The European Court of Auditors has, for the 14th year running, refused to give a clean bill of health to the EU’s spending.
In its annual report published on November 10th, the auditors give their verdict on the EU’s budget for 2007. They warn of continuing problems with spending on cohesion, which is supposed to support the EU’s poorer regions and social groups, and of growing problems with payments for rural development.
The auditors estimated that at least 11% of the €42 billion spent on cohesion should not have been paid out because the EU’s rules were not complied with. That compares with an estimate of 12% made in last year’s report, suggesting that there has not been a significant improvement. The auditors said that the errors were often the inclusion of ineligible costs, an exaggeration of what money had been spent, for which reimbursement was sought, and failures to respect the procurement rules.
The auditors criticised both the controls imposed by member states on spending and the Commission’s supervision of the member states.
Siim Kallas, the European commissioner responsible for the accounts and the audit, said the auditors’ verdict was “an improvement on last year, for a year of higher payments, in an increased number of member states, the EU of 27.” He added: “We are improving, even as an already challenging task is steadily growing.”
But José Manuel Barroso, the Commission president, has missed his declared objective of a positive verdict from the auditors before the end of the five-year mandate of his Commission.
For the first time, the auditors did give an unqualified opinion on the accounts themselves, saying that they gave a fair presentation of the EU’s financial position and results.
But the auditors are also required to give a verdict on the legality and regularity of the underlying transactions.
The auditors judged that in only two areas – the administration of the EU’s institutions and economic and financial affairs – was spending free of material error, ie, transactions had an error rate of below 2%. But those two areas account for only 7.6% of the EU’s €114 billion budget.
Spending on cohesion, which accounts for 37% of the budget, had an error rate of more than 5%. In the remaining areas – agriculture and the environment, external aid, development and enlargement, research, energy and transport, education and citizenship – the error rate was between 2% and 5%.
In his presentation to the European Parliament following the release of the report, Kallas stressed that the error rate for the European Agricultural Guarantee Fund, which accounts for the bulk of EU farm spending, was below the 2% level. But the auditors point out that there was a “disproportionately large” error rate for rural development, which now represents 20% of farm spending. The EU is moving away from direct market support for farmers in favour of rural development.
The Commission urged the member states to do more prevent and correct errors in the management of EU money.
The auditors’ report has been discussed by the European Parliament’s budgetary control committee, forming the basis for the MEPs’ discussion over whether or not to give approval – known as “discharge” – to the 2007 accounts.