The European Court of Auditors has been issuing a negative assessment as it has never found that the EU funds were perfectly used in the Member States as regards all the EU’s areas of expenditure and 2007 was not an exception. The EU money had not been spent well and according to the rules. In 2007, the EU budget totalled 114 billion euro of payments.
The European Court of Auditors presented on 10 November its Annual Report for the 2007 financial year. Vitor Caldeira, president of the European Court of Auditors, said “Overall, the Court's audit opinion on the EU accounts is now unqualified while the opinion on underlying transactions remains broadly similar to that of last year.”
As regards the legality and regularity of the transactions underlying the accounts the Court also gave unqualified opinions for revenue, commitments and payments for economic and financial affairs and Administrative. According to the Court such transactions are free from material error and the supervisory and control systems are implemented adequately.
However, it could not provide a clean opinion for most spending areas. According to the Court payments for Agriculture and natural resources, cohesion, research, energy and transport, external aid, development and enlargement, and education and citizenship continue to be materially affected by errors and these areas supervisory and control systems are considered to be only partially effective.
The Court continues to find that payments made to final beneficiaries do not comply with the rules. According to the Court cohesion policies (€42 billion) continue to be the area most affected by errors. The Court pointed out that “at least 11 % of the total amount reimbursed should not have been reimbursed.” Vitor Caldeira has stressed that “In the cases audited by the Court this year the most frequent causes of incorrect expenditure reimbursements in the Structural Funds were inclusion of ineligible costs, over-declarations of money spent and serious failures to respect procurement rules.”
The Court estimated that the level of error in agriculture and natural resources is not considerably different from last year. According to the Court “In agriculture and natural resources (51 billion euro) the estimated overall error rate is still material. Rural development, with its often complex rules, accounts for a disproportionately large part of this error rate.” The Court has estimated the value of the error rate for European Agricultural Guarantee Fund (EAGF) expenditure to be “slightly below materiality” (2%).
For the other areas such as external aid, development and enlargement, research, energy and transport, education and citizenship the error rate was estimated between 2% and 5%. The Court has stressed “The estimated error rates in some spending, notably that previously covered under the headings "internal policies" and "external actions" have fallen – however not enough to affect the overall picture.”
The Court acknowledged the Commission’s efforts to address the existing weaknesses in supervision and control systems particularly in the area of monitoring and reporting but further progress is needed. The Commission, since 2000, has been working on a reform program to improve the management of the EU budget. It adopted an Action Plan to address the recommendations of the Court on how the Commission should improve its supervisory role of management and control systems in Member States for structural actions.
The Commission was expecting that its Action Plan would help it to reach its dream that before the end of its term the Court issue a positive Declaration of Assurance. The Statement of Assurance of the Court provides opinions on both the reliability of the accounts and on the regularity and legality of the underlying transactions. Although the overall accounts have been approved without qualification for the first time since present accounting rules were adopted the Court of Auditors could not issue a Statement of Assurance as the underlying payments in most spending areas have a too high level of error. Although the Commission has implemented several control measures the true is that the Court continues to find serious errors in several areas of the EU expenditure.
Moreover, the Court has called for simplification of the regulatory framework. According to Vitor Caldeira “Well designed rules and regulations which are clear to interpret and simple to apply decrease the risk of error, streamline the required controls and consequently also reduce their cost.”
