Auditor praises EU accounts despite problems

But the report still finds a high number of irregularities in the actual spending of EU structural funds (€42 billion) - where it estimates that "at least 11 percent of the value of reimbursed cost claims should not have been paid out." According to the court's criteria, the acceptable irregularity threshold lies at 5 percent.

Another "red area" where the court found a high number of errors was agriculture and rural development (€51 billion euro).

On the EU's measures to reform the management of its budget, the court "identified further progress in the [European] Commission's supervisory and control systems, in particular in the area of monitoring and reporting."

Yet the "improved high level controls," including the commission's supervision of member state "cannot compensate for inadequate lower level controls, including on-the-spot-checks," actions which lie in the area of responsibility of national governments, Mr Caldeira stressed.

Tougher stance from the commission

EU commissioner for administration, audit and anti-fraud, Siim Kallas also underlined on Monday that the bloc's executive body "shall not hesitate to take a tough stance and suspend payments until all member states implement adequate corrective measures. And where errors have financial impact, we shall recover the money."

"I do hope the report will also mobilise member states to do their job better so that errors on the ground are prevented and corrected," he said.

Following last year's report from the Court of Auditors, the European Commission has toughened its stance on suspending payments and recovering money where irregularities were found. The "financial correction" imposed on member states in 2008 amounted to €843 million, almost double than in 2007. Another €1.5 billion is expected to be recovered by March 2009.

Among the countries hit by these "corrective measures" this year were Italy, UK, Bulgaria and Luxembourg.

Yet according to the court's president, "corrective actions currently cannot yet be considered to be effective in mitigating errors of legality and/or regularity."

"In some cases, especially agriculture, correction normally means making national tax payers pay for part of the costs of misapplied schemes, not recovering payments from those directly involved," Mr Caldeira said.

On this matter, commission spokesman Michael Mann explained to EUobserver that the national governments "are bound to recover the undue payments from the beneficiaries" and that "nobody would want an army of EU inspectors go across Europe to recover the money from the farmers."

'Name and shame' governments

German Socialist MEP Herbert Bosch, chairman of the budgetary control committee, told EUobserver that the report highlights the need for national governments to take action, as well as to redesign some of the budgetary policies, since they are marred by errors year by year.

"Member states need to take responsibility. We can't go on like this. One first step would be for member states to provide national declarations on the expenditures," he said.

In a similar move, British Conservative MEP James Elles called for national governments to be "named and shamed" by the European Commission.

"Those governments failing to take responsibility for EU funds should be named and shamed. Should this lack of importance in the Council of Ministers continue, we must get a grip and withhold monies they need such as for Common Foreign and Security Policy actions," Mr Elles said in a press release.