By Nicola Smith - 17th November 2003
Poor financial control systems at the European Commission have once again come under fire from the EU’s financial watchdog, the Court of Auditors.
Based in Luxembourg, the court conducts an annual check of the previous year’s budget of the European institutions.
The report is used as the basis for the European Parliament’s decision on whether to sign off the accounts for a given year, often prompting intense political wrangling with the European Commission.
The confidential report, seen by this website, details a series of weaknesses and irregularities in the audit control systems of each EU policy area.
It also points out that in 2002, €7422 million of the EU budget was left untouched.
While this shows an improvement on previous years, the court calls for the surplus to be more “actively managed.”
The leftover cash was caused mainly by lower than expected spending on structural measures (€7422m) and agriculture (€1104m).
As previously, Structural Funds and Agriculture – which account for most of the budget – pose some of the most serious concerns about control standards.
While noting that 80 per cent of the EU’s annual €100 billion budget is spent in the member states – mainly in structural funds and agriculture - the court does not let the commission off the hook when it comes to policing the money.
As regards structural funds, the court reveals “numerous weaknesses” in the main supervisory and control systems.
“..there are still errors of the same type and with the same frequency as in previous years,” it adds, calling the commission to intensify its checks.
And when it comes to agriculture, the picture does not appear any brighter.
The court’s audit shows that, as in previous years, “CAP expenditure was materially affected by error".
“A large number of the transactions examined by the court were subject to errors,” the report states, with less control on subsidies paid on the basis of quantity produced, export funds, storage, fruit and vegetables and vineyards.
On internal policies – a diverse group of education policy, media, transport and nuclear safety and environment – the court concludes that “the transactions are affected by significant errors in respect of the beneficiaries.”
In the EU’s ‘external actions’, “a large number of irregularities (tendering procedure, supporting documents, eligibility of expenditure) have been detected in the bodies responsible for implementing the development aid projects.”
Administrative expenditure fares little better, with “shortcomings in supervisory systems and controls.”
And even in the area of “own resources” – the contribution of the member states to the EU budget – the commission is told to “intensify its controls in order to improve the reliability of the calculation of the own resources.”
The court expresses significant concern about controls within the commission itself.
The issue has not been out of the spotlight since harsh criticisms last year from the commission’s former chief accountant Marta Andreasen that the accounts system was wide open to fraud.
Adding fuel to the fire, the court concludes that some Directors General “claimed they did not have the information they needed on operation of the supervisory systems and controls or admitted that there were serious weaknesses in these systems.”
It calls for an update of the commission’s white paper on reform to take account of delays in certain actions.
And finally, the court expresses its “fear that the ambitious timetable for implementing the action plan [to modernise the accounts] could obstruct the necessary reform of the management information systems that ultimately lead to entries in the accounts.”
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