2004 discharge: EC general budget, section III, Commission and ECSC in liquidation
The European Parliament adopted a resolution drafted by Jan MULDER (ALDE, NL) recommending that the Commission be granted discharge for its 2004 budget. (Please see the summary of 21/03/2006.) Parliament insisted on better management of Community funds where these are jointly managed by the Commission and the Member States. It also welcomed the steps taken by the Commission in strengthening its internal control, but felt that there was room for improvement.
Shared management: Parliament recognised that
whilst the Commission has sole responsibility under the Treaty for
implementing the budget, four out of every five euros in the budget are in
reality handled by the Member States under shared management. It was
essential that Member States take an active part in the initiative and that the
Council made it first priority and include it as a separate subject in their
semi-annual working programmes. Parliament stressed that the shortcomings in
the EU's financial management cannot simply be reduced to a question about a
positive or negative DAS (Declaration of Assurance). It warned, therefore,
against obtaining a positive DAS without a corresponding improvement in the
quality of the financial management. The responsibility for financial
management lies with the Commission and the Member States and it is for the
Commission and the Member States together to ensure that the Court will be
able to find audit evidence of progress towards an adequate management of the
risk of error. Member States must be held accountable for their use of EU
funds and the primary means of accountability must be their national
parliaments and media. Parliament went on to suggest the
introduction of "national management declarations", to be signed by
the relevant bodies of the Member States. The latter are responsible
for joint management of the Community budget with the Commission and would,
therefore, have to take their share of responsibility if errors occur.
A declaration at political level covering all Community funds in shared
management and signed by finance ministers, as proposed in the 2003 discharge
resolution, would be a big step forward. However, Parliament noted with
satisfaction that the Council and the Commission agree on the importance of
strengthening internal control. To
achieve a positive DAS, priority should be given to sound financial
management for funds under shared management. Parliament noted that as
part of their enhanced responsibilities for structural funds and in
accordance with national constitutional requirements, the relevant audit
authorities in the Member States will produce an assessment concerning the
compliance of management and control systems with the regulations of the
Community. It welcomed the fact that Member States have therefore undertaken to
produce an annual summary at the appropriate national level of the available
audits and declarations. It drew attention to the fact that the level of a
possible signature at Member State level is not mainly a matter of form but a
signal showing the expected quality of the supervisory and control systems
operating under the signature. National declarations might comprise several
declarations within a national framework, rather than one alone, in order to
acknowledge the federal and decentralised political systems in existence in
some Member States. Parliament noted Member States' resistance and stated
that it wanted to be pragmatic and constructive. The important thing is to
find a way of identifying the weaknesses in the current control and
supervisory systems and to undertake appropriate remedial action with a view
to achieving better financial management of EU funds. Parliament welcomed a
discussion about which authority might be the best for the purpose. It proposed a slightly modified approach to that for the
2003 discharge: a series of sectoral declarations signed by bodies selected
by the Member States themselves. Until such a system is in place, it invited the
Commission to set up a more intense programme of ex post
clearance-of-accounts audits and fully to make use of suspension of payments
or financial corrections whenever it cannot obtain assurance from the Member
States.
Parliament went on to state that national audit institutions could audit the internal control systems set up by the national administration as well as the regularity and legality of the underlying transactions effected in their own country. It called on national audit bodies to assume responsibility for controlling the local use of EU funds, so as to make any consideration of establishing national offices of the Court of Auditors unnecessary.
It should be pointed out that the Court of Auditors, for the eleventh consecutive year, has been unable to establish that "underlying transactions" (all the operations underlying the implementation of the Community budget) are free of irregularities. Under the EU Treaty, the Commission and the Member States are required to ensure "sound financial management" (Article 274), something which cannot be verified completely with the existing control systems.
Review of Commission's internal control systems needed: the other main part of the 2004 discharge relates to the accountability of the Commission under the same Article 274, which requires it to manage the Community budget properly. Parliament underlined that whilst ultimate responsibility for transactionsafterthe reform lies now - and rightly so - with line managers (Directors-General), final responsibility for controlsystems must be anchored in the centre, not in the periphery. It noted that the Court of Auditors supports this view and made a clear recommendation in that respect. Parliament felt that the quality of information contained in the reports is not checked and no one is accountable for it. It made certain recommendations:
- the Director-General of the Directorate-General for Budget should give a formal opinion on the quality and efficiency of the internal control systems;
- since the Synthesis report is drawn up by the Secretary-General of the Commission, the Secretary General, who has ultimate operational executive responsibility for the bureaucracy, should give a formal declaration of assurance as regards the quality of the individual declarations from the line managers (Directors-General);
- the internal auditor of the Commission should give his assessment of the quality and effectiveness of the controls as described in the management's annual activity reports and Synthesis report in the form of an audit opinion as regards the adequacy of the Secretary-General's assurance statement;
- the responsible Commissioner should co-sign the declaration given by the Director-General, as this would bridge the gap between the Director-General's individual assurance declarations and the College's institutional assurance declaration.