Monday, November 12, 2007

The Court of Auditors quadrille

The band strikes up, the dancers take their places, for tonight is that annual EU extravaganza, the annual jig around the failure of the EU's auditors to sign off the accounts. At 7pm in Strasbourg the Court will appear in the Committee of Budgetary Control, and for the 14th year in succession (or is that 13, who knows, who cares?) the accounts will be found wanting.

How do I know, well I have a copy of them in my begloved hand. So I can quote from the information note
European Court of Auditors: 2006 Annual Report
Key Messages

Adverse Opinions on the transactions in the majority of spending.
For the majority of spending - agriculture (primarily in areas of spending not covered by the control system IACS), structural policies, internal policies and a significant proportion of external action - the Court provides an adverse opinion on the legality and regularity. This is because of a too high estimated rate of error in underlying transactions:
Of course they go on to say,
"The result does not imply that the errors are the result of fraud, or that all, or most, transactions in these areas are irregular".

Then looking at the DAS (the Statement of Assurance).
Whilst saying that they were presented fairly it then qualifies this,
"due to the overstatement of the amounts recorded under the accounts payable and prefinancing headings of the balance sheet causing an overstatement of net assets.
Conclusions on the legality and regularity of the underlying transactions
The Court provides adverse audit opinions on most expenditure areas...In these areas there is still a material level of errors, although to different levels...

For agriculture, the integrated administration and control system (IACS), which covers a majority of spending, is effective when properly applied. There is a marked reduction in the estimated overall level of error, although it remains just above materiality. (or in other words though better, still not good enough EE)

For structural policies, control systems in Member States and Commission supervision are generally ineffective or moderately effective. As a result, the amounts overclaimed by beneficiaries often go undetected and so Community payments are materially effected by error.

For internal policies, the Commission's control system covering this expenditure is insufficient to mitigate inherent risks. As a result the amounts over claimed by beneficiaries often go undetected and so Community payments are affected by a material level of error.

For external actions, while the supervisory and control systems covering expenditure through the Commission delegations is satisfactory (and the resulting transactions are largely legal and regular) this is not the case for the significant proportion of expenditure managed by the organisations that implement the projects. Control systems are weak and the transactions are affected by a material level of error.

For pre-accession strategy, while the Court's testing found the transactions to be materially legal and regular, it identified significant risks at the level of the implementing organisations in the newly acceding and candidate countries concerned.

Which in given that this is written by accountants and EU accountants is pretty strong stuff indeed. The key point here is the structural funds, given that the normal line of attack from the crowd of EU cheerleaders is that the blame lies with external organisations especially the member states this is a direct criticism of the Commission, so that excuse will not, at least this year wash.

If history is any guide, then the verbal report this evening will be even more fruity. Of course England Expects will be there and will be able to provide any further juicy gobbets from their lips.

Update
Nothing much to report onthe meeting last night, though I note that the Conservative's in the person of Richard Ashworth MEP seem to be doing the Commission's job for them by blaming the nation states,
"National governments are responsible for three quarters of EU transactions, yet they provide no transparency or accountability of the European taxpayers' money they spend,"
Now what did the Report say? Oh yes,
"For structural policies, control systems in Member States and Commission supervision are generally ineffective or moderately effective. As a result, the amounts overclaimed by beneficiaries often go undetected and so Community payments are materially effected by error".
So yes the Commission is at fault, but of course if we remember what the MEPs were told to say by the Parliament a month ago,
"The idea is simple: based on your experience of business at Cocobu, you are invited in this press kit to present your views on the discharge and all its related aspects, including thus themes such as national declarations, methodology, the sampling method, etc"

2 comments:

michael mcgough said...

Do the accounts provide 'reasonable assurance2?

NO

Greg said...

Meanwhile we just sleep walk into tyranny, and no one seems to care.

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