# CE2004065EN.01003901.xml

| 13.3.2004 | EN | Official Journal of the European Union | CE 65/39 |
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13.3.2004

EN

Official Journal of the European Union

CE 65/39

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(2004/C 65 E/039)

WRITTEN QUESTION E-0649/03

by Erik Meijer (GUE/NGL) to the Commission

(5 March 2003)

Subject:   Criticism by the Netherlands National Audit Office of the lack of transparency in the management of EU funds by fund flow and by Member State

Subject:

| 1. | Is the Commission aware that the Netherlands National Audit Office published its first annual ‘EU trends report’ on 18 February 2003, the aim of which is to chart developments in the management of Community funds and oversight and monitoring of their allocation, as well as legality and effectiveness in the Netherlands and throughout the European Union? |
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1.

Is the Commission aware that the Netherlands National Audit Office published its first annual ‘EU trends report’ on 18 February 2003, the aim of which is to chart developments in the management of Community funds and oversight and monitoring of their allocation, as well as legality and effectiveness in the Netherlands and throughout the European Union?

| 2. | Is the Commission aware that the 2003 report points out that, while the Commission exercises checks, their results are not published, so that the public is unable to establish any link between shortcomings in financial management and certain countries or flows of funds, and that the report also criticises the fact that since 1994 the European Court of Auditors, in its reports on the reliability of income and expenditure, has made no specific reference by country or fund flow, and hence can make no positive statements on the accounts of the European Union? |
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2.

Is the Commission aware that the 2003 report points out that, while the Commission exercises checks, their results are not published, so that the public is unable to establish any link between shortcomings in financial management and certain countries or flows of funds, and that the report also criticises the fact that since 1994 the European Court of Auditors, in its reports on the reliability of income and expenditure, has made no specific reference by country or fund flow, and hence can make no positive statements on the accounts of the European Union?

| 3. | Is there a law in all the Member States comparable to the Dutch law on supervision of European subsidies, which was adopted following the discovery of errors in the management of the ESF in the period from 1994-1999, and which requires ministers to exercise central oversight over decentralised spending? |
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3.

Is there a law in all the Member States comparable to the Dutch law on supervision of European subsidies, which was adopted following the discovery of errors in the management of the ESF in the period from 1994-1999, and which requires ministers to exercise central oversight over decentralised spending?

| 4. | Is oversight at national level limited in practice to the Member States Austria, the United Kingdom and the Netherlands, and the candidate countries Estonia, Latvia, Hungary and Romania? |
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4.

Is oversight at national level limited in practice to the Member States Austria, the United Kingdom and the Netherlands, and the candidate countries Estonia, Latvia, Hungary and Romania?

| 5. | Why are results broken down by fund flow not published, particularly as regards the Structural and Cohesion Funds and agricultural subsidies? |
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5.

Why are results broken down by fund flow not published, particularly as regards the Structural and Cohesion Funds and agricultural subsidies?

| 6. | Why are results broken down by Member State, including Member States which themselves practise no or little oversight, not published? |
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6.

Why are results broken down by Member State, including Member States which themselves practise no or little oversight, not published?

| 7. | What is the Commission doing, particularly in the light of the report in question, to present these financial data to the public in a better form, thus reinforcing the possibility of public oversight of movements of EU funds? |
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7.

What is the Commission doing, particularly in the light of the report in question, to present these financial data to the public in a better form, thus reinforcing the possibility of public oversight of movements of EU funds?

Supplementary answer given by Mrs Schreyer on behalf of the Commission

(10 July 2003)

(10 July 2003)

| 1. | The Commission has taken note of the first annual ‘EU-trendrapport 2003’ by the Dutch ‘Algemene Rekenkamer’. Like similar reports produced by other national audit bodies, this is a good example of a national audit institution supporting improvement in the management of Community funds by the Member States.
  The Commission will take account of the recommendations made by the ‘Rekenkamer’ where they can improve such management and draw them to the Member States' attention. |
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1.

The Commission has taken note of the first annual ‘EU-trendrapport 2003’ by the Dutch ‘Algemene Rekenkamer’. Like similar reports produced by other national audit bodies, this is a good example of a national audit institution supporting improvement in the management of Community funds by the Member States.

The Commission will take account of the recommendations made by the ‘Rekenkamer’ where they can improve such management and draw them to the Member States' attention.

| 2. | In line with recognised auditing standards, the Commission does not validate audit findings until they have been confirmed in discussion with the auditees. If, after completion of this procedure, the Commission considers that money has been improperly spent in the field of the structural funds, it can recover this money by imposing so-called ‘financial corrections’. These decisions are publicised. However, in many cases the Member State will take the necessary corrective action in response to the audit findings before the final stage is completed. Furthermore, the Commission publishes an annual report on the protection of the Community financial interests and the fight against fraud which contains, inter alia, statistics and analyses on irregularities concerning the Cohesion and structural funds and agricultural subsidies, as communicated by the Member States.
  The annual reports of the European Court of Auditors since 1994 have concluded that, except for certain observations largely on accrual matters, the accounts faithfully reflect the Communities' revenue and expenditure for the year and their financial position at the year end. The Court has, however, not given full assurance as to the legality and regularity of the underlying transactions, inter alia on the basis of findings concerning payments for the Structural Funds. Upon receipt of the Court of Auditor's annual report, the Commission informs the Member States immediately of the details of theat report which relate to managament of the funds for which they are responsible. They, in turn, are obliged to present their observations within 60 days. The Commission transmits then a synthesis of Member States's replies to the other institutions (Article 143 paragraph 6 of the Financial Regulation).
  The Commission is attempting to improve this situation within the limits imposed by the system of shared management whereby the Structural Fund monies are administered in the Member States while the Commission remains responsible for the overall implementation of the Community's budget. The Commission has markedly tightened up the requirements on Member States for sound financial management. |
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2.

In line with recognised auditing standards, the Commission does not validate audit findings until they have been confirmed in discussion with the auditees. If, after completion of this procedure, the Commission considers that money has been improperly spent in the field of the structural funds, it can recover this money by imposing so-called ‘financial corrections’. These decisions are publicised. However, in many cases the Member State will take the necessary corrective action in response to the audit findings before the final stage is completed. Furthermore, the Commission publishes an annual report on the protection of the Community financial interests and the fight against fraud which contains, inter alia, statistics and analyses on irregularities concerning the Cohesion and structural funds and agricultural subsidies, as communicated by the Member States.

The annual reports of the European Court of Auditors since 1994 have concluded that, except for certain observations largely on accrual matters, the accounts faithfully reflect the Communities' revenue and expenditure for the year and their financial position at the year end. The Court has, however, not given full assurance as to the legality and regularity of the underlying transactions, inter alia on the basis of findings concerning payments for the Structural Funds. Upon receipt of the Court of Auditor's annual report, the Commission informs the Member States immediately of the details of theat report which relate to managament of the funds for which they are responsible. They, in turn, are obliged to present their observations within 60 days. The Commission transmits then a synthesis of Member States's replies to the other institutions (Article 143 paragraph 6 of the Financial Regulation).

The Commission is attempting to improve this situation within the limits imposed by the system of shared management whereby the Structural Fund monies are administered in the Member States while the Commission remains responsible for the overall implementation of the Community's budget. The Commission has markedly tightened up the requirements on Member States for sound financial management.

| 3. | Member States' systems for supervising the management of Community funds vary according to their constitutional arrangements and distribution of competences among the different levels of the administration. In some Member States, national ministers may be responsible; in others national ministers have no, or very limited, legal rights of supervision over Community spending at a regional level. In any case the applicable regulation provides for a wide range of measures that Member States are required to take for the financial control of assistance [see, in particular, Article 38 of Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds (1) and Commission Regulation (EC) No 438/2001 of 2 March 2001 laying down detailed rules for the implementation of Council Regulation (EC) No 1260/1999 as regards the management and control systems for assistance granted under the Structural Funds (2)]. |
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3.

Member States' systems for supervising the management of Community funds vary according to their constitutional arrangements and distribution of competences among the different levels of the administration. In some Member States, national ministers may be responsible; in others national ministers have no, or very limited, legal rights of supervision over Community spending at a regional level. In any case the applicable regulation provides for a wide range of measures that Member States are required to take for the financial control of assistance [see, in particular, Article 38 of Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds (1) and Commission Regulation (EC) No 438/2001 of 2 March 2001 laying down detailed rules for the implementation of Council Regulation (EC) No 1260/1999 as regards the management and control systems for assistance granted under the Structural Funds (2)].

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| 4. | All Member States have, as already outlined under point 3, systems for supervising the management of Structural Funds. The Community Regulations (in particular Council Regulation (EC) No 1260/1999 and Commission Regulation (EC) No 438/2001) require it. The level of government at which this supervision is exercised, varies according to the Member States' constitutional arrangements. |
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4.

All Member States have, as already outlined under point 3, systems for supervising the management of Structural Funds. The Community Regulations (in particular Council Regulation (EC) No 1260/1999 and Commission Regulation (EC) No 438/2001) require it. The level of government at which this supervision is exercised, varies according to the Member States' constitutional arrangements.

| 5. | The Commission would refer the Honourable member to the Annual Report of the Commission mentioned in point 2 above and also to the annual activity report of the European Anti-Fraud Office (OLAF). |
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5.

The Commission would refer the Honourable member to the Annual Report of the Commission mentioned in point 2 above and also to the annual activity report of the European Anti-Fraud Office (OLAF).

| 6. | All Member States are required to supervise the management of Structural Funds and agricultural subsidies and the Commission ensures they do so. |
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6.

All Member States are required to supervise the management of Structural Funds and agricultural subsidies and the Commission ensures they do so.

| 7. | The Commission's audits focus on specific priorities which vary from year to year, except for agricultural subsidies where there is an annual clearance of accounts, and, for reasons of efficiency, increasingly relate to the systems used rather than individual transactions. For its annual reports the Court of Auditors covers a larger number of transactions but not sufficient to establish annual country-by-country comparisons. In addition, data on protection of the Communities' financial interests can be found, as already indicated, in the annual reports of OLAF and the Commission. |
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7.

The Commission's audits focus on specific priorities which vary from year to year, except for agricultural subsidies where there is an annual clearance of accounts, and, for reasons of efficiency, increasingly relate to the systems used rather than individual transactions. For its annual reports the Court of Auditors covers a larger number of transactions but not sufficient to establish annual country-by-country comparisons. In addition, data on protection of the Communities' financial interests can be found, as already indicated, in the annual reports of OLAF and the Commission.

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(1)  OJ L 161, 26.6.1999.

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(2)  OJ L 63, 3.3.2001.

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