Speech van voorzitter Europese Rekenkamer: EU-budget 2008 correct besteed (en)

EUROPEAN COURT OF AUDITORS

ECA/09/71

Brussels, 18 November 2009

DRAFT SPEECH BY MR CALDEIRA,

PRESIDENT OF THE EUROPEAN COURT OF AUDITORS

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PRESENTATION OF THE 2008 ANNUAL REPORT TO THE COUNCIL OF THE EUROPEAN UNION (ECONOMIC AND FINANCIAL AFFAIRS)

The spoken text will prevail in the event of differences

President ,

Ministers ,

Ladies and Gentlemen,

It is an honour for me to have the opportunity to present to you today the Annual Report of the European Court of Auditors’ on the implementation of the budget for the 2008 financial year.

In short, we have four key messages in this year’s annual report. First, the EU accounts are reliable for the second year running. Secondly, the level of irregularity in the transactions underlying the accounts has decreased overall in recent years mainly due to the improvements in agriculture. But irregular payments are still too high in some areas, in particular Cohesion. Thirdly, the Court’s recommendations from previous years on how to improve systems continue to be valid as it takes time before relevant measures can be deemed to be effective. And lastly, simplification remains a priority. Allow me to expand briefly on each of these messages.

First, for the second consecutive year, the Court gives an unqualified opinion on the accounts. It concludes that the accounts present fairly, in all material respects, the financial position, results, and cash-flows of the European Communities. This does not mean that the accounting systems are perfect. Weaknesses were noted in the systems of a number of the Directorates General which the Commission should pay due attention to addressing.

A s regards the legality and regularity of underlying transactions , the second key message is that the Court notes an overall decrease in the level of irregularity in recent years, but finds that it is still too high in some areas.

As in previous years, for 2008, the Court gives an unqualified opinion on Revenue and on commitments . The picture for payments, however, continues to be mixed.

For Administrative and other expenditure , the Court gives an unqualified opinion as in previous years. The Court also gives an unqualified opinion on Education and citizenship , estimating the error rate to have fallen below 2%. This result is mainly due to the high proportion of advance payments in 2008, to which few conditions are attached and where the scope for error is relatively low compared to interim and final payments. Systems in this area continue, however, to be assessed as only partially effective.

For Agriculture and natural resources the Court concludes that, except for Rural Development, payments were in all material respects legal and regular. For the first time, the Court gives a qualified opinion and not an adverse one. The overall error rate for this policy group is under 2%, a decrease with respect to previous years. Deficiencies in supervisory and control systems related to Rural Development contributed significantly to the Court’s overall assessment of systems related to Agriculture and natural resources as only partially effective for limiting the risk of irregular expenditure.

The Court also gives a qualified opinion on the policy group Economic and financial affairs due to errors found in transactions relating to the sixth Framework Programme for Research and Technological Development.

For the policy groups Cohesion , Research, energy and transport and External aid development and enlargement , the Court continues to give adverse opinions concluding that they are affected by material error, although to different levels.

Cohesion remains the area most affected by error. The Court estimates that at least 11% of the total of 24.8 bn euro reimbursed during 2008 in respect of the 2000-2006 programming period should not have been reimbursed, in many cases due to eligibility errors (for example, projects did not meet the specific funding conditions), or because of serious failures to respect procurement rules.

The Commission ’s response in the past has been to claim that the correction and recovery mechanisms mitigate the effects of the errors the Court detects at the time of payment. However, the Commission is not in a position to demonstrate the extent to which this is the case because Member States do not provide complete and reliable information on financial corrections, and because it is still too early to measure the impact of ongoing actions to strengthen the Commission’s supervisory role under the shared management of structural actions. In addition, the Court found cases of ineligible expenditure rejected by the Commission being replaced by Members States with new expenditure which was also ineligible.

As regards the 2007-2013 programming period, it is still too early to say whether changes to rules or supervisory and control systems have had a positive effect in reducing the level of errors. However, the Court notes with concern that there have been delays in approving Member States’ systems descriptions, compliance assessments and audit strategies which have slowed budgetary implementation and which may increase the risk of errors in the start up phase.

For Research, energy and transport , the Court concludes that, although there continues to be a material level of error, remedial measures taken by the Commission have helped to reduce it. Nevertheless errors persist due to the complex legal requirements and control systems which continue to be only partially effective. For example, the Court found errors in the cost statements certified without qualification by an independent auditor. In addition, few recoveries had been initiated by the end of 2008 and no sanctions had been imposed.

And finally, f or the policy group External aid, development and enlargement , payments continue to be materially affected by error. And weaknesses in supervisory and control systems continue to be found for external aid and development assistance at the level of the implementing bodies and at delegation level rather than at Headquarters.

Overall, error rates appear to be decreasing but legal frameworks continue to be complex and problems remain in some control systems.

Reducing the level of irregular payments further will, therefore, require the continuing improvement of supervisory and control systems and, where appropriate, the simplification of rules and regulations.

As regards improving supervisory and control systems , the third key message of the Annual Report is that the Court’s recommendations from previous years continue to be valid.

This is mainly because the relevant measures are part of an ongoing process where it will take time before they can be deemed to be effective.

The priority should be to address the specific weaknesses the Court has found in the areas where the most problems have been detected, many of which I have just outlined.

Particular attention should also be paid to continuing to improve the mechanisms intended to correct errors through financial corrections and recoveries, in anticipation of the closure of the 2000-2006 programming period.

In addition, t he Commission should continue its efforts to monitor the effectiveness of the supervisory and control systems and identify where more could be achieved from existing expenditure on controls, or where it would be appropriate to consider revising the programmes or schemes involved.

In the context of such revisions, the legislative authorities and the Commission should consider trying to set a level of residual risk of irregularity to be achieved by the system (i.e. the tolerable risk of error) rather than specifying the number of checks to be undertaken, as is the case now.

But there is a limit to the reduction in the level of irregularity that can be achieved by improving the effectiveness of supervisory and control systems.

This brings me to the last key message of the annual report on the continuing need for simplification .

As the Court emphasises in its statement of assurance, the areas where the Court finds too high levels of errors are those where there are complicated or unclear legal requirements (such as eligibility rules). An example of where serious efforts have already been made to simplify expenditure schemes is agriculture, the main area of improvement noted by the Court.

Simplification, therefore, remains a priority if further significant and sustainable reductions in the level of irregular payments are to be achieved.

The Court also maintains its view that well designed rules and regulations which are clear to interpret and simple to apply not only decrease the risk of error but can also reduce the costs of control.

However simplification needs to be applied with caution in order to find the right balance between simplification and the establishment of policy objectives, avoiding unintended side-effects such as less focussed spending.

In addition, as the Court has emphasised in its other reports, simplification should be applied alongside the principles of clarity of objectives, realism, transparency and accountability when revising or reforming the arrangements for EU spending. The intended proposals for a revision of the financial regulation, a new financial framework, and a reformed budget will provide opportunities for so doing during the mandate of the new Commission.

The entry into force of the Lisbon Treaty will also bring changes to the management of EU funds and the scrutiny of their use. These will have important implications for the work of the Court and should serve to reinforce accountability and transparency , thereby contributing to building the confidence and trust of citizens in the EU institutions.

President, Ministers,

This is an important moment of renewal for the EU and the intended reforms provide a great opportunity for further improving the financial management of the EU. At times of renewal and reform it is important, however, to remember the lessons of the past. I believe the Court plays a vital role in such circumstances by providing reports and opinions that not only identify existing problems but also make recommendations for the future. The Court, therefore, looks forward to continuing to work together with its partner institutions to make the most of the current opportunities for further improving EU financial management.

Thank you for your kind attention