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Auditors attack EU spending again Auditors attack EU spending again
(about 7 hours later)
European Union auditors are expected to highlight irregularities in EU spending for the 12th year running as they make their annual report. European Union auditors have drawn attention to irregularities in EU spending for the 12th year running, in their report on the 2005 budget.
It is understood that the auditors will declare the accounts reliable overall, but criticise the way some funds have been spent on the ground. The auditors declared the accounts reliable overall, but criticised the spending of funds on the ground, particularly aid for poorer regions.
As in previous years, most problems are expected to be connected with payments made by the EU's 25 member states. As in previous years, most problems were connected with payments made by the EU's 25 member states.
Spending on the EU administration is expected to get a clean bill of health. Spending on the EU administration once again got a clean bill of health.
WHAT THE AUDITORS JUDGE Reliability of accounts: Are transactions, assets and liabilities are accurately recorded?Regularity/legality of transactions: Is there enough evidence that money has been spent according to the rules? Last year, the auditors praised a new system for monitoring farm aid payments, and they are expected to repeat that it has reduced the risk of error to an acceptable level in countries where it has been fully implemented. WHAT THE AUDITORS JUDGE Reliability of accounts: Are transactions, assets and liabilities are accurately recorded?Regularity/legality of transactions: Is there enough evidence that money has been spent according to the rules? href="/1/hi/world/europe/6078982.stm" class="">Why the EU audit is bad news
The new system, called IACS, currently covers 40% of agricultural spending. "Within... areas representing the majority of EU expenditure, the court's audits continue to identify (errors) in transactions and weak internal control systems," the auditors said.
The auditors are expected to be more critical of spending under the second largest heading of the EU budget, the funds spent on development of poorer regions. They said irregularities had involved problems with paperwork and poor management, and also "presumed attempts to defraud the EU budget".
The Court of Auditors' president, Hubert Weber, criticised "deficiencies in internal control - particularly, but not solely, in the member states".
Fraud 'rare'Fraud 'rare'
The European Commissioner for Administration, Audit and Anti-fraud, Siim Kallas, is expected to respond to the report - which will be presented on Tuesday to a European Parliament committee in Strasbourg - by criticising aspects of the auditing procedure. The European Commissioner for Administration, Audit and Anti-fraud, Siim Kallas criticised aspects of the auditing procedure, in advance of the report's publication.
The Commission says the Court of Auditors:The Commission says the Court of Auditors:
  • Ignores the fact that money mis-spent one year is often clawed back the next year
  • Ignores the fact that money mis-spent one year is often clawed back the next year
  • Draws sweeping conclusions from analysis of only a small number of transactions - a few hundred out of many millions
  • Draws sweeping conclusions from analysis of only a small number of transactions - a few hundred out of many millions
  • Considers money lost even when it may have been spent as intended - if say, a grant recipient makes a minor mistake with the paperwork
  • Considers money lost even when it may have been spent as intended - if say, a grant recipient makes a minor mistake with the paperwork
  • Refuses to name and shame member states that are routinely lax in controlling use of EU funds
  • Refuses to name and shame member states that are routinely lax in controlling use of EU funds
    • In 2005, Mr Kallas says, the Commission clawed back 2.17bn euros (£1.45bn) from member states, and wrote off only 90m euros (£60m).In 2005, Mr Kallas says, the Commission clawed back 2.17bn euros (£1.45bn) from member states, and wrote off only 90m euros (£60m).
    "You lost your wallet and you get it back with some money inside, but you still consider it a catastrophe. This is our main debate with the Court of Auditors.""You lost your wallet and you get it back with some money inside, but you still consider it a catastrophe. This is our main debate with the Court of Auditors."
    However, the Court of Auditors said that recovery procedures were "increasingly slow, and the sanction mechanism largely inadequate".
    It says that when money is clawed back from member states it is usually at the expense of the taxpayer, rather than the people who mis-spent the money in the first place.
    Mr Kallas says mistakes will always occur in any large organisation, but that instances of actual fraud such as the 2003 case at the statistics agency Eurostat - described by investigators as a "a vast enterprise of looting" - are rare.Mr Kallas says mistakes will always occur in any large organisation, but that instances of actual fraud such as the 2003 case at the statistics agency Eurostat - described by investigators as a "a vast enterprise of looting" - are rare.
    National controlsNational controls
    A positive verdict from the auditors on the reliability of EU accounts means that all transactions, assets and liabilities have been completely and accurately recorded.A positive verdict from the auditors on the reliability of EU accounts means that all transactions, assets and liabilities have been completely and accurately recorded.
    A negative verdict on the regularity and legality of transactions in one area of spending or another means that there is insufficient evidence that funds have been spent in accordance with the rules.A negative verdict on the regularity and legality of transactions in one area of spending or another means that there is insufficient evidence that funds have been spent in accordance with the rules.
    Most of the problems occur with payments made by member states, because 76% of EU payments are delegated to them, but efforts are under way to encourage them to exercise greater care when spending EU funds.Most of the problems occur with payments made by member states, because 76% of EU payments are delegated to them, but efforts are under way to encourage them to exercise greater care when spending EU funds.
    An agreement was reached in April requiring the member states to produce an annual assessment, starting next year, of the way EU spending has been controlled at national level. Last year, the auditors praised a new system for monitoring farm aid payments saying that it was helping to make improvements.
    However the latest report says agricultural spending is "still materially affected by errors".