EU budget audit notes 2008 significant improvement - November 12, 2009

The European Court of Auditors has issued an unqualified (clean) opinion on the reliability of the 2008 EU accounts and concluded that last year's annual accounts of the European Communities were presented fairly.

In terms of the legality and regularity of the transactions underlying the accounts, the ECA said that the overall results for 2008 reflect the improvements in the management of the budget in recent years.

The ECA is the EU's external auditor and the publication of its annual report is the effective starting point for the "budget discharge process" by the European Parliament. The ECA's annual report provides the required independent and professional assessment of whether EU funds have been legally and regularly spent and properly recorded and disclosed in the consolidated accounts published by the Commission.

Malta is represented on the ECA by former Economy Minister Josef Bonnici, who plays a very important role in the formulation of the court's opinion as he is directly responsible for the coordination of the ECA's Annual Statement of Assurance, which constitutes the core of the annual report. This entails providing a common framework for the audits that cover each specific part of the EU budget as well as responsibility for coordinating the process that allows the resulting "specific assessments" to be integrated into one overall audit opinion (Statement of Assurance) covering the whole budget area.

Presenting their findings at the European Parliament, ECA president Vitor Caldeira and Prof. Bonnici said that the number of errors in EU spending fell again in 2008 although the level of errors remains high in some areas, especially Cohesion Policy. However, they said that the overall level of irregular payments "has decreased in recent years, due to the improvements in the management of the budget".

The report shows that Cohesion Policy was the area where the rate of errors was most significant - standing at 11 per cent of a total €24.8 billion budget.

Most of the errors in this area were due to payments being made for projects that did not meet eligibility rules and because of a failure to respect public procurement rules. For the first time, the court said the overall error rate for agriculture and rural development was below two per cent.

Errors in spending on education and citizenship were less than two per cent. In this area, many of the erroneous payments were advance payments that do not have to meet eligibility conditions as tough as those applied to interim and final payments.

The report was welcomed by the European Commission, and Sim Kallas, Commissioner for Administration, Audit and Anti-Fraud, stressed that the auditors' report was "the best report so far". He pointed out that the proportion of the EU budget that falls under areas where the level of error was over five per cent has been halved since 2004, to around 30 per cent.

He said that the Commission would ensure that any payments which had been made incorrectly would be recovered.

According to the Commission it has already claimed back €629 million this year and should recover another €500m by the end of 2009.