Agricultural Support System failure

The European Court of Auditors, is like many aspects of the EU made up largely of decent men and women trying to do a decent job.

However they, like so many here in Luxembourg and in Strasbourg are hamstrung by having to play the game, not rock the boat and generally make politics out of raw data. This is not what they should be doing of course given that they are auditors and they should, by all reason be providing clear, clean and transparent reports.

Today's report on the Agricultural support schemes within the CAP is a classic of its kind - following as it does this years annual CoA report on the General Budget. It is called in that special language, Commissionese, "Special Report No 8/2008 (pursuant to Article 248(4), second subparagraph, EC) Is cross compliance an effective policy?"

Here is a list of the chapter headings,

Audit Scope and Approach:

The audit objective was to assess the effectiveness of cross compliance

Observations

The objectives and the scope of cross compliance
The objectives are not defined in a “SMART” manner
The scope of cross compliance is not well defined
Only limited results can be expected at farm level
Implementation of the legal framework
The Member States implemented requirements and standards only partially
The SMRs farmers must comply with are numerous and complex
The framework for GAEC is restricted
More Commission guidance and control on requirements and standards was needed
Cross compliance and rural development
Certain key elements of the rural development control and sanction systems are weakened by the introduction of cross compliance
The separation between cross compliance and agri-environment measures is not always clear

The control and sanction systems

The control system provides insufficient assurance on farmers’ compliance
The sanction system is weak and the resulting reductions in direct payments are low

Monitoring and reporting

Data in some areas is not reliable and overestimates control and compliance rates
The Commission’s performance monitoring was found wanting

As you can see all pretty damning stuff.

But the Commission response is a paradigm of Euro think, if it don't work, apply more of the same,

Cross compliance has certainly contributed to a better respect of the relevant environment, food safety, health, and animal welfare Directives and Regulations.

However the Commission aknowledges (sic) that the effectiveness of cross compliance could be further improved and sees the best way to achieve this in pursuing and reinforcing the efforts already initiated.

That is it, "Reinforcing the efforts already initiated". No you don't get it. The system isn't working and billions of pounds of other people's money is being wasted.

Another scandal beckons

It appears that we might be in for a bumper week. First the Sunday Times magisterially skewers the Trade DG through its Insight team.

Now I am hearing of a new scandal. This time to do with the Humanitarian Aid budget. No details are available yet, but MEPs on the Budgetary Control Committee have been invited to apply to view a document in the infamous secret reading room of the Parliament. The document must be read on the following conditions.

SOLEMN DECLARATION
I, the undersigned Mrs/Mr. …………………………………………………
declare on my honour that I have taken cognisance of the rules governing consultation of confidential documents as set out in Annex 1, point 3, of the Framework Agreement on Relations between the Parliament and Commission of 26 May 2005 and
the Bureau decision of 13 November 2006, and I undertake to respect those rules, in particular as regards the ban on disseminating the confidential information examined today.

Lieu et date : ……………………………
Signature : ……………………………

When I have more you will have it.

Update
No movement at all it seems.

Here is my analysis.

They have invited MEPs to apply for a time slot in the secret room - tomorrow they are on an away day to the Luxumbourg based Court of Auditors for their annual visit. Budgetary Control (CONT) Committee is meeting now, they will not open the room during the Committee meeting. So it is feasible that the room will only be open on Wednesday - in order that they do not read the report until AFTER they have been to Luxembourg.

It would be like them don't you think?

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"