IP/09/1690 Brussels, 10 November 2009 Clean bill of health for EU accounts – strong resolve on remaining challenges For the second year running the EU annual accounts have received a clean bill of health from the external auditors. As for payments, since 2004 the amounts with a 'red card' from the auditors have been halved thanks to significant improvements in EU financial management. 'I thank the Court of Auditors for their report which corroborates that our efforts bring results', said Siim Kallas, vice-president of the European Commission responsible for administration, audit and anti-fraud measures. 'Our accounts are fully reliable, after a successful reform of our accounting system. I am also delighted that we have an overall positive opinion on payments under the agricultural policy, mainly thanks to recent reforms of the CAP which have greatly simplified things for farmers and administrations. As for errors in payments made to EU regions by member states, we will not tolerate any leniency there: the European Commission will claw back the money each time national administrations do not manage to spend it correctly.' Green light for farm subsidies The overall picture is reassuring. The accounts were found to be 'true and fair', meaning a clean bill of health. As for spending, the Commission managed to cut in half the 'red' expenditure from over 60% of the total spending in 2004 to around 30% last year: Figures and graphics available in PDF and WORD PROCESSED Estimated risk of error in EU expenditure As much as 70% of the EU budget has now a low risk of error (their financial impact estimated at 5% or less); the remainder are payments under cohesion policy made by member states, where increased clawback effectively reduces financial risk to the EU budget. Overall, agriculture has been given a positive opinion from the auditors. Fourfold increase in clawbacks The auditors estimate that at least 11% of payments made by member states on behalf of the EU to regional and employment projects under cohesion policy in 2008 should not have been reimbursed. Though many of these errors are about the incorrect application of the EU's financial procedures and do not imply failed projects or wasted funds, the Commission is taking the auditors' warning extremely seriously and is set on clawing back from member states any incorrect payments. In 2008, clawback procedures were launched for a total of EUR 2.9 billion across all policy areas. For cohesion payments alone, the clawback requested by the Commission and member states increased fourfold compared to 2007, reaching EUR 1.6 billion; another EUR 1.1 billion is expected to be clawed back by the end of 2009. The Commission is also suspending payments until corrective actions are taken by member states: a total of 15 decisions to suspend payments were taken over the last two years, and there are suspension procedures in the pipeline covering 28 programmes. Preventive measures The Commission shares the Court's view that many of the errors result from the complexity of the rules. Therefore, on the preventive side, the Commission is stepping up efforts to provide guidance to member states in error-prone areas and to spread good control practices. Simplified financial procedures (e.g. a wider use of flat rate payments in research projects), which already apply to the new programmes (2007–13), are expected to further reduce the risk of errors. In addition, a public consultation is currently open on how to improve EU financial procedures. Further information: 1) Get your facts straight! EU spending – a myth-buster: http://ec.europa.eu/budget/sound_fin_mgt/myths_en.htm 2) Press pack: http://europa.eu/press_room/press_packs/auditors/index_en.htm