EUROSAI. Magazine N24 - 2018

eurosai 62 Information on EU statements are audited by an external auditor, and the audit report is published in the Official Journal of the European Union and on the ECA website. The European Development Funds (EDFs) provide EU assistance for development cooperation to the African, Caribbean and Pacific (ACP) countries and overseas countries and territories (OCTs). EDF spending and cooperation instruments aim to overcome poverty and to promote sustainable development and the integration of the ACP countries and OCTs in the world economy. For 2017, €3.5 billion of expenditure was subject to audit in this area. The EDFs are funded by the EU Member States and are implemented either through individual projects or through budget support (a contribution to a country’s general or sector budget). Each EDF is governed by its own financial regulation. The EDFs are managed outside the framework of the EU budget by the European Commission (which manages the biggest part) and the European Investment Bank. As for the reliability of the EDFs’ accounts, the ECA concluded that the 2017 accounts present fairly the financial position of the EDFs, the results of their operations, their cash flow and changes in net assets. The revenue of EDFs was not affected by material error. However, payments of the EDFs were affected by material error, with an estimated level of error of 4.5 % (2015: 3.3 %). As in the area of Global Europe, the Commission has considerable flexibility in deciding whether eligibility conditions have been met, and misuse of EU funds at national level will not necessarily lead to errors being identified in the ECA’s audit. This is also the case for EU funds that are pooled with those of other international donors and not earmarked for specific items of expenditure. In such cases, costs are considered eligible under EU rules as long as the pooled amount includes sufficient eligible expenditure to cover the EU’s contribution. Expenditure not incurred accounted for 42 % of the overall rate of error in the EDFs. Other significant types of error includemissing essential supporting documents, and non-compliance with procurement rules. For a number of transactions containing quantifiable errors, the Commission had sufficient information at its disposal to prevent, or to detect and correct, the errors. Had the Commission made proper use of all the information available to it, the estimated level of error for expenditure for the EDFs would have been 2.8 %. Conclusion As in previous years, the ECA concluded that the 2017 EU accounts present a true and fair view of the EU’s financial position. For the second year in a row, the ECA issued a qualified (rather than an adverse) opinion on the regularity of the transactions underlying the accounts. In other words, a significant part of the 2017 expenditure that was audited was not materially affected by error. Although problems remain, in particular where payments from the EU budget are made to beneficiaries based on their declarations of costs previously incurred, such as in rural development and cohesion, the level of irregularities in EU spending continued to decrease. The estimated level of error in payments during 2017 was 2.4%, down from 3.1% in 2016 and 3.8% in 2015. At the same time, sufficient information was available to prevent – or detect and correct – a significant proportion of errors. At the presentation of the 2017 annual reports to the Budgetary Control Committee of the European Parliament, Klaus-Heiner Lehne, President of the ECA, said that “this illustrates that the EU’s financial management is definitely heading in the right direction – and credit must go first and foremost to the Commission’s sustained efforts, together with the Member States”. The ECA’s annual reports on the implementation of the 2017 EU budget and European Development Funds can be found on www.eca.europa.eu © European Union – Source: ECA

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