WRITTEN QUESTION E-3331/98

by Graham Mather (PPE) to the Commission

(10 November 1998)

Subject: The Intervention Board Executive Agency (UK) - CAP funds

The Intervention Board Executive Agency accounts to the UK Parliament for the cost of implementing, in the United Kingdom, the market regulations and agricultural support measures of the common agricultural policy, together with associated administration costs.

In 1996-97, the Agency administered around 2,5 million transactions accounting for £4,2 billion in expenditure and £3,2 billion of aid appropriations.

Of the 1996-97 Appropriation Account, the House of Commons Public Accounts Committee (PAC) stated that, "the Auditor General ... was not able to obtain all the information and explanations that he considered necessary for his audit. The evidence available to him was limited because of the Agency's failure to maintain accurate and fully reconciled books of account ... amounting to some £30 million for which there were no satisfactory explanation". The PAC concluded that, "the Board's standard of financial management stands in urgent need of considerable improvement".

1. Is the Commission satisfied with the administration of CAP funds in the UK?

2. Is the Commission satisfied with the standard at which the Intervention Board conducts the tasks assigned to it?

3. What provisions does the Commission have in place for the monitoring of the administration of CAP funds in the UK?

4. What sanctions does the Commission have at its disposal if the administration of CAP funds in the UK consistently falls below acceptable standards?

Answer given by Mr Fischler on behalf of the Commission

(9 December 1998)

1. and 2. The Commission is not fully satisfied with the administration of the common agricultural policy (CAP) funds in several Member States, including the United Kingdom. Concerning the Intervention board, the comptroller and auditor general has qualified not only the national accounts of the board, but also the annual certificate on the European agriculture guidance and guarantee fund (EAGGF) account, required under Regulation (EC) 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy(1). These qualifications were due to the board's failure to maintain accurate and fully reconciled books of account. Clearly, the Commission is unhappy with this situation, and under the clearance of accounts process has refused to accept expenditure that is not fully supported by the board. It will continue to refuse to finance all expenditure that cannot be fully supported. It has also insisted that the board takes remedial action if it wishes to remain a paying agency accredited to pay out money on behalf of the EAGGF guarantee section. There is evidence that this remedial action is now being taken.

3. The Commission is following closely the situation in the Intervention board, and the steps taken to remedy the shortcomings identified in the accounting and reconciliations procedures. Council Regulation (EEC) 729/70 amended by Council Regulation (EC) 1287/95 of 22 May 1995(2), sets out the legal framework for controlling the administration of CAP funds. The Commission carries out regular controls in various market sectors and paying agencies (including the Intervention board) to monitor the administration of CAP funds.

4. The Commission has, through the clearance of accounts procedure, the right to refuse the reimbursement of all expenditure made by a paying agency which is not in conformity with the Community rules. It will continue to exercise these powers whenever necessary. With regard to the general operations of the Intervention board, if the administration of CAP funds falls consistently below acceptable standards, the British authorities will be asked to apply the provisions of Article 4 (4) of Regulation (EEC) 729/70 and withdraw the accreditation of the paying agency.

(1) OJ L 94, 28.4.1970.

(2) OJ L 125, 8.6.1995.