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Auditor flags up spending errors in EU budget

The European Union's internal accounting books are generally in order, but a big chunk of payments are subject to "material error" its audit office has said.

"The 2010 accounts present fairly the financial position of the European Union and the results of its operations and its cash flows for the year," Vitor Manuel da Silva Cadeira, the president of the Luxembourg-based European Court of Auditors, told the EU parliament on Thursday (10 November).

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Setting aside the overall reliability of the accounting process on last year's EU €120 billion budget, the court also looked at underlying financial transactions.

"The [EU's] revenue underlying the accounts is legal and regular in all material respects. However, its payments are affected by material error, with an estimated error rate of 3.7 percent for the EU budget as a whole," da Silva Cadeira noted.

He added that the error rate - up from 3.3 percent in 2010 after dropping year-by-year from 7 percent in 2006 - should not be seen as a sig of fraud "as there are many reasons why errors occur". But he noted that the union's financial control systems are "only partially effective."

One of the most error-prone areas concerns the second biggest chunk of EU spending: cohesion policy, worth €36 billion. With a mistake rate of more than seven percent in 2010 in the sectors, spending was "materially affected by error" Cadeira explained.

The rate in the biggest area - agriculture, worth €41 billion - was down at 2.3 percent.

But Cadeira noted there is plenty of room for improvement, saying: "There remain significant risks to the regularity of payments. Appropriate arrangements are needed for ensuring transparency and accountability."

For its part, the The European Commission downplayed the importance of the findings.

"That's because all programmes are now in full swing. There's more activity, so there are more errors happening,” Ton van Lierop, commission spokesman for EU regional policy, said on Thursday.

He added: "An error does not mean that money is lost or badly spent. An error can be that a page is not correctly numbered. And if there are problems, in practially all cases we reclaim the money over the course of a few years."

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