PracticeAuditMismangement continues to dog EC finances

Mismangement continues to dog EC finances

Observers are asking whether the financial mismanagement at the European Commission will ever end after the European Court of Auditors refused to sign off the European Union accounts for the ninth year.

‘The community’s accounting systems do not guarantee the complete presentation of all assets and liabilities,’ says the report. It adds that the court ‘refuses to provide assurances on the legality and regularity of payments in most areas of the budget’.

The Court of Auditors decision is the latest in a long line of financial embarrassments during the tenure of current EC president Romano Prodi.

The charges are both sweeping and detailed. Why should 55.8% of EU farmland be classified as ‘less favoured,’ thereby drawing extra support of more than a billion euros a year? Why should CAP spending payments generally be ‘materially affected by error’? Why should internal policy transactions be ‘still affected by significant errors’?

In the business world, these charges would have led to a management cull and a clean-up of departments. Does anyone ever take any notice of what the court says? Only minimally, and without much enthusiasm, it appears.

David Bostock, the British member of the court, agrees that the commission ‘has done much to introduce new rules and standards.’ But this is not enough. The commission ‘hasn’t yet been so successful in changing its culture,’ he says. ‘The challenge … is to follow the spirit as well as the letter of its new arrangements for financial management.’ And the commission would have to take a similar message to the national governments ‘who administer 80% of the budget’.

Audit Court president Juan Manuel Fabra Valles says that the EC was able to take steps to implement the new provisions of the financial regulation, and progress was noted in all areas, though he adds that the target for introducing accrual accounting by 2005 was ‘overly ambitious’.

Criticism has also been levelled by the EC’s former chief accountant Marta Andreasen, who has said: ‘The responses of the commission are always looking to the future, saying they will make changes, yet year after year no changes are made.’

Andreasen is scathing about the lack of an official audit inquiry into statistical agency Eurostat.

But it may be that public outrage is calling time on the commission.

‘I think the commission is beginning to respond, maybe not to the court’s report itself but to the bad publicity they’re getting on the back of it,’ says Christopher Heaton-Harris, the Conservative group budget spokesman in the European Parliament.

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