Wednesday

14th Nov 2018

EU accounts and the Brussels blame game

  • Who's to blame for the EU's accounts? (Photo: kukkurovaca)

Like the rising of the sun and November rain in Brussels, the publication of the European Court of Auditors' annual report on EU accounts brings equally predictable accusations of fraud and rampant mismanagement.

The line that the EU has, yet again, failed to have its accounts signed off for the umpteenth year in a row is regularly trotted out by eurosceptics.

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It is a tried and tested stick with which to beat the EU institutions, which seldom take much trouble to defend themselves.

The Luxembourg-based ECA published its annual report on EU spending in 2012 this week, with its headline figure being that there were irregularities on 4.8 percent of EU funds.

This is higher than the 3.9 percent error rate in 2011 and well short of the 2 percent threshold that allows the court to declare all EU spending "free from material error."

But this year EU officials seem, for once, to be fighting their corner in the media war.

In September, European Council chairman Herman Van Rompuy was accused of interfering with the court's mandate after calling on it to "give some further thought as to how it can encourage more nuanced media reporting."

But claims that Van Rompuy was attempting to put pressure on the court to put a dishonest spin on EU accounts are over-egging the pudding.

It is facile and misleading to paint the auditing of nearly €140 billion in spending in black or white. The reality is more grey and more complicated.

Normally, the court finds that the accounts are overall correct, but that some payments have been made without following the necessary procedures or that other faults have occurred.

Van Rompuy was right when he said, in the same speech, that reports by the court are "not released into a void, but into the rough and tumble of political life and media reporting.

The European Commission says the court has given the EU accounts a clean bill of health since 2007, noting that "every euro spent from the EU budget was duly recorded in the books and properly accounted for."

It also says that improvements in the management of EU funds "can only deliver if member states, too, step up to the mark."

The report states that 56 percent of the errors recorded in administering cohesion policy, for instance, "could, and should" have been prevented by governments before they submitted claims for money.

The Portuguese President of the ECA, Vitor Manuel da Silva Caldeira, underlined the point at his press briefing on Tuesday.

In fact, when it comes to the €10 billion of administrative spending by the EU institutions on themselves, the court gave a clear green light by stating that the accounting had not been affected by "material error."

Eighty percent of EU funds are directly managed at national level, with the payment of rural development subsidies attracting the highest number of irregularities at 7.9 percent.

It should not come as a surprise that an organisation with so many diverse areas of spending and such a complicated method of allocating funds cannot vouch for every euro.

By way of comparison, the US federal budget has not had a positive statement of assurance - confirming that all items of spending are all in order - on its accounts for 15 years.

But even as the debate on EU accounting should be more nuanced, it should not detract attention from the main priority: the need to make EU spending more transparent and accountable, and to recoup money that has been misspent.

The commission is ready to claim back funds if governments fail to identify and address accounting irregularities.

Some €4.4 billion of incorrectly spent money was already clawed back by Brussels in 2012.

One way to bolster the arguments of the court and the commission would be to require statements of assurance for each commission department and all 28 national governments.

This would be more transparent and would put pressure on the commission and capitals to be more rigorous in their spending of EU funds.

Too often the EU institutions are their own worst enemies when it comes to media perception.

When it comes to its annual audit, the commission has for years allowed itself to be tarred - in most cases, unfairly - with accusations of negligence, corruption and waste.

It is about time they fought back and - equally importantly - time for governments to face up to their responsibilities in managing EU spending.

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