REPLIES OF THE COMMISSION TO THE ANNUAL REPORT 2009 OF THE COURT OF AUDITORS CHAPTER 2 "REVENUE"
Date: 2010-09-10
Institutions: European Commission
Subjects: European Court of Auditors, Greece, VAT, customs inspection, national accounts, national income, revenue

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EUROPEAN COMMISSION 

Brussels, 10.9.2010 
SEC(2010) 1010 final 

REPLIES OF THE COMMISSION TO THE ANNUAL REPORT 2009 OF THE 
COURT OF AUDITORS 

CHAPTER 2 "REVENUE" 

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REPLIES OF THE COMMISSION TO THE ANNUAL REPORT 2009 OF THE 
COURT OF AUDITORS 

CHAPTER 2 "REVENUE" 

INTRODUCTION 

REGULARITY OF TRANSACTIONS 

2.17.  These  anomalies  once  spotted  by  the  Commission  were  communicated  to  Member 
States and the Court. All Member States agreed that the necessary remedial measures be taken 
as part of the routine procedures for revisions and updates.  

EFFECTIVENESS OF SYSTEMS 

2.20. The Commission will request the Member States concerned to take remedial action to 
address the short-comings found and where necessary Traditional Own Resources underpaid 
will be requested as well as any late payment interest due. 

2.21. The Member States concerned will be requested to justify the amounts in the accounts, 
to make good any short-payments of Traditional Own Resources discovered, and where late 
making available has occurred, late payment interest will be demanded. 

2.22.  The  Commission's  position  has  been  based  on  Article  867(a)  of  Regulation  2454/93 
implementing the Customs Code according to which goods seized and confiscated are to be 
considered  to  have  been  entered  for  the  customs  warehousing  procedure.  For  goods  entered 
under this procedure no customs debt is established and entered in the accounts. The Court of 
Justice judgement of 2009 did not cover the relevance of Article 867(a) as to the treatment of 
the  customs  debt  for  seized  goods  and  therefore  the  Commission  awaited  the  outcome  of 
another similar case,  C-230/08.  The  Commission is assessing the consequence of  the  recent 
judgement  in  this  case  and  the  follow-up  to  be  given.  In  any  event,  when  the  Modernised 
Customs  Code  enters  into  force,  for  seized  goods  the  customs  debt  will  always  be 
extinguished, regardless of the place where the goods are seized. 

2.23.  It  is  for  the  Member  States  to  establish  their  Customs  control  systems  based  on 
appropriate methods of risk analysis. The deficiencies referred to by the Court concern three 
Member States. In one of these identical findings were made in the Court's audit of Simplified 
Procedures and the Commission is following up the action being taken. In the remaining two 
they relate to the absence of a random element in the declaration/trader selection system. The 
national authorities have taken remedial measures in one. In the other a random element was 
used  but  was  not  incorporated  in  the  automated  system  for  the  selection  of  import 
declarations/traders for examination.  

2.24.  The  Commission  agrees  with  the  Court  that  Customs  controls  could  be  improved  and 
need to evolve in the light of experience and best practice.  

The  Commission  has  been  taking  action  to  assist  the  Member  States  with  the  evolving 
procedures.  Detailed  guidelines  have  been  provided,  as  has  training  on  how  best  to  apply 
them.  The  results  will  be  examined  during  monitoring  visits  to  be  made  during  2010  and 
2011.  In  addition  throughout  2009  and  2010  the  Commission  has  carried  out  specific 
inspections, in every Member State, of their Customs Control Strategies. On the basis of these 
inspections and the Court's audit observations the Commission has already requested remedial 
action.  It  will  prepare,  in  the  course  of  2010,  a  thematic  report  on  the  Customs  Control 
Strategy  in  the  Member  States,  incorporating  the  Court's  findings  as  well  as  those  of  the 

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Commission.  This  will  be  discussed  with  Member  States  at  ACOR  with  the  objective  of 
seeking improvements in this field.  

2.25. As the Court acknowledges the starting point for calculating the annual VAT base, on 
which the amount of VAT own resources contributions is in turn fixed, is the value of VAT 
receipts actually collected during that one year. Although a diminution in the VAT gap, could 
theoretically  result  in  an  increase  in  the  VAT own  resources  paid,  the  legislator  opted  for  a 
method in which any increase in VAT own resources would be neutralised, from a budgetary 
point of view, by a corresponding reduction in the amount raised from GNI resources. 

2.26. Proactive measures to lift long-outstanding reservations continue. In 2008 the Commission 
categorised, on a risk basis, all long-outstanding reservations and began, with the Member States 
concerned,  to  resolve  the  items  taking  those  relative  priorities  into  account.  The  strategy 
began to bear fruit in 2009 and is continuing: a further 7 of the oldest reservations have been 
lifted  during  2010.  The  Commission  considers  good  progress  has  been  achieved.  Further 
management meetings are to be scheduled in 2010/11. 

2.27. The Report quoted deals with deficit and debt data of general government in Greece. A 
thorough  analysis  of  the  potential  impact  of  the  issues  which  emerged  from  this  deficit  and 
debt verification did not reveal a significant impact on GDP/GNI levels. 

Greece has started addressing the issues raised in the Commission Report of 8 January 2010, 
with the adoption of a new law on the Hellenic Statistical System including the creation of a 
new  statistical  authority  (ELSTAT)  in  order  to  guarantee  the  independence  and  integrity  of 
statistics. 

2.28. The Commission considers that the reliability of national accounts depends primarily on 
the specific statistical sources and methods used and has based its approach of GNI validation 
on their verification and improvement. Well designed supervisory and control systems (SCS) 
in national statistical institutes of Member States may help identify and mitigate the risks of 
errors occurring. The Commission has already taken account of the remarks of the Court on 
SCS in the ways mentioned in its replies to paragraph 4.24 of the 2008 report. Furthermore, 
during  the  GNI  verifications,  the  Commission  collected  information  on  Member  States' 
practices,  in  particular  for  the  purposes  of  the  workshop  it  organised  in  December  2009.  In 
accordance with the objectives  of this workshop, the Commission will  identify and develop 
best practices for use in the Member States, as well as assessment procedures in this domain. 

2.30. The Commission is continuing its cooperation with the two countries that still have GNP 
reservations for the period 1995-2001 (1 for Greece, and 3 for United Kingdom) so that these 
reservations can be lifted. 

2.31.  The  Commission  applies  direct  verification  as  a  supplement  to  the  verification  of  the 
countries'  GNI  Inventories  based  on  the  GNI  Inventory  Assessment  Questionnaire  (GIAQ). 
The Commission considers that the number of components it had selected was sufficient for 
the purposes of direct verification, in accordance with the “Guidelines for direct verification” 
approved by the GNI Committee. 

RELIABILITY OF COMMISSION MANAGEMENT REPRESENTATIONS 

2.32. The Commission in its inspections of Simplified Procedures and Member States' control 
strategy  has  also  found  weaknesses  in  the  control  procedures  in  Member  States  and  will 
continue  to  follow  up  the  Court’s  and  its  own  findings.  As  soon  as  this  follow-up  is 
completed, the Commission will have a more comprehensive basis for an assessment.  

CONCLUSIONS AND RECOMMENDATIONS 

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2.35. The Commission will continue its regular examination of the B accounts to identify any 
weaknesses  which  might  impact  on  the  timely  establishment  and  making  available  of 
Traditional Own Resources. 

2.36. The Commission will follow up these weaknesses in conjunction with the findings from 
its own inspections. 

2.37.  So  far  a  further  seven  of  the  longest-outstanding  reservations  have  been  lifted  in  2010. 
Further management meetings are to be scheduled in 2010/11. 

2.38. The Commission will complete the verification of Member States' GNI inventories and 
produce  assessment  reports  at  end  2010/early  2011.  The  Commission  considers  that  the 
approach  it  applies  (desk  checks  of  the  GNI  Questionnaires,  the  verification  of  GNI 
Inventories using the GIAQ supplemented by a  direct  verification) is appropriate for a final 
assessment of the Member States' GNI. In this context, supervisory and control systems (SCS) 
are  of  an  organisational  nature  and  do  not  give  specific  indications  on  the  reliability  of  the 
accounts, which depends primarily on the statistical sources and methods used, even though 
SCS may help mitigate risks of errors in national accounts. 

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