WRITTEN QUESTION E-1847/97 by Daniela Raschhofer (NI) to the Commission (30 May 1997)

Subject: Adjustments in the clearance of accounts

In 1992 the clearance of accounts showed ECU 900 million as financial adjustments which could not be recovered until 1996 with the adoption of the clearance of accounts for 1992. As a result the EU suffered a loss of interest and financial damage amounting to some ECU 200 million. What action will the Commission take to prevent such irregularities in the future? How much funding is needed for such measures?

Answer given by Mr Liikanen on behalf of the Commission (11 July 1997)

The question presumably refers to the clearance of accounts for 1992 for the European Agricultural Guidance and Guarantee Fund (EAGGF), Guarantee Section, which is the only budget heading that is subject to such a procedure.

The clearance of EAGGF Guarantee Section accounts for 1992 has been the subject of two clear Decisions. The first of these (Commission Decision No 96/311/EC of 10 April 1996 ((OJ L 117, 14.5.1996. ))) involved an amount of ECU 753 million that had been reimbursed to the Commission by the Member States in 1996. The second (Commission Decision No 96/701/EC of 20 November 1996 ((OJ L 323, 13.12.1996. ))) involved an amount of ECU 70 million that was reimbursed to the Commission in November 1996 and subsequently posted to the 1997 budget. The total amount of adjustments levied on Member States for the 1992 budget was thus ECU 823 million. There can therefore be no question of a loss; on the contrary, this figure represents the recovery of a considerable amount of wrongfully paid appropriations.

The clearance of accounts procedure is governed by Article 102 of the Financial Regulation and Article 5 of Regulation (EEC) No 729/70 of 21 April 1970 ((OJ L 94, 28.4.1970. )). According to these provisions, the accounts for years prior to 1996 must be cleared before the end of the year following the year for which annual statements of expenditure

are submitted. If errors of any kind or deficiencies in financial control are ascertained during this period, the Member States are requested to provide an explanation. If no explanation is forthcoming or if a Member State is found to have exercised inadequate financial control, the amounts are disallowed. The Member State then remains liable for these amounts and they are recovered by the Community budget.

The financial adjustment, that is to say the amount that is still payable by the Member State, can range from rejection of an individual application to rejection of a more substantial amount, and may even amount to the total payments made for the offending operation. The forthcoming enlargement of the Community and the increasingly numerous and complex controls on bookkeeping and audits that this will entail have caused considerable delays.

A decision was taken in 1995 to reform the system, with the aim of improving the clearance of accounts procedure. The objective is to make the procedure more preventive than punitive, to improve dialogue between Member States by means of an arbitration procedure to take place before an arbitration body, and to reduce financial insecurity by cutting the time taken to reach the clearance decision. Starting with the 1996 clearance exercise, the procedure has been split into two parts: a clearance of accounts, to be carried out no later than 30 April of the following budget year, and subsequent operations audits not linked to a particular budget year and aiming to ensure that operations do not breach Community rules and regulations.