Auditors refuse to certify EU budget

For the twelfth year in a row, the European Court of Auditors (ECA) has refused to sign the EU accounts for 2005 as drafted by the European Commission, citing errors in the budget documents as the main reason.

In its annual report, published yesterday, the ECA said considerable progress had been achieved by the Commission in introducing a new accounting system. According to the court, however, there were weak internal controls for the most part of the EU expenditure, both within member states and at the Commission, and a high incidence of errors in the underlying transactions.

The details of the report were presented during a press conference by ECA President Huber Weber and by Prof. Josef Bonnici, the ECA member responsible for the coordination of the statement of assurance which certifies the reliability of accounts. The ECA commented positively on the EU administration but found errors in programmes accounting for around two thirds of its €105 billion budget, particularly structural funds aimed at poorer regions. These included incorrect paperwork, missing documents and possible fraud.

Member states are responsible for 76 per cent of EU spending.

The legality and regularity on underlying transactions continues to be of concern to ECA.

"This does not mean that all, or even the majority of payments from the EU budget are affected by errors.

"What it does signify is that based on the results of the court's detailed audit work, errors with a financial impact are found too frequently for the court to conclude that all is well.

The underlying reason most errors occur is because beneficiaries - farmers, local authorities, project managers - claim far more than they have the right to," Mr Weber said. Prof. Bonnici said: "Let us not underestimate the challenge. Managing EU funds is a daunting and complex task. Equally challenging is the audit task that has to be covered by the court, and this has been particularly so this year".

The European Commission reacted negatively to the court's decision and said the court should change its methodology.

In a statement, Sim Kallas, vice president of the Commission responsible for administration, audit and anti-fraud expressed concerns related to the court's statements on the underlying transactions.

"The Commission fundamentally disagrees with the way the court is still focused on finding individual errors in small samples of transactions, and with how it makes extrapolations which are widely misinterpreted. One will always find errors in individual transactions, in any organisation, but we have effective mechanisms to claw back any undue payments." Last year the Commission recovered more than €2,170 million of such payments.