Council recommended Discharge but Osborne said No

The European Parliament is the discharge authority. Each year it must close the financial year on the basis of the recommendation of the Council and the Statement of Assurance (DAS) provided by the Court of Auditors. By granting a discharge Parliament approves the implementation of the budget in respect of the relevant financial year. It is well known that the European Court of Auditors for the 16th year in a row has not signed the EU accounts, nevertheless the European Parliament has been giving a discharge to the Commission for the execution of funds even if the Court of Auditors was not able to deliver a positive DAS. The European Parliament has been arguing that the rate of errors does not only depend on the Commission as member states co-manage 80% of the funds. MEPs have therefore urged the member states to cooperate more closely in checking on EU spending and recovering incorrectly spent funds.

Last November the European Court of Auditors published its report on the implementation of the 2009 EU Budget. The Court has issued an unqualified opinion on the reliability of the 2009 EU accounts. According to the Court “The accounts of the European Union give a fair presentation of the financial position and the results of operations and cash flows.” Nevertheless, “payments from the budget continue to be materially affected by error, except in two areas of expenditure - Economic and financial affairs and Administrative expenditure.” Once again, the court has refused to sign off on how the money from the EU's 2009 budget had been spent. As regards the legality and regularity of the transactions underlying the accounts, the Court concluded that the level of irregularity is still too high.

Yesterday (15 February) the Economic and Financial Affairs Council, adopted a recommendation to the European Parliament on the discharge to be given to the Commission for implementation of the EU’s budget for 2009. George Osborne has stressed that “The Government consider it unacceptable that the ECA has not been able to grant a positive statement of assurance on the EU budget as a whole for the 16th year in succession.”

The UK as well as the Netherlands and Sweden abstained on the vote showing, in this way, their concerns over lack of accountability and transparency on how EU money is spent. Nevertheless, the Council recommended the European Parliament to give a discharge to the Commission in respect of the implementation of the 2009 budget.

The Commission, since 2000, has been working on a reform program to improve the management of the EU budget. The Statement of Assurance of the Court provides opinions on both the reliability of the accounts and on the regularity and legality of the underlying transactions. Although the Commission has implemented several control measures the true is that the Court continues to find serious errors in several areas of the EU expenditure.

The EU’s Cohesion Policy, which represents almost a third of the budget, continues to be the area most affected by errors, “36 % of payments to projects were affected by error.” The Court has stressed that “the main causes of eligibility errors were the reimbursement of ineligible costs, and serious failures in applying the rules on public procurement.”

Vitor Caldeira said that "The Court estimates that almost a third of the errors found on the interim and final payments tested could have been detected and corrected by member states before certifying expenditure to the commission, as the audit shows they had the information to do so..."

The report notes that the Commission has improved the information it provides on the correction of irregularly paid amounts, nevertheless it stressed that “the information is not yet completely reliable because the Commission does not always receive reliable information from the Member States.” The Court has pointed out that while “the vast majority of the corrections are financial corrections on Member States or third countries”, the errors found by the Court “are mostly amounts incorrectly claimed by, or paid to, beneficiaries”, consequently “is not possible to make a meaningful comparison between its own estimate of error rates and the data for financial corrections and recoveries supplied by the Commission.”

The money paid in error is not always recovered, therefore, in some cases, taxpayers end up paying for "corrections" rather than the EU funds beneficiaries. Member States should be, therefore, more accountable for EU funds. In fact, the three member states mentioned above, asked member states to be held more accountable. Presently, only four member states, UK, Sweden, Netherlands and Denmark, give a certificate of compliance for EU funded projects.

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