There has been a detectable improvement over recent years in the financial management of European funds across the European Union. However, there remain seemingly intractable problems with reducing the high levels of error in some significant areas of EU spending.
This briefing by the National Audit Office has been carried out in response to a request from the Environmental Audit Committee to provide an update on the European Union Emissions Trading Scheme covering developments since the Committee last reported on this topic in 2007.
“Recent initiatives have started to improve the financial management of EU funds, but a positive Statement of Assurance on the legality and regularity of expenditure has yet to be achieved. The implementation of Cohesion policy remains the chief source of error. The Commission will soon start work with Member States on the design of future programmes. This work presents a good opportunity to simplify some of the rules whose complexity is contributing to error in EU spending.”
“There has been some improvement in financial management of EU funds in 2006, but there are still significant challenges to achieving a positive Statement of Assurance on legality and regularity of expenditure. To reduce the level of error the Commission needs to strengthen its supervision of Structural Measures expenditure. But with some three-quarters of European expenditure managed by Member States, they too have a major role in improving the financial management of European Union funds. The United Kingdom’s forthcoming account of its own use of European Funds is a helpful development.”
“There has been some improvement in financial management of EU funds in 2006, but there are still significant challenges to achieving a positive Statement of Assurance on legality and regularity of expenditure. To reduce the level of error the Commission needs to strengthen its supervision of Structural Measures expenditure. But with some three-quarters of European expenditure managed by Member States, they too have a major role in improving the financial management of European Union funds. The United Kingdom’s forthcoming account of its own use of European Funds is a helpful development.”
As part of our work to evaluate how well the UK Government is tackling the renewal of the Thames Gateway we explored how seven European cities or regions are tackling ambitious regeneration and bringing sustainable growth and renewal to local communities. We published our research as a companion piece to the Thames Gateway report.
“I am pleased to see the Court was able to issue a positive Statement of Assurance on a larger percentage of EU spending than it had done at any time in the previous decade and that it reported that the Commission had made progress in a number of key areas of financial management, such as the development of its internal control framework.
“Last year, I said that the United Kingdom’s Presidency of the European Union in the latter half of 2005 presented the United Kingdom authorities with an opportunity to push for improvements in financial management. I am pleased to see therefore that the United Kingdom Presidency made a substantial contribution to initiatives in this area. The challenge is to keep up the momentum during the Austrian and Finnish Presidencies in 2006.”
“European laws form a large part of Defra’s work and getting transposition wrong can be costly for government and industry and lead to environmental damage and other adverse effects. Defra has made improvements, particularly in the field of programme and project management, and can point to a number of successful cases on which to build. There is still scope for Defra to improve the overall quality and timeliness of transposition and taking steps such as increased senior level oversight of the process and giving stakeholders as much certainty as possible will help the department to achieve better and more consistent results. “
“While I am concerned that the Court has qualified its opinion on the accounts of the European Union for the 10th year in succession, I am pleased to see that the Commission has made progress in a number of areas. For example, the new accruals based accounting system introduced on 1 January 2005 presents a good opportunity to move towards an unqualified opinion. I am also pleased that the Court was able to identify progress with regard to other aspects of improved financial management, which the Commission seems intent to build on.
“The United Kingdom’s Presidency of the European Union, in the second half of 2005, provides a further opportunity for the United Kingdom authorities to continue to push for improvements in the financial management of the European Union, both during its Presidency and beyond. We will continue to work closely with European Institutions and the state audit institutions of the 24 other Member States to protect European Union funds and to bring about the necessary changes to improve financial management.”
