EU accounts unlikely to get seal of approval ‘for years’

Date: 16/11/00

By John Shelley

THE Court of Auditors has warned that the European Commission is still too bureaucratic and inefficient, and says it is unlikely to be able to give the EU's budget a clean bill of health for years to come.

In its annual report on the Union's 1999 accounts, the Court paints yet another grim picture of an EU crippled by overly complex rules, an obsession with procedure and a lack of effective financial controls.

The 500-page report says the level of errors in the € 87-billion budget remains far too high, with no significant improvement over the 5% error rate found in the previous year's accounts.

It adds that the reforms introduced by the Prodi Commission, which was in office for only the last three months of the year in question, should improve the situation. But it is unlikely that their effects will be felt for several years.

The report points out that agricultural reforms agreed eight years ago are only just beginning to show up in the accounts, and changes by the Santer Commission to the management of structural funds have not yet had a significant impact. The auditors conclude that there is little reason to believe that reforms introduced by the Prodi administration will come on line more quickly.

"We might just see some improvement next year but this will be because of some of the things done by the Santer Commission," said court member John Wiggins. "We do not expect to see the effects of other reforms until at least the year after and probably beyond."

The auditors say that, as in previous years, the majority of accounting problems are caused by mismanagement of agriculture and structural fund payments by member states. Agriculture alone accounts for half the total EU budget, and national authorities are responsible for disbursing more than 90% of this money.

The Court stresses that most of these mistakes are not the result of fraud but rather the accumulated effects of small errors in payments to farmers and incorrect expenditure by public authorities.

But the Commission does not escape criticism, with its management of research funds coming under particular attack. The report says contractors frequently submit exaggerated expenses and fail to provide supporting documentation. "Furthermore, hardly any incentive exists for the final beneficiaries to avoid over-declarations since there are no contractual penalties and no risks other than having to repay the amounts found to be overpaid," it warns.

The auditors add that the Commission has failed to act on many of their previous suggestions and that internal auditing, particularly within the research directorate-general, is hopelessly slow.

The Court of Auditors has warned that the European Commission is still too bureaucratic and inefficient, and says it is unlikely to be able to give the EU's budget a clean bill of health for years to come.