VIDEO: 22 Years of Failed Audits but Sure Who’s Counting?

As a member of the Budgetary Control Committee of the European Parliament (CONT, for short…) I was the Shadow Rapporteur on the 2015 Discharge for the European Commission’s EU General Budget.

In simple terms that meant that having taken note of the what the auditors had said (in this case the European Court of Auditors, the ECA), I would be the one recommending to my group (GUE/NGL) whether or not they should give the Commission a clean bill of health for its spending in the calendar year 2015. Sounds like a daunting and tedious task, and it was, but it was also interesting.

Every year since 1994 the Court is required to provide a ‘Declaration of Assurance’ certifying the Commission’s annual budget; every year since 1994 it has refused to do so.

2015 was no exception but this days, there is a little twist. Well, maybe not so little.

YES, WE’RE MISSING BILLIONS BUT THE BOOKS LOOK GOOD!

Since 2007 the ECA produces not one, but two sets of audits:

1) An audit of the accounts
The opinion on the reliability of the accounts states whether the final consolidated accounts of the European Communities for a given year completely and accurately report the cash flows and financial results for that particular year and assets and liabilities at the year end are properly registered in order to reflect faithfully the financial position.

2) An audit of the legality and regularity of the underlying transactions
The objective is to gain sufficient evidence as to whether funds have been received and spent in conformity with contractual and legislative conditions and have been correctly and accurately calculated. In brief, this involves the determination of whether the transactions took place, whether the recipients/beneficiaries were eligible for the funds received, and whether the costs/quantities claimed were accurate and eligible. The resulting audit opinion consists of an overall conclusion covering all revenue and expenditure transactions. Payments are audited down to the level of the final beneficiaries.

In any language, the only one of those two opinions that matter is the second – the legality and regularity of the underlying accounts. So why two sets of audits?

LOOK – OVER THERE!

A smokescreen, that’s why, a reaction to the mounting annual criticism of the ECA that since it first began to audit the Commission’s EU budget in 1994 it had never issued a clean, unqualified bill-of-health to the EU on its annual accounts. Never.

That particular situation hasn’t changed and again for 2015, on the substantial issue of the legality and regularity of the underlying accounts, and for the 22nd year in a row, the ECA has issued a qualification on the accounts.

However – and herewith the smokescreen – to allay criticism, and as it has done since 2007, the ECA does declare its confidence in the actual book-keeping. Under this novel audit system, if the Mafia presented a set of books outlining in detail all its income from all its various rackets, all its spending on items like bribery of officials, the ECA would sign off on them, thus giving a gloss of acceptability to those activities.

This is simply a flagrant attempt to disguise the fact that year after year, the EU’s general budget accounts fail to meet minimum accounting standards, that yet again this year the ‘unaccounted for’ rate again far exceeds the maximum allowable of 2%, a sum that runs to hundreds of billions of euro.

It's a farce and it's time the Commission - so quick to condemn Member States on their national budgets - was held to account on its OWN accounts.

Europe, VideosPaul Cotter