| Author (Person) | Davies, Eric |
|---|---|
| Publisher | ProQuest Information and Learning |
| Series Title | In Focus |
| Series Details | 19.11.00 |
| Publication Date | 19/11/2000 |
| Content Type | News, Overview, Topic Guide | In Focus |
|
On 15 November 2000, in a speech to the European Parliament, Mr Jan Karlsson, President of the European Court of Auditors, presented the Court's Annual Report and Statement of Assurance on the financial year 1999. The Court of Auditors has not been able to give an overall statement of assurance for 1999 payments. It has, however, granted a statement of assurance on the legality and correctness of procedures followed on the income side of the budget, on the commitments and on the administrative expenditure. Background The European Court of Auditors (ECA) is the European Union's external auditor, responsible for monitoring the Union's finances and highlighting areas where financial management needs to be improved. As such it contributes to the fight against budgetary fraud and financial irregularity. The ECA supports the Parliament and Council in their budgetary roles, and monitors the Commission's management of the budget. The ECA has no judicial powers, and relies on the relevant institutions voluntarily taking appropriate action. The Court of Auditors started work in October 1977 (further information about the Court can be found in the Topic Guide: In addition, the 1993 Treaty on European Union [pdf] requires the ECA to 'provide the European Parliament and the Council with a statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions'. Following the Treaty of Amsterdam, Statements of Assurance must be published in the Official Journal. Before an ECA report is published, it is presented to the relevant institution(s) for comment. The published text includes replies received. The annual report forms the basis of the Council's recommendation and Parliament's subsequent decision on whether to approve the budget. Parliament is responsible for following up the ECA's observations in the annual report. Only when MEP's have considered the Council's recommendation on the budget, and are satisfied that the annual finances have been properly managed can they Discharge procedure. The 1999 Annual Report The ECA's website includes the text of the 1999 Report: http://eca.europa.eu/audit_reports/annual_reports/docs/1999/ra99_1_en.pdf The main points of the Report were identified in an ECA press release: - The reform programme set in motion by the Prodi Commission is considered to be a positive response to the weaknesses in financial management and control which the Court has been reporting on for many years. The proposals to improve internal control systems, to increase the focus on results and performance measurement, and to overhaul the framework of financial rules are all in line with key recommendations of the Court. - There was an unacceptable incidence of errors affecting the legality and regularity of payments from the budget on the various programmes. The majority of these errors occurred in areas of the budget managed by Member States (who are responsible for managing some 80&percent; of the EU budget). Weaknesses in accounting systems and procedures mean that information presented is in some cases incorrect or incomplete. The problems in management and control systems continue to give rise to a significant incidence of errors, mainly at the level of final beneficiaries. The Court is, however, able to give positive assurance concerning the revenue of the Community, the commitments, and the staff expenditure of the Community institutions. - The Court wishes to emphasise that the incidence of errors found should not be interpreted as an indication of the level of fraud affecting the Community budget. Most of them concern such matters as small overpayments to farmers and payments for ineligible expenditure by public authorities. Few of the breaches of the regulations have justified further investigation by the Commission's Anti Fraud Office (OLAF) or the authorities with criminal jurisdiction in the Member States. - In several areas, the Court found that weaknesses in the controls on the use of Community funds persist. Thus, in both the Agricultural and Structural Funds areas, much remains to be done by the Member States to improve the financial controls they are required to carry out on Community financed or co-financed measures. Where the Commission contracts directly with organisations there is a need to strengthen procedures for checking declared expenditure, and ensuring that there is adequate supporting documentation. - In looking at the response of the Commission to previous findings and observations of the Court, a mixed picture was found. In a number of areas the Commission has indeed taken action, but in others the response has been slow or partial. Responses to the 1999 Annual Report Budget Commissioner, Michaele Schreyer, stated: 'The European Commission is on the right path, thanks to its comprehensive administrative reform efforts, but a lot remains to be done if it wishes to meet the high expectations which rightly exist in the field of financial management.' Improving financial management and control is a key element in the Commission's Administrative Reform Strategy adopted on 1 March 2000. Key steps taken over the past year include: - Separating audit from financial control by creating an Independent Audit Service staffed by professional auditors; In the Debate which followed Mr Karlsson's presentation, the chair of the Budget Control Committee, Diemut Theato MEP (EPP-ED, D), wondered how long it would be before the ECA was able to give the Commission a clean bill of health for its financial management. A number of MEPs felt it was important to identify Member States where errors are occurring (it is apparently impossible to say whether errors are running at 5.5 &percent; or 7&percent;). Eluned Morgan (PES, Wales) wants the ECA to produce a table 'naming and shaming' guilty Member States and said that if the Court is not prepared to do it, then Parliament will. José Javier Pomès Ruiz (EPP-ED, Spain) also felt that those with a poor record should be identified, and wanted to know why no Council representative was available to respond to criticisms of spending controls in the Member States. In reply, Mr Karlsson agreed on the need for greater precision, but said that the Court does not possess sufficient resources to further investigate the error figure. With reference to naming and shaming Member States, he denied any suggestion that the ECA was frightened of identifying those concerned, and reminded MEPs that the Court's special reports provide more detail on specific topics and on the position in individual Member States. At the time of writing, there had been little reaction in the general media, although the report was picked up by The Guardian (EU funds still misspent, report says). Further information within European Sources Online: European Sources Online: Topic Guides: European Sources Online: In Focus: [Note: Topic Guides are periodically updated: if these links do not work, you can find the updated version by linking to Topic Guides: EU Institutions, The EU's Budget] European Sources Online: European Voice: Further information can be seen in these external links: European Court of Auditors: European Parliament: European Commission: Guardian Unlimited: Further and subsequent information on the subject of this week's In Focus can be found by an 'Advanced Search' in European Sources Online by inserting 'european court of auditors' and 'annual report' or 'fraud' in the keyword field. Eric Davies On 15 November 2000, in a speech to the European Parliament, Mr Jan Karlsson, President of the European Court of Auditors, presented the Court's Annual Report and Statement of Assurance on the financial year 1999. |
|
| Subject Categories | Economic and Financial Affairs |
