Auditors find rising error rate

Errors and irregularities continue to blight the European Union’s spending on agriculture and rural development, and the situation is getting worse, according to the Union’s external auditors.

The European Court of Auditors (ECA) presented its annual report on the EU’s accounts for 2012 this week, and warned that the overall rate of errors had risen for the third year running.

The ECA said that the accounts themselves fairly presented the financial position of the Union. However, the auditors are also required to give a statement of assurance on the legality and regularity of the underlying transactions.

Their verdict was that the revenue transactions were legal and regular, as were the commitments, but the error rate for payments was too high. They estimated the error rate at 4.8%, up from 3.9% the year before, though direct comparison is difficult because the auditors have changed their methods of calculating the error rate.

The highest error rates, which measure irregularities that may or may not include fraud, were estimated in spending for rural development and environment (7.9%, up from 7.7% in 2011) and in regional policy, energy and transport (6.8%, up from 6.0%). Research and other internal policies had an error rate of 3.9%. External relations, aid and enlargement had an error rate of 3.3%. Employment and social affairs had an error rate of 3.2%.

Under the heading of administration and other spending, the error rate was deemed to be 0%. An error rate is considered to be material when it is 2% or greater.

As in previous years, the spending programmes with the worst error rates are those where management is shared between the Commission and the member states. The auditors said that supervisory and control systems in the member states were only partially effective. The ECA was particularly critical of “serious failures to respect public procurement rules”, which were estimated to be the greatest contributor to the errors. The category that was the next greatest contributor to errors was “ineligible projects/activities or beneficiaries”.

In a separate statement, the Court said that the accounts for the European Development Funds – the aid to the African, Caribbean and Pacific countries – were reliable but the underlying payments were affected by material error (estimated at 3%).