The European Union needs to improve its accounting procedures to produce better and more reliable accounts, according to the National Audit Office which estimates errors cost the EU £3 billion in 1998.
According to Sir John Bourn, head of the NAO, the EU also needs to improve on high rates of error found in expenditure saying the rate in some areas is ‘unacceptable’.
In his report called Financial Management in the European Union, Sir John also says urgent improvements are needed to minimise fraud and irregularity in relation to the Common Agricultural Policy and the Structural Fund scheme.
Sir John said: ‘It is important that the United Kingdom government, through the Council of Ministers and its other links with the Community, continues to seize all opportunities to facilitate and support the Commission’s far reaching programme of reform to ensure that its impetus is maintained and improvements in financial management are secured.
‘The National Audit Office will continue to give a high priority to examining the way that United Kingdom departments manage Community funds and to co-operating with the European Court of Auditors.’
The NAO recognises that measures have been put in place by European commissioner Neil Kinnock to tackle many of the financial management issues raised in recent times.
But Sir John is also careful to draw attention to a 1999 report from the Court of Auditors which for the fifth year in succession found significant weaknesses in the management of the union’s General Budget and an unacceptably high rate of error in the transactions underlying payments.