International Journal of Auditing – January 2010
European Court of Auditors
Annual Report on European Union Budget Implementation for Fiscal Year 2008
In November 2009, the European Court of Auditors published its annual report on the implementation of the 2008 European Union (EU) general budget. The court issued an unqualified opinion on the reliability of the 2008 annual accounts of the European Communities, concluding that they present fairly, in all material respects, the financial position of the European Communities and the results of their operations and cash flows.
The overall results for 2008 reflect improvements in budget management in recent years in terms of the legality and regularity of the transactions underlying the accounts. The improvement is due primarily to better results in the largest policy group, agriculture and natural resources, which accounts for almost half of the EU budget. This was the first time that the court gave a qualified rather than an adverse opinion for this policy group, whose overall error rate is below materiality. However, within this group the estimated level of error for rural development, remains material, although it is lower than in previous years.
The second largest policy group, representing almost a third of the budget, is cohesion, which remains problematic and is the area most affected by errors. The court estimates that at least 11 percent of the total amounts reimbursed should not have been paid out.
The court’s past recommendations to improve supervisory and control systems still remain valid. They should be seen as part of an ongoing process, in which the relevant measures will require additional time before they can be deemed to be effective.
Additional attention needs to be directed to those expenditure areas where the court continued to report a high level of error due, in many situations, to the complexity of rules and regulations. Simplification, therefore, remains a priority.
The court’s opinions on the implementation of the EU budget for 2008 can be summarized as follows:
- The court gave clean opinions on (1) the legality and regularity of the underlying transactions for revenue and (2) commitments and payments for the education and citizenship and administrative and other expenditure policy groups.
- The court gave qualified opinions on payments for agriculture and natural resources (except for rural development) and for economic and financial affairs (except for expenditures for the sixth framework program for research and technological development, which are, in all material respects, legal and regular).
- The Court gave adverse opinions on legality and regularity aspects for the (1) cohesion, (2) research, energy, and transport, and (3) external aid, development, and enlargement policy groups. Payments in these policy groups were materially affected by errors, although at different levels.
The general budget of the EU is decided annually by the Council of the EU and the European Parliament. The European Commission is, solely or in cooperation with member states, responsible for budget implementation. The court’s annual report provides a basis for launching the discharge procedure that brings the annual budgetary process to an end.
The court’s annual report on the implementation of the 2008 EU budget, as well as special reports covering different aspects of EU finances and management issues, can be found on the court’s web site, www.eca.europa.eu, in 22 official languages.
Meeting of the Heads of the SAIs of the European Union in Budapest
On November 30 and December 1, the State Audit Office of Hungary hosted the 2009 annual contact committee meeting of the heads of EU SAIs; the heads of SAIs of the candidate countries (Turkey, Croatia, and the former Yugoslav Republic of Macedonia) also participated, as did representatives from the INTOSAI Development Initiative, the EUROSAI Training Committee, and SIGMA (a joint initiative of the Organisation for Economic Co-operation and Development and the EU that provides support for public administration initiatives). Árpad Kovács, then President of the Hungarian State Audit Office, chaired the meeting.
The meeting’s agenda featured a seminar on the role of SAIs in helping governments respond to the current economic crisis. The seminar provided a platform to exchange ideas and information on the impact of the short-term measures taken to date in the European Union and its member states in response to the financial and economic crisis.
Participants also discussed how the implementation of the Lisbon Treaty will change the management of EU funds and possible implications for the work of SAIs and the court. Other agenda items included presenting the results from working groups covering specific areas of EU fund management, a review of 2009 contact committee activities, and a discussion of activities planned for 2010. The new contact committee Web site (www.contactcommittee.eu), which the court developed, was also presented to the participants.
The next contact committee meeting will be held in October 2010 at the court in Luxembourg and will be chaired by the President of the SAI of France.
For additional information, contact the European Court of Audit:
E-mail: euraud@eca.europa.eu
Web site: www.eca.europa.eu