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Notiziario Marketpress di
Mercoledì 17 Novembre 2004
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PRESENTATION BY THE PRESIDENT OF THE 2003 ANNUAL REPORT TO THE BUDGETARY CONTROL COMMITTEE ON 16 NOVEMBER 2004, STRASBOURG |
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Strasbourg 17 November 2004 - Juan Manuel Fabra Vallés President of the European Court of Auditors Introduction: “Mr Chairman, Members of the Budgetary Control Committee of the European Parliament, Ladies and gentlemen, I am appearing before you today to present the European Court of Auditors' Annual Report for the financial year 2003. This year's Report is unique in nature. Firstly, because this is the Court's first Annual Report since enlargement. The Court started to make preparations to receive 10 new Members a long time ago. We have undertaken internal reforms in order to make the institution more effective in the performance of its duties. Secondly, from a personal point of view, this presentation is of special significance for me. As you are aware, my term as President of the Court ends in January 2005. I will therefore have completed the three-year period which began with the presentation of the Court's 2002 work programme. During these three years, I have made every effort to foster and maintain a good working relationship between the Budgetary Control Committee and the Court. Particular attention has been paid to the Committee's concerns and we have promoted more effective communication, exchanges of information and dialogue on both sides. I believe that the overall result is positive and that every day the Court provides the Parliament with independent and professional assistance of ever higher quality. This can only be achieved if the independence and roles of our respective institutions are respected. The main purpose of the Annual Report which I am presenting to you today, together with the Court's Special Reports and Opinions, is to assist the Council and the Parliament in their budgetary control duties, in particular during the discharge procedure. The structure of the Annual Report is the same as last year: - Chapter 1 contains the Statement of Assurance (the Das). - In Chapter 2 we have consolidated our observations on the management of the budget and, in so doing, provide an overall summary analysis of the management of the budget. The remainder of the Report is devoted to our observations on the revenue and expenditure for the financial year, set out in accordance with the Financial Perspective. Each Chapter examines the follow-up to the Court's previous observations and provides specific information about the Statement of Assurance. In addition, we have included a summary of the Special Reports adopted since the 2002 Annual Report. The Report concludes with our observations on the European Development Funds. Before going into detail, I should like to outline the structure of my speech. Firstly, I shall discuss our analysis of the management of the budget. Secondly, I shall provide details of the Statement of Assurance concerning the reliability of the accounts (the Das) before discussing changes in the Commission's internal control system. After that, I shall present the six Special Reports which the Court is publishing today. My fellow Members of the Court will be happy to discuss these Reports with the Committee in greater detail at a later date. I shall then conclude with a few words about the state of progress of administrative reform at the Commission. Analysis of budgetary management Let us now consider the findings of the Court's analysis of the management of the Eu budget in 2003, the last year before the enlargement and the halfway stage of the implementation of the Financial Perspective for 2000-2006. In 2003, the Commission took specific measures to improve its forecasting of the use of the budget. Thanks to the presentation of an amending budget, payment appropriations and revenue fell by 5 000 million euro. However, in the financial year 2003 the total budget surplus reached 5 500 million euro. Although this figure is still high in absolute terms, it is lower than in previous years (7 400 million in 2002 and 15 000 million in 2001). The surplus can be ascribed to a budget estimate which was over-ambitious and to the Member States' and the beneficiaries' inability to absorb Eu funds. Throughout the 1999-2003 period, payment appropriations totalling 39 900 million euro were cancelled due to the lack of implementation. At the end of the financial year 2003, outstanding commitments totalled 69 300 million euro in the case of the Structural Funds, 12 200 million euro in the case of internal policies and 12 900 million euro in the case of external actions. These data clearly show that the tools used for budgetary management and forecasting require further improvement, bearing in mind the ability to effect expenditure and the time needed to do so. Only then will it be possible to ensure that expenditure and revenue reflect the actual situation. This improvement is a pre-requisite for drawing up the budget for the period covered by the Financial Perspective for 2007 to 2013. The rate of implementation for payments under the pre-accession aid programmes was 80%. However, in the case of the Sapard programme, which I will discuss in greater detail when I present the Special Report, total payments to beneficiaries at the end of 2003 accounted for only 14.8% of the available funds. As regards the budgetary management of the European Development Funds, we note that efforts have been made, with the revised form of the report on financial management, to improve the quality of information about the management for the financial year. The Commission has also made a considerable effort to reduce the volume of outstanding commitments. Furthermore, the implementation of payments has been affected by a shortfall in financial resources (270 million euro). In order to round off its report, the Commission should ensure that it reflects the costs of managing the Edfs. I do not wish to conclude this point without stressing that the measures taken over the last few years by the Commission have made it possible to provide more accurate budgetary estimates, to improve implementation and to reduce the surplus. The Commission must continue to make these improvements, in particular by providing more reliable information about the extent to which the Eu programmes have been implemented. Statement of Assurance I should now like to present the Statement of Assurance (the Das). As was the case last year, the conclusions of the Statement of Assurance are based on four main components: - firstly, an assessment of the quality of the management and control systems in the Eu institutions, the Member States and other beneficiary countries; - secondly, an examination of a sample of transactions in each area of expenditure, including checks down to final beneficiary level; - thirdly, an analysis of the annual declarations of the Commission's Directors-general; and - fourthly, an assessment of other auditors' work. In the Court's view, the annual accounts for 2003 that were presented by the Commission were drawn up in accordance with the Financial Regulation. With the exception of whether or not the transactions relating to the sundry debtors item have been correctly and completely recorded, the Court is of the opinion that the accounts faithfully reflect the revenue and expenditure of the financial year and the financial situation of the Communities. As regards revenue, commitments and administrative expenditure, the Court considers the transactions underlying the consolidated annual accounts to be legal and regular. The Court notes the progress made by the Commission in reforming its internal control system and the positive impact of the reform on the legality and regularity of the transactions directly managed by the Commission. As far as other Chapters on expenditure are concerned, the Court noted in the case of the Eaggf Guarantee Section, that the payments were, again, materially affected by errors. The expenditure subject to the Integrated Administration and Control System (Iacs), which accounts for 58% of all expenditure on agriculture, is less exposed to risk and controls are better. The other categories of expenditure, especially production-based aid, are exposed to greater risk, as well as being subject to less effective controls. The main errors observed involve declarations by the beneficiaries of the aid. As regards the structural measures, owing to persistent weaknesses in the Member States' management and control systems, payments are still affected by the same type of errors occurring with the same frequency as in previous years. In the area of internal policies, the improvements noted in the supervisory systems and controls are still not sufficient to prevent significant errors in the legality and regularity of payments. We noted cases of excessive declarations of expenditure. In the case of the research framework programmes, these errors are likely to persist if the rules governing the programmes are not revised. In the case of external actions, legality and regularity errors have continued to affect the bodies responsible for implementing the projects and the projects themselves. The decentralisation of aid management was completed in 2003; it is therefore essential that the facilities for supervising and controlling the systems and expenditure should be fully operational. Lastly, as regards the Chapter on pre-accession aid, the shortcomings identified in previous years in the supervisory systems and controls gave rise to errors and risks which affected the legality and regularity of the transactions in the financial year 2003. It is therefore clear that greater efficiency is needed in the supervisory systems and controls for Eu funds managed jointly by the Commission, the Member States, the beneficiary States and other bodies. Changes in the internal control system As regards changes in the internal control system, the Court noted improvements in the annual activity reports and declarations of the Directors-general. However, further changes still need to be made. In specific terms, some of the reservations about the operational aspect of the controls which were expressed by some Directors-general contradict their declaration about the effectiveness of the control system. Despite improvements, these reports and declarations still cannot serve as a useful basis for the Court's audit conclusions. Let us briefly turn our attention away from the Commission towards the other Institutions: the Council, the Parliament, the Court of Justice and the Court of Auditors. All of these Institutions have made a considerable effort to adapt their supervisory systems and controls to the requirements of the new Financial Regulation. In 2003, the authorising officers by delegation of the majority of the Institutions submitted annual activity reports for the first time, as required by Article 60 of the Financial Regulation. These reports provide useful information about the way the supervisory systems and controls work. Presentation of Special Reports I shall now outline the six Special Reports which the Court of Auditors is publishing today[1]. Special Report No 2/2004 on pre-accession aid - Has Sapard been well managed? The Special Accession Programme for Agriculture and Rural Development (Sapard) is the first external aid programme to be implemented in a decentralised manner. Its total available budget was 2 183 million euro. The programme's objectives are to contribute to the implementation of the Community acquis and to solve problems for the adaptation of the agricultural sector and rural areas in the ten countries which receive Sapard aid, namely Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia and Romania. The Court performed an audit, the aim of which was to answer the question: "Has Sapard been well managed?". The audit showed that the management was of mixed quality. There were substantial delays in getting Sapard under way, which were caused by a failure on the part of the Commission to plan as early as possible and by the excessive complexity of the administrative procedures involved. Consequently, the budgets were overestimated. In the first four years of implementation, only 323 million euro (14.8%) of the available budget was paid to final beneficiaries. In addition, more than half of these payments were made in the last quarter of 2003. As a result of the delays and problems with implementation, the main objectives were not achieved during the pre-accession period. The first results of the completed projects show that the money for agricultural processing was spent more on projects which increase production, rather than on those improving quality, which was one of the programme's key objectives. The majority of Sapard's potential beneficiaries lacked own resources, found it difficult to obtain credit and were faced with cumbersome administrative procedures. The result of this was that the programme favoured the financially strong and the better organised with sufficient capital or access to loans. The rules and the checks for private procurement and for general costs were insufficient. Up to 12% of total eligible costs can be charged to the project as general costs. The Court's audit found that there was typically no justification for the amounts charged. Similarly, no checks were made to ascertain whether the costs were in relation to the services provided or whether the services had actually been provided. Checks to prevent the acceptance and payment of overstated invoices were not made on a systematic basis. Special Report No 4/2004 on the programming of the Community Initiative concerning trans-European cooperation - Interreg Iii Let us now turn to the Special Report on the programming of the Community Initiative concerning trans-European cooperation - Interreg Iii. The Interreg Community Initiative, which was launched in 1990 in an attempt to tackle the isolation of border areas, has been allocated commitment appropriations totalling 4 875 million euro for the 2000-2006 period. The Court's audit covered the period from the preparation of the Commission guidelines to the first decisions to adopt beneficiaries' projects. The Interreg Iii guidelines focus on the procedures for implementing programmes that seek to enhance cooperation. These guidelines were not made available until preparation of proposals for the programmes had been under way for at least a year. The proposed objectives are not targeted and cannot be measured or quantified. In addition, there are no indicators with which to assess how much overall progress has been made. The adoption of the programmes was delayed, with the result that the cooperation process was interrupted and the available funds were under-utilised. The Community Initiative Programmes (Cips) were prepared in the context of a consultation process. However, there remain some obstacles to cooperation and there is no genuinely shared implementation structure. The indicators are inadequate to the task of ex-post evaluation of the progress made and do not sufficiently embody the objectives. Some are too abstract and need to be clarified, while the information sources used to constitute them should be more precise. If the Community Initiative is renewed after 2006, the Commission should launch a study to ascertain which problems are caused by the existence of a border. Global indicators would then need to be defined. Setting criteria for the assessment of programme proposals should make it possible to adopt a proactive approach towards the Member States. The analyses requested at the level of each programme should be used to set specific objectives and measure progress in this field. The guidelines and methodology documents should be made available before work starts on the preparation of programmes. Special Report No 5/2004 concerning the audit of Phare support to prepare Candidate Countries for managing the Structural Funds Special Report No 5/2004 relates to the audit concerning Phare support to prepare Candidate Countries for managing the Structural Funds. The Court examined how well the Commission had used Phare, the largest pre-accession instrument, to prepare countries for managing the European Regional Development Fund (Erdf) and the European Social Fund (Esf). The audit concluded that, although use of Phare started early, at the time of accession the programme had had a more limited impact than had been planned in the Commission's policy documents. This was in part due to inexperience and insufficient institutional development in the Candidate Countries. It was noted in particular that: the approach followed by the Commission was not as effective as it could have been, partly because a new pre-accession instrument modelled on the Erdf and the Esf was not established; the Extended Decentralised Implementation System, which was intended to give Candidate Countries pre-accession experience of financial management procedures similar to those in force for the Structural Funds, had not been introduced by May 2004; most countries allocated less than the target figure to the economic and social cohesion programmes, which were intended to play an important role in preparing them for the Erdf and the Esf; the effectiveness of institution-building projects in the Candidate Countries was generally reduced by frequent changes in ministerial responsibilities and delays in designating managing and paying authorities. The Court recommends that institution building in the area of Structural Fund management continue to be supported in the new Member States after accession and that more resources be allocated to the ex-post control of Structural Fund operations in the new Member States. Lastly, a clear strategy should be put in place to identify the different steps that still need to be taken in order to prepare the current and future Candidate Countries for Structural Fund management. Special Report No 6/2004 on the organisation of the System for the Identification and Registration of Bovine Animals in the European Union The System for the Identification and Registration of Bovine Animals is an essential prerequisite for ensuring the traceability of beef and veal in the European Union. It also sets conditions for the payment to farmers of the various bovine premiums, which amounted to around 7 000 million euro in 2002 and 8 000 million euro in 2003 and 2004. Every Member State has had to set up a cattle identification and registration system consisting of four components: ear tags for the individual identification of animals, a passport for each animal, registers of holdings and a computerised database containing information on the holdings, the animals and all their movements. The database is the core of the system and was to be operational by 31 December 1999 at the latest. The Court audited the operation and design of the system at Commission level. Audits were also carried out in the four Member States with the largest bovine herds - Germany, France, Italy and the United Kingdom. In the Member States visited, the system, which was set up more than two years after the target date of 31 December 1999, was found to have significant weaknesses. The passports of animals traded between Member States are not monitored and there is no exchange of information between national databases. What is more, there are delays in updating the databases and the level of reliability of the information is often unsatisfactory. To conclude, the system does not guarantee the traceability of intra-Community or extra-Community cattle movements, which nevertheless involve approximately 3 million head of cattle per year (approximately 4% of the herd). No provision has been made for exchanges of data between Member States on animal movements, and such exchanges have been compromised, in practice, by the fact that the data format varies from one Member State to another. Moreover, a number of imprecisions in the Community legislation have led to different interpretations in respect of, for example, the deadlines for tagging, the concept of a "keeper of animals" and the procedure for returning animal passports. The Commission has not been given responsibility for adopting implementing measures for setting up and checking the databases. This explains, in part, the differences found between the Member States. The Court sets out various recommendations, such as the need to improve the legislative framework and give the Commission adequate means to take on a guiding role in the system. It also emphasises the need to standardise the rules governing management of the national databases, draw up quality indicators, define a format for the exchange of data between the national databases and implement a system to certify the quality of information. Special Report No 7/2004 concerning the audit of the common organisation of the market in raw tobacco The major Eu producers of raw tobacco are Italy, Greece and Spain, which together account for 87% of total production. The Eu has been supporting tobacco cultivation since 1970 through a Common Market Organisation (Cmo) with an annual budget of some 1 000 million euro. The market has been substantially reformed, first in 1992, then again in 1998 and, most recently, in 2004. The Court assessed whether the reforms introduced in 1998 were soundly based and well managed by the Member States. It also examined how the Commission had monitored and evaluated implementation and whether the objectives of the reformed Cmo had been achieved. Lastly, it examined how the recently approved reform might affect the tobacco Cmo. The process by which the Commission drew up its proposals for the 1998 reform was based on unreliable data and its analysis of the market was inadequate. The measures introduced did not result in significant improvements in the income from tobacco cultivation or the expected market balance. The value of production was also put at risk by anti-competitive behaviour, in the form of price agreements, in the three largest producer States. The Member States failed on many occasions to apply the checks required by the regulations. As at June 2004, the pursuit of corrections through the Clearance of Accounts process had not led to any decisions. The Commission's monitoring was unsatisfactory and the evaluation of the Cmo was delayed. The findings of the evaluation carried out by external consultants were published in report form in October 2003. The reform adopted by the Council in April 2004 envisages phased decoupling of the aid from production. Future support for tobacco producers will be included in the single farm payment scheme. There will also be a specific financial envelope for the restructuring of tobacco-producing areas. The Court welcomes the present reform, which should go some way to addressing many of the weaknesses identified by the audit, although this will take some time. The Court recommends that the Commission pursue its investigations of anti-competitive behaviour in Member States and, if this is confirmed, take appropriate action. The Member States' failure to apply the required checks should also be followed up and corrections made wherever possible. Special Report No 8/2004 on the Commission's management and supervision of the measures to control foot and mouth disease and of the related expenditure Following the foot and mouth crisis of 2001, Member States requested reimbursement of 1 616 million euro from the Community for expenditure on compensation to farmers. That cost, combined with the scale of the epidemic, was the motivation for the Court's audit. Before the 2001 crisis the Commission did not subject the arrangements for prevention and control of the disease to adequate evaluation that took account of the changes in the risk factors. A number of weaknesses in the prevention and control arrangements concerning protective measures at borders, animal feed, animal movements and notification of the disease were not corrected before the outbreak of the epidemic. During the crisis the Commission rapidly took the necessary measures, such as notification of the disease to the Member States and surveillance and slaughter of sheep which had been imported from the United Kingdom before the crisis began. Although the shortcomings in the system and in its application in the Member States were identified by the Commission during the crisis, it was too late to remedy them. The way in which the Community financing system was applied during the crisis led to inconsistencies: the reimbursement rates for the various animal diseases were aligned only for the pig sector; there were delays in reimbursements to Member States; in the absence of a more clearly defined Community framework the Member States introduced a variety of compensation systems, based on varying methods of assessing the value of the animals before slaughter. After the crisis many shortcomings were remedied; nevertheless, the financial framework has not been revised and a number of measures are still inadequate with regard to the supervision of farms, notification of disease and speed in culling; these shortcomings could compromise the effectiveness of the prevention and control arrangements in containing a future epidemic. The Court recommends that the Commission: - firstly, carry out regular evaluations of the prevention and control arrangements outside crisis periods and increase supervision of their implementation; - secondly, study ways of including farmers in the disease control system. The involvement of farmers is crucial for the rapid notification of disease and compliance with movement restrictions; - lastly, clarify the financial framework applicable to epidemics, while reducing as far as possible the risk to the Community budget. This brings to a close my presentation of the Court's six most recent Special Reports. As I mentioned earlier, the Court's rapporteur Members, Mrs von Wedel, Mr Bernicot, Mr Clemente and Mr Engwirda, are available should the Committee on Budgetary Control wish to discuss the reports in greater detail. The administrative reform I shall end my presentation with a few words about the state of the administrative reform launched by the Commission in 2000. In February 2004, the Commission published a report on the degree of implementation of the actions proposed in the White Paper on the reform. Of the 36 actions set out in chapter V ("Audit, financial management and control"), 32 had been completed by the end of the financial year 2003. The Court of Auditors recognises that the Commission has achieved progress with the new control framework. Nonetheless, the results are not entirely satisfactory in the case of eight of the actions that should have been completed by the end of 2003. We are particularly concerned about the actions relating to the minimum standards for internal control and the internal audit capability within each Directorate-general. The Court urges the Commission to redouble its efforts to bring the outstanding actions to completion, especially in the areas of shared management, risk analysis and debt recovery. Lastly, it should not be forgotten that the Commission's reform starts from the principle of responsible management, reporting and the evaluation of results. To this end, each Directorate-general draws up activity-based management plans and produces annual activity reports. The Directors-general also sign annual declarations on the operation of their departments and the accuracy of the information that they produce. In so doing, they accept management responsibility. In the financial year 2003 the European Commission presented, for the first time, an analysis of the reliability of its supervisory systems and controls with regard to the legality and regularity of underlying transactions. In this way, the Commission assumed management responsibility for the Community budget, as required by Article 274 of the Ec Treaty. The Commission reports that it is still unable to make an unconditional declaration in key areas of its management, and the Court of Auditors' observations have confirmed this situation. The Commission's efforts and the progress that it is making are not sufficient unless they also bring about an improvement in the various audits of Community funds that are carried out at national level. The European Court of Auditors addressed this theme in its Opinion No 2/2004, published last April, on the feasibility of introducing a single audit model. I would remind you that the opinion was delivered at the request of the European Parliament. The purpose of the "single audit" model is to develop, within the European Union, an efficient and effective internal control framework guaranteeing the reliability of findings and enabling them to be used by all parties taking part in control activities. This is a field in which the European institutions and the Member States can cooperate very closely to develop a legal framework for improving the audit of Community funds. Before I close, Mr Chairman, allow me to express my deepest thanks to all the staff of the Court of Auditors who have contributed through their work to the preparation of the Annual Report concerning the financial year 2003 and the Special Reports that I have presented today. I should like to offer special thanks to the language services (translators and interpreters), who, behind the scenes, perform a task so essential to our mutual understanding in this multilingual Europe. Many thanks also to you, Ladies and Gentlemen, for your kind attention".
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