While the UK and other Member States are struggling, in their battle with the European Parliament, to restrict the increase in the 2011 EU Budget to 2.91 percent, which represents a 3.5 billion euro increase from the 2010 budget -amounting 123 billion euros, the European Court of Auditors for the 16th year in a row has not signed the EU accounts.

On 9 November the European Court of Auditors published its report on the implementation of the 2009 EU Budget. The Court has issued an unqualified opinion on the reliability of the 2009 EU accounts. According to the Court “The accounts of the European Union give a fair presentation of the financial position and the results of operations and cash flows.” Nevertheless, “payments from the budget continue to be materially affected by error, except in two areas of expenditure – Economic and financial affairs and Administrative expenditure.

The Court gave unqualified opinions on revenue and on commitments and concluded that there was an improvement in the management of the budget. However, once again, the court has refused to sign off on how the money from the EU's 2009 budget had been spent. As regards the legality and regularity of the transactions underlying the accounts, the Court concluded that the level of irregularity is still too high.

According to the Court several spending areas in the budget continue to be materially affected by errors such as Agriculture and natural resources (56. 3 billion euro), Cohesion policy (35,5 BILLION EURO), Research, Energy and Transport (8,0 BILLION EURO), External Aid, Development and Enlargement (6,6 BILLION EURO) and Education and Citizenship (2,2 BILLION EURO). The Court estimated that payments, in these policy groups, are materially affected by error, being the error rate, estimated by the Court, between 2 and 5 % of payments made. However, for the cohesion policy the error rate estimated by the Court is above 5% (very serious). Moreover, the Court concluded that for these policy groups “The supervisory and control systems are partially effective in preventing or detecting and correcting the reimbursement of overstated or ineligible costs.”

The majority of irregularities are not fraud, nevertheless the Court will refer two cases to OLAF.

The Court concluded that the payments for Agriculture and Natural Resources were affected by material errors, which were higher than in 2008. The Court has pointed out “While some of the quantifiable errors concerned the eligibility of the expenditure, most were accuracy errors, resulting from over-declaration of eligible land.” According to the ECA the supervisory and control systems related to Agriculture and natural resources are only partially effective.

The EU’s Cohesion Policy, which represents almost a third of the budget, continues to be the area most affected by errors, “36 % of payments to projects were affected by error.” The Court has stressed that “the main causes of eligibility errors were the reimbursement of ineligible costs, and serious failures in applying the rules on public procurement.” Vitor Caldeira said that "The Court estimates that almost a third of the errors found on the interim and final payments tested could have been detected and corrected by member states before certifying expenditure to the commission, as the audit shows they had the information to do so…"

As regards “Education and citizenship” , the Court concluded that “the closures of programmes and projects for 2009 were affected by material error” and “The most common type of quantifiable error found was eligibility errors at national level.” The Court gave a clean opinion for spending in this policy area in 2008.

Moreover, the Court also gave adverse opinions on the legality and regularity aspects for the policy group “Research, energy and transport.” According to the Court “Most errors in this policy group stem from the reimbursement of overstated personnel and indirect costs to research projects.

The Court continues to find that payments related to External aid, development and enlargement do not comply with the rules and continue to be materially affected by errors. According to the Court “the most significant errors were eligibility errors and non-quantifiable compliance errors.”

The Court 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.” The supervisory and control systems for this policy group were considered to be partially effective in preventing and correcting errors.

The Court also gave clean opinion for spending on “Administrative and other expenditure.” The Court concluded that “transactions in this area were free from material error and that the supervisory and control systems in place complied with the requirements of the Financial Regulation.

The report notes that the Commission has improved the information it provides on the correction of irregularly paid amounts, nevertheless it stressed that “the information is not yet completely reliable because the Commission does not always receive reliable information from the Member States.” The Court has pointed out that while “the vast majority of the corrections are financial corrections on Member States or third countries”, the errors found by the Court “are mostly amounts incorrectly claimed by, or paid to, beneficiaries”, consequently “is not possible to make a meaningful comparison between its own estimate of error rates and the data for financial corrections and recoveries supplied by the Commission.

The Court also noted that several Directorates-General of the Commission still have to resolve weaknesses in their accounting systems.

Vítor Caldeira has called, again, for simplification of the control systems. He said “Improving the quality of spending should be a high priority. Simplifying legislative frameworks and introducing more cost-effective systems to reduce the risk of error should contribute to this goal…