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Auditors unable to sign-off EU accounts again

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18th Nov 2005
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For the eleventh year running auditors have refused to sign-off the EU's accounts because they are full of errors.

In its report the EU's Court of Auditors, said: "The Court found that the vast majority of the payments' budget was again materially affected by errors of legality and regularity in the underlying transactions."

Enlargement means the EU's budget rose to '105 billion (£70 billion) during the 2004 financial year. Financial assistance to countries applying to join the EU and the administration budget were two areas that were certified, although the Court of Auditors said there were some risk areas in the pre-accession budget.

But big-spending areas such as farm subsidies and regional development were uncertified. Auditors also failed to approve the budget for the EU's foreign policy, aid programme and internal policies, including its research programme.

The report said the problems arose through "inherently risky transactions, and supervisory and control systems that are ineffective in terms of limiting the risk of irregularity to an adequate level".

In a speech to the EU parliament Hubert Weber, president of the Court of Auditors, said that accruals-based accounting was being introduced for the 2005 financial year, which would be a 'fundamental change' to the system.

But he warned that further progress was required to provide accurate opening balances as they had not been validated by authorising officers. 'If no appropriate action is taken by the end of this year, the shortcomings identified by the Court may affect the reliability of the 2005 financial statements,' he said.

Part of the problem is that although the EU Commission is responsible for seeing that the budget is correctly spent, it only has direct control of 20 per cent. The remaining 80 per cent is controlled by member states.

While that does allow for a certain amount of buck passing, the idea that the EU should scrutinise how member states spend their money might be considered a political move too far.

Even though the accounts have not been signed off again, Siim Kallas, the almost Yes Minister-ially titled vice-president of the European Commission responsible for administrative affairs, audit and anti-fraud, said he was pleased the Court had noted improvements have been made and would be asking for help to reduce error in the future.

'Court sampling reveals substantial errors that we are, of course, concerned to reduce to the minimum,' he said. 'To do so, we are focusing, and seeking assurance, on the procedures for managing the risk of irregularity.'

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