Just received by email: Clarifications from the Press Office of the independent European Court of Auditors (ECA) regarding the understanding and reporting of their annual audit of the European Union budget 2013. (Link to main blog: ‘BBC’s John Humphrys got it wrong about Europe’)
11 November 2014 14:57
Re: Claim by Telegraph that EU auditors refuse to sign off more than £100 billion of its own spending
It is a frequent misunderstanding that the ECA did not approve or sign off the EU accounts. As stated in our Annual Report on the implementation of the EU budget for 2013 (published last week), the ECA has signed off the 2013 accounts of the European Union (as it has for every financial year since 2007). The misunderstanding might be related with the ECA’s opinion on the underlying payments, which has been negative (adverse) for 2013 and the preceding 19 years.
In relation to the cited article by the Daily Telegraph, I hope the following explanations will be useful in reporting correctly about the findings of our Annual Report. You may also consult our FAQ sheet, which we have published to encourage correct understanding and reporting of our Annual Report.
The cited Daily Telegraph article among others says that the Brussels accounts have not been given the all clear for 19 years running, that £5.5 billion of the EU budget last year was misspent because of controls on spending that were deemed to be only partially effective by experts, and that the audit found that £109 billion out of a total of £117 billion spent by the EU in 2013 was affected by material error.
What we say in our Annual Report is:
The ECA has signed off the 2013 accounts as reliable (given a ‘clean opinion’), as it has for every financial year since 2007.
The ECA concludes that the 2013 accounts present fairly, in all material respects, the financial position of the EU and its results for the year. As well as the opinion on the accounts, the ECA is also required to give an opinion – based on its audit testing – on whether the underlying payments were made in accordance with EU rules. For 2013, the estimated level of error in these transactions was again too high at 4.7% for the ECA to give a clean opinion on the regularity of expenditure.
The control systems are – in general – only partly effective. That is why there are errors in payments. The estimated error rate was 4.7%.
Ultimately, the blame for errors rests with those [- beneficiaries and/or Member State authorities – ] who make incorrect claims for funding. However, control systems at both Member State and EU level should prevent such claims being processed in the first place, or detect and correct them after the event. There is potential to use control systems more effectively to reduce the error rate. The ECA concluded that for a large proportion of the errors found, national authorities had sufficient information available to have detected and corrected many of them before claiming reimbursement from the Commission. This could have significantly reduced the error rate.
The total amount of EU budget in 2013 was €148.5 billion and the error rate was 4.7%.
In the past, some commentators have multiplied the total EU budget by the error rate and came up with a total for “money wasted”. This approach is simplistic and can be misleading.
The £109 billion refers to the spending areas for which our audit work shows a material error rate. This is correct but vastly overstates the impact of those errors: 4.7% of the budget as a whole.
— Jon Danzig (@Jon_Danzig) November 12, 2014