EU spending rules lead to errors and lack transparency, says new audit chief

13 Oct 16

Spending rules for European Union resources have become so complex that they encourage errors and lack transparency, the president of the European Court of Auditors has warned.

Klaus-Heiner Lehne said in his inaugural presentation of accounts to the European Parliament that there was also an excessive emphasis on compliance with spending rules rather than actual performance.

And he warned that EU institutions were losing public trust, in part because people could not easily see the results of their spending.

Speaking to Public Finance International, Lehne, who took over as ECA president on 1 October, said: “The public is losing trust, and you only need to read the newspapers to see that.

“People are not seeing the real results of what is done and that means our communications have to improve, but we cannot ignore the need for better results.”

He said the European Commission had not produced a cash-flow forecast covering the next 7-10 years when this would have enabled “stakeholders to anticipate future payment requirements and budgetary priorities. It would also contribute to rebuilding trust”.

While money going into and out of the EU budget was accurately recorded, there remained “too many mistakes still made when spending it”, mostly in the member states as opposed to the commission itself, Lehne said.

He told PFI: “Mistakes arise because some processes are error prone.

“In simple programmes this happens less but in extremely complex ones they are considerably error prone and the rules should be less complicated.

“In legislation they try to cover everything and that makes it very complex and adds difficulty when things should be easy and clear. The research programmes are an example of [complexity].”

Lehne said European taxpayers would benefit if the commission and member states “spent more of the money properly in the first place, rather than having to spend time going to the trouble and expense of clawing it back after mistakes have been found”.

He also criticised the policy of no further questions being asked once it was established that money has been spent in accordance with rules and properly accounted for, regardless of whether it had been spent effectively.

There should be incentives to achieve value for money rather than just hitting spending targets and avoiding breaking the rules, because unless people could tell that the system delivered value for money “we cannot expect them to trust it”.

Lehne said: “You can comply with the rules but not perform well, and perform well but not comply with the rules and we should look at both with a stronger role for performance.”

He also questioned the use of financial instruments, which were not directly funded by the EU budget or audited by the court, something he said “poses greater risks in terms of accountability and the coordination of EU policies and operations”.

Lehne explained: “Financial instruments are used because EU spending is agreed far in advance and things change, so people have to react to that and I understand that, but it loses transparency so the risks are higher.”

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