EU accounts

The EU’s auditors are warning that the management of EU spending is not yet good enough overall, either at EU level or in the member state, and much more needs to be done to track value for money report Harris & Co accountants Northampton #accountantsnorthampton

In its annual report on the EU budget, the European Court of Auditors (ECA) signs off the 2013 accounts but says the current budget system is ‘too focused on just getting funds spent’. The auditors say that analysis of the 2007 to 2013 spending period indicates the EU’s priority is ‘use it or lose it’, rather than focusing on achieving good results.

The accounts put the EU’s total spending at €148.5bn (£116bn), or €290 (£227) for every EU citizen. The auditors conclude that the collection of EU revenue was free from error. However, for EU expenditure the estimated error rate was 4.7 % (compared with 4.8 % in 2012).

The ECA emphasises that the error rate is not a measure of fraud, inefficiency or waste. Instead, it is an estimate of the money that should not have been paid from the EU budget because it was not used in accordance with EU rules, usually resulting from claims for ineligible costs, projects, activities or beneficiaries.

Typical errors include payments to a company declared as an SME, which is in fact owned by a large company, or making additions to an existing public contract without giving other tenderers a chance to bid.

Specific examples included a Sardinian artichoke grower found using harmful pesticides while claiming EU compensation for eschewing their use; a German airport contract awarded with EU support without tender rules having been followed; and Scottish farmers claiming EU subsidies while not meeting rules for the notification of movement of livestock.

Most errors occurred in spending areas where management is shared between the member states and the European Commission. The two most error-prone spending areas were again regional policy, energy and transport with a 6.9 % estimated error rate on a budget of €43.6bn (£34bn). There were also serious errors in public procurement, rural development, environment, fisheries and health with a 6.7 % error rate on a budget of €13.7bn (£10.7bn).

Across areas under shared management, the estimated error rate was 5.2 % compared to 3.7% for the spending programmes mostly directly managed by the Commission. The estimated error rate for the EU’s own administrative expenditure was 1%.