2010 discharge: EU general budget, Economic and Social Committee

PURPOSE: to present the report of the Court of Auditors on the implementation of the budget for the financial year 2010 (Section VI – European Social and Economic Committee).

CONTENT: this is the Court’s 34th Annual Report on the implementation of the EU budget. It covers the 2010 financial year.

Pursuant to the provisions of the Treaty on the Functioning of the European Union (TFEU) the Court has audited: (a) the annual accounts of the European Union which comprise the consolidated financial statements and the consolidated reports on implementation of the budget for the financial year ended 31 December 2010; and (b) the legality and regularity of the transactions underlying those accounts.

The central part of the annual report is the Court’s statement of assurance (the ‘DAS’) on the reliability of the annual accounts of the EU and on the legality and regularity of transactions (referred to in the report as ‘regularity of transactions’). The statement of assurance itself begins the report; the material which follows reports mainly on the audit work underlying the statement of assurance.

This particular audit concerns the budget implementation of the European Social and Economic Committee.

Based on its audit testing, the ECA concludes that the payments for the policy group Administrative and other expenditure were on the whole free from material error. The estimated error rate was 0.4%.

The Court found that supervisory and control systems for administrative and other expenditure were effective in ensuring the regularity of payments. However, the ECA found a number of errors and weaknesses in the implementation of procurement procedures by the EU institutions and bodies, and in one institution repeated under-utilisation of certain budget lines resulting in significant budget transfers to finance building projects. Recruitment decisions were also not always appropriately documented. These weaknesses were not material for the policy group as a whole, but were significant in the context of the individual institution or body concerned and need to be addressed by their administrations.

For 2010, the ECA recommends the EU institutions and bodies should ensure that:

• appropriate documentation is established to justify recruitment decisions and that eligibility criteria set out in vacancy notices are respected; and
• authorising officers establish appropriate checks and benefit of better guidance in order to improve the design, coordination and performance of procurement procedures.

The Court makes a certain number of particular observations as regards each EU institution or body of the European Union and which do not call into question the overall positive assessments set out above because they do not affect significantly administrative expenses as a whole.

In the particular case of the European Social and Economic Committee, the Court notes the following issues:

• reimbursement of travel expenses to Members of the Committee: the rules on the reimbursement of travel costs allow Members of the Committee to choose between Option A, based on actual travel costs incurred on production of the supporting documents, and Option B (60 % of missions performed between January and November 2010), which is the payment of a flat-rate allowance based on the distance in kilometres. Under Option B, the meeting must be held in Brussels and the compensation cannot exceed the standard price of a first-class train or airline ticket determined under Option A. The payment of a flat-rate allowance, under Option B, is generally higher than the actual price of the economy-class train or airline ticket used by beneficiaries most of the time. Reimbursement under Option B can thus generate a payment higher than the actual travel costs incurred. Although legal and regular, this procedure does not correspond to the practice of the other European Institutions and bodies, which is to reimburse travel costs on the basis of actual costs incurred;
• procurement: in one restricted procedure out of the seven procedures examined, the tenderers which had submitted offers in two different lots were not treated equally when submitting clarifications about their offer. In two negotiated procedures, errors and inconsistencies were noted for the drafting of the tender specifications and of the award criteria, the contacts with the tenderers, the evaluation of offers and the formalities for the outcome of the procedure.