Main accounting reforms “cannot be achieved by 2005”

Date: 10/07/03

By David Cronin

FRESH doubts have been cast on whether the European Commission will be able to introduce reforms to its controversial accounting system on schedule.

Last year Sincom, the bookkeeping structure covering the Union's €98 billion annual budget, became the centre of a major row when Marta Andreasen, the Commission's accounting officer, was dismissed after telling other EU institutions that it was "vulnerable to fraud".

Now both Jules Muis, the head of the Commission's internal audit service, and management consultancy PriceWaterhouseCoopers (PWC) have queried if a shake-up to the system, announced in December 2002, can be finalized by the stipulated deadline of January 2005.

In a 2 July memo sent to Neil Kinnock and Michaele Schreyer, the commissioners for internal reform and budgets, Muis says the "project oversight board" for the reforms believes the main one is "not achievable" within that time. This concerns the move from the current cash-based accounting to accrual accounting. The latter is designed to provide a more complete picture of the financial situation, by showing the full set of assets and liabilities, as well as revenue and spending for a financial year.

Muis also said "the term "project oversight board" is a misnomer". This body, consisting of senior Commission officials - including Muis - with representatives of the European Court of Auditors acting as observers, has only an advisory role.

"Even as a consultative body, which yesterday met only for the second time, members feel they are not given adequate time, or any time at all, to digest the papers submitted," wrote Muis. "We are still not clear who actually has the operational oversight responsibility, the [Commission's] Accountant [Brian Gray] being responsible for execution/management."

Speaking to MEPs on Tuesday (8 July), Muis argued the fact that the Commission's budget directorate-general (DG Budget) does not know who is in charge of oversight is "unnecessarily dangerous".

Commissioned by the EU executive, the PWC evaluation of the reform blueprint describes the 2005 deadline as "very challenging". It says "considerable work should be completed during 2003" for this to be realized. While the Commission has acknowledged that requirement, PWC says it is "not yet fully reflected in the planning and timing".

Nevertheless, Schreyer told the European Parliament's budget control committee that work towards reaching the 2005 target is "on track".

"We have achieved a lot in the past six months," she added, pointing out that DG Budget has recruited 14 new staff to implement the reform.

Meanwhile, Muis this week dismissed rumours that he is resigning from his post because the Commission had allegedly hindered him from investigating the allegations of massive fraud in its data agency Eurostat. The Dutch announced last month that he will step down from his post next year and insists his decision was not motivated by a rift with the Commission hierarchy.

Jules Muis, head of the European Commission's internal audit service, and management consultants PriceWaterhouseCoopers (PWC) have queried whether reforms to the Commission's controversial accounting system will be introduced by January 2005, as scheduled.