On 10 November the European Court of Auditors published its report on the implementation of the 2008 EU Budget. The Court has issued an unqualified opinion on the reliability of the 2008 EU accounts. According to the Court “the 2008 annual accounts of the European Communities present fairly, in all material respects, the financial position of the European Communities (…)” However, the President of the European Court of Auditors, Vítor Caldeira, has said “This does not mean that the accounts are perfect or the systems that produce them never fail” and stressed that “there are weaknesses in the accounting systems of a number of the DGs of the Commission which put the quality of financial information at risk.”
As regards the legality and regularity of the transactions underlying the accounts the Court concluded that although the level of irregularity is still too high in some areas it has generally decreased.
The Court gave unqualified opinions on revenue and on commitments and concluded that there was an improvement in the management of the budget. Siim Kallas, Vice-President of the European Commission responsible for Administrative Affairs, Audit and Anti-Fraud, said that it was “the best report ever.” It was about time! However, once again, the court has refused to sign off on how the money from the EU's 2008 budget had been spent. According to the Court several spending areas in the budget continue to be materially affected by errors such as cohesion policy, research, energy and transport, external aid and enlargement as well as part of the agricultural programme.
The Court, for the first time, has not given an adverse opinion but a qualified one for the policy group “Agriculture and natural resources.” The court concluded that payments for this policy group are legal and regular, except for Rural Development. The estimated level of error for Rural Development expenditure continues to exceed 2%. Consequently, according to the ECA the supervisory and control systems related to Agriculture and natural resources are only partially effective.
The Court also gave a qualified opinion for the policy group “Economic and financial affairs.” According to the ECA payments for this policy area, were “in all material respects, legal and regular”, except for expenditure concerning the Sixth Framework Programme for research and technological development (FP6). The supervisory and control systems for this policy group were, therefore, considered to be partially effective in preventing and correcting errors.
The Court gave clean opinions for spending on “Education and citizenship” and for “Administrative and other expenditure.” However, the Court continues to give adverse opinions on the legality and regularity aspects for the policy groups “Cohesion”, “Research, energy and transport”, as well as “External aid, development and enlargement.” The Court continues to find that payments in these policy groups do not comply with the rules and continue to be materially affected by errors.
The EU’s Cohesion Policy, which represents almost a third of the budget, continues to be the area most affected by errors. The report reads “Instead of the estimated 16,3 billion euro, the payments amounted to 24,0 billion euros.” According to the Court “at least 11 % of the total amount reimbursed should not have been reimbursed.” Mr Caldeira stressed that “A major part of the estimated error rate relates to eligibility errors (for example, projects did not meet the specific funding conditions) and to serious failures to respect procurement rules.” Hence, for this policy group, supervisory and control systems are not effective in preventing and correcting the reimbursement of overstated or ineligible costs.
Vítor Caldeira said “Overall, error rates appear to be decreasing due to improvements in the management of the budget, but legal frameworks continue to be complex and problems remain in some control systems.” In the majority of the cases the errors are due to misapplication or misunderstanding of the too complex rules of EU expenditure schemes. Mr Caldeira called, therefore, for simplification of the control systems.
