covering the assistance allowances for the members of the European Parliament.'
EU Administration and Anti-Fraud Commissioner Siim Kallas explained: 'The Court gives its green light when it estimates that the errors have a financial impact of less than 2%. In total, the Court now gives its green light to over 40% of total payments compared to roughly 1/3 last year, and only 6% two years ago. This represents tangible progress towards the goal of obtaining a positive Declaration of Assurance (DAS).' The Commission pledges to take the necessary measures to remedy the problems detected with the Structural Funds, including by suspending payments (as it has done for €1.7bn granted to the United Kingdom, although part of the suspension has since been lifted due to improvements).
Herbert Bosch (PES, Austria), the chair of the European Parliament's budgetary control committee, said that progress had been made in agriculture but he was 'extremely disappointed' with the bad news on Structural Fund spending, particularly the 'catastrophic' outcome of controls by the member states.
Bösch again returned to the EP request for member states to sign “national declarations” certifying to the correct use of Community budget resources. Member states are only obliged to present their annual reviews of the results from the audits and inspections. Only a few member states are committed to publish a national declaration (Denmark and the Netherlands). Mr Bösch also indicated that there was a severe shortcoming in external actions: we do not know how the €750 million granted by the European Union in 2006 to Iraq have been used. Bösch added that the Commission had been unable to send personnel into the field to inspect how this money was being used.
One of the rapporteurs for the discharge, Dan Jorgensen (PES, Denmark) also lambasted the “worrying” conclusions on Structural Funds, which will have to be examined in detail by the committee before it is able to make a recommendation on granting (or not) a Commission discharge on execution of the 2006 budget. He pointed out that Mr Kallas had expressed hope when he began his job in 2004 of obtaining a positive statement of assurance (DAS) from the Court at the end of the Commission's current mandate (2009). Mr Jorgensen averred that they did not know whether Mr Kallas would succeed in this respect. (L.C.)