John Wiggins.

John Wiggins.

On 13 November the European Court of Auditors will present its annual report to the European parliament in Strasbourg. The event has a ritual of its own. Before publication the content must remain a dark secret.

After publication, although the essential problems are well known, it must be greeted with shock/horror. Commentators need an instant response.

Fury against the Commission often fits the bill, but sometimes the messenger gets caught in the crossfire. Too often, the ‘f-word’ is used to characterise all breaches of the rules. The Court of Auditors reports that it found errors; the newspapers say we found ‘fraud’.

Year after year we find high levels of errors in payments financed by the EU. But relatively few are made in Brussels, or can be described as fraud.

On paper, most scope for fraud exists in agriculture. Here national bodies pay farmers on the basis of claims from farmers themselves (most payments are made on the basis of cropped areas or herd size). Some farmers still push their luck, but this is getting harder to do.

More goes wrong in the area of the structural funds. Errors are made by public bodies (usually local and regional authorities) throughout Europe.

This sometimes occurs because they fail to follow up on the use of EU funds, but more commonly because they give themselves the benefit of the doubt when applying complex EU rules.

The trouble is that subsidies – and most of the EU budget is subsidies – need fairly complex rules. And complexity easily leads to errors. The Commission says it wants to change and simplify things.

But the Council and the parliament do not easily agree the changes, and sometimes add to the problems when responding to Commission ideas. National and local officials who actually administer the schemes in the member states find it difficult to keep up with voluminous EU regulations on top of the more familiar national rules.

Can we overcome these problems? The EC is trying. Some tough talking in Strasbourg next month may encourage them to try harder.

But real progress requires others to work with the Commission: clearer and preferably quantified objectives are needed, and simpler rules must be accepted by legislators. And people spending EU money in the member states must be ready to account for it at least as carefully as they would national funds.

Whitepaper

The Future of Finance is in the CFO's Hands

Business The Future of Finance is in the CFO's Hands

2m
Save a Week a Month Consolidating Accounts

Accounting Software Save a Week a Month Consolidating Accounts

3m
Mitigating Risk Through Internal Control

Legal Mitigating Risk Through Internal Control

4m
Could tax season have run more efficiently?

Corporate Tax Could tax season have run more efficiently?

4m

Related Articles

Financial reporting – a new era beckons for professionals, directors and their insurers

Audit Financial reporting – a new era beckons for professionals, directors and their insurers

1w Rebecca Smith, Partner
KPMG slapped with $50m fine over past audit work

Audit KPMG slapped with $50m fine over past audit work

1w Tom Lemmon
Audit of the future

Audit Audit of the future

2w Andy Turner, Audit and Business Advisory Partner
PwC audit changes are “unacceptable”

Audit PwC audit changes are “unacceptable”

3w Tom Lemmon
PwC reveals “big deal” tech plan to boost audit quality

Audit PwC reveals “big deal” tech plan to boost audit quality

3w Dave Beach
ICAEW: Companies House data a “gaping hole in AML defences”

Audit ICAEW: Companies House data a “gaping hole in AML defences”

3w Dave Beach
Grant Thornton to up audit quality with new appointment

Audit Grant Thornton to up audit quality with new appointment

3w Dave Beach
Goldman Sachs chooses Mazars for audit – but does it really matter?

Audit Goldman Sachs chooses Mazars for audit – but does it really matter?

1m Tom Lemmon