The overseas aid of the Commission's Humanitarian Aid department (ECHO) and EuropeAid Co-operation Office (EuropeAid) funded through UN organisations has increased assistance from 500 million euro in 2002 to over 1 billion euro in 2008. The European Court of auditors has recently published a report analysing the EU assistance implemented through UN organisations. It has examined whether the process for deciding to implement Commission aid through the UN was objective and transparent and whether it was the most efficient and effective option.
The Court has slammed the Commission’s method of channeling aid through UN organisations.
The conditions for working with international organizations are set out in the Financial Regulation. The 2003 Financial and Administrative Framework Agreement (FAFA) also applies to all funding agreements between the Commission and the UN. The Commission is required to choose the organisations and the actions to be financed in an objective and transparent manner. International organisations are required to implement the EU’s funds in accordance with their own procedures. Nonetheless, the Commission has overall responsibility for sound management of the budget.
The report recalls that the “Commission remains accountable for tasks delegated to UN organisations.” Taking into account the absence of competitive tendering, the Commission has acknowledged the need for “robust decision-making procedures” for selecting its implementing partners. In 2001, the European Commission adopted a Communication entitled ‘Building an effective partnership with the United Nations’ setting out its strategy for funding aid through UN organizations. It has established as a pre –condition to fund a UN organization, “its capacity to carry out the proposed task efficiently and effectively.” However, according to the Court “The process for deciding to implement aid through the UN does not demonstrate that this is the most efficient and effective option.” In fact, the Court has concluded that “strategic and legal requirements to select partners in an objective and transparent way are insufficiently translated into practical criteria to support decision-making.”
The report points out that the Commission does not systematically undertakes a documented assessment of a UN organization suitability to implement the proposed task before contracting with it. The European auditors concluded therefore, that “the Commission does not convincingly demonstrate, before deciding to work with a UN organisation that it has assessed whether the advantages offset any disadvantages.”
Moreover, the Court also found that the Commission’s decisions to fund UN organisations were not informed by a comparison with alternative aid delivery mechanisms. The Court has stressed that the Commission does not “(…) systematically carries out formal appraisals of alternative aid delivery mechanisms.” According to the Court the Commission’s choice of using a UN organisation to deliver aid is not supported by “sufficient evidence to show that this approach is more efficient and effective than other ways of delivering aid.” Nevertheless, the Commission is satisfied with its choice to channel aid through UN organizations, “despite the absence of systematically documented justifications at the time when the decisions were taken.”
The Court recalls that, in order to ensure that financial systems operate in practice and that results have been achieved the Commission’s UN partners are required to provide information through reports. UN organisations are required to provide annual progress reports as well as a final report. However, the Commission has been criticizing the UN reports for being “excessively general” and “frequently late.” The report points out that “the Commission has not yet succeeded in obtaining from UN reports adequate information on the efficiency of implementation and the achievement of objectives.” Hence, the Commission has little information if the EU aid through UN organizations is effective.
The Commission also carries out field monitoring visits to projects in order to ensure the efficiency of implementation and achievement of objectives. Including results-oriented monitoring (ROM) visits to assess project’s relevance, efficiency, effectiveness, impact and potential sustainability. However, according to the Court, whereas the monitoring by the Commission provides complementary information, it is not enough to fully compensate for the limitations of UN reporting on the efficiency of implementation and achievement of results.
Under FAFA’s provisions, the so called verification clause, the European Commission is entitled to carry out financial checks, including on the spot, related to the operations funded by the European Communities. These missions are aiming at confirming the adequacy of procedures and to review financial management systems as well as to assess whether the projects represent value for money.
However, the report points out that “the UN Panel of Auditors has continually questioned the Commission’s right to check expenditure, arguing that its own audit arrangements are sufficient.” In fact, the UN has considered the verification clause, contrary to its independence, arguing that its auditing arrangements are enough.
In April 2009, the UN and the Commission agreed on common terms of reference for verification missions. Nevertheless, the Court stressed that “the Commission has encountered restricted access to UN systems and documents.”
Hence, the Court concluded that “Monitoring arrangements do not provide adequate information on the robustness of financial procedures and on the achievement of objectives.” It seems that the Commission has little information on what happens to the billions of euros that are channelled through UN organisations.
