Local view for "http://purl.org/linkedpolitics/eu/plenary/1999-12-13-Speech-1-086"
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"en.19991213.4.1-086"2
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". – Mr President, ladies and gentlemen, I am very pleased to present today the European Court of Auditors' Annual Report concerning the financial year 1998, one of the fundamental elements of the discharge procedure.
The Court found a significant number of errors when checking the final beneficiaries of subsidies. This demonstrates that, not only the Commission, but also the Member States still have problems in the administration and control of the Community programmes.
The Commission and the Member States are now embarked on a reform of the major areas of expenditure, notably agriculture, structural funds and the PHARE programme. Real progress will depend on far-reaching fundamental changes in the Member States' system also and in many cases, in Council regulations.
The observations concerning the activities of the sixth, seventh and eighth European Development Funds are, in this Annual Report, presently separated along with a separate statement of assurance. The audit revealed failures to comply with the EDF regulations and errors affecting the amount of payments made.
Apart from these points, however, the Court is of the opinion that the European Development Fund accounts are reliable and the underlying transactions legal and regular.
Under these circumstances, in most of the areas of expenditure the Court has identified Community policies and programmes that are imprecisely designed and cannot be properly evaluated. Under these circumstances, actions cannot be correctly planned and the resources needed cannot be accurately estimated. That leads to poor results and the squandering of funds.
For example, in our Special Report No 2/99 on the effects of the Community agricultural policy reform in the cereal sector, the Court observed that there is no evidence that the reduction of institutional prices has brought significant benefits to the consumer nor that the reform has improved the position of small farmers.
Since the policies and programmes lack clear and measurable targets in terms of output and costs, it is not possible to assess the extent to which policy goals have been attained and whether value for money has been obtained.
the prime indicator of financial performance commonly used is the extent to which the appropriations allocated in the budget have been utilised and not whether they are efficiently and effectively spent. That confirms the persistence of the "spending culture" within the Community, more concerned with the volume of expenditure than with its quality. I underline that this is about the Community as a whole. At the same time, evaluation is not consistently applied and rarely results in concrete corrective action. This is the case, for example, of the mid-term evaluation of the structural measures where the methodological framework remains inadequate and relevant indicators are lacking. The Commission should ensure a proper link between evaluation results and programming.
The 1998 annual report again reveals weaknesses in the three layers of the Community's financial control: at the Commission; in the Member State systems; and in the Commission's supervision of Member States' systems.
The Commission's internal control did not prevent the cases of mismanagement and irregularities that have recently been uncovered. At the same time the internal audit function is carried out in an uncoordinated way by several bodies. The Court's audit of the 1998 accounts has found cases where the internal control failures have led to ineligible costs being financed by the Commission, overcharging, backdating contracts or an absence of supporting documentation. These have adversely affected the Court's statement of assurance, notably in the area of internal policies.
The discharge of the 1998 accounts is undertaken in a context very different to previous years. Our institutions have been both protagonists in and witnesses of major events on the European scene. For the first time the European Commission has resigned during its term of office and for the first time management and control of European funds have been put in the forefront of political attention.
Nor can Member States' control systems be relied on to prevent errors.
The European Union suffers from a fundamental problem inherent to a period of growth. The Commission structure has not evolved in parallel with the increasing variety of Community policies and funds that have to be implemented.
As the reports of the Committee of Independent Experts clearly state: the Commission's organisation, staffing and procedures have become obsolete and are unable to deliver the policies with the expected high degree of efficiency and accountability. This failure brings about financial management and control weaknesses which have persistently been reported by the Court of Auditors. I believe that there is a general consensus on these observations. The crucial corollary is, in my view, that all European institutions and the Member States share responsibility for this situation and consequently that we have to work together to improve it.
To this effect and as part of its contribution, the Court addressed a letter to President Prodi, when he was still President-elect Prodi, on 15 July this year, drawing his attention to those basic improvements that we, the members of the Court of Auditors, considered to be the most essential. They involve making policy performance possible to assess, enhancing the structures of control, drawing up simple and more consistent financial and accounting regulations and finally managing staff more efficiently.
The special reports and opinions adopted by the Court during the year in the Court's 1998 Annual Report submitted to Parliament provide additional evidence to corroborate this analysis.
As you have seen, the report that you now have in your hands contains the statement of assurance for the 1998 financial year. In response to the requests of this Parliament, the Court has expanded its work with the statement of assurance. It now provides additional information per sector of revenue and expenditure in each chapter, which should make the report more useful in assessing the particular situation in each field.
The global conclusions in the 1998 statement of assurance do not differ substantially from previous years. Firstly, the court is of the opinion that, overall, the accounts reliably reflect the Community's revenue and expenditure and the financial situation at the end of the year, subject, however, to certain qualifications concerning the omissions of debts and potential liabilities, overstatements of outstanding commitments and the presentation of advances as definite payments.
Secondly, the Court declines to give a positive statement on the legality and regularity of the transactions underlying the Commission's payments. The audit revealed a material incidence of error which affected the amount of payments made or the eligibility of the transactions financed. The audit also showed other failures to comply with regulations. Although these do not have a direct effect on the amounts of the transactions they often indicate a failure to apply control procedures properly."@en1
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