The EU Court of Auditors will only give qualified approval to the EU's accounts again this year, having found that more than £3 billion of spending in 1996 was accounted for inadequately. The court's annual report will be presented to the European Parliament in Strasbourg this morning. Although the 1996 accounts give an accurate overall view of revenue and expenditure, once again substantial irregularities and errors mean it "was unable to give an affirmative statement regarding the legality and regularity of the transactions underlying payments", the president of the court, Mr Bernhard Friedmann, will tell MEPs today.
The independent court based in Luxembourg is charged under EU treaties with auditing the Union's financial transactions. Its Irish member is a former minister for health, Mr Barry Desmond. Since the introduction three years ago of a certification system of "statements of assurance", the court has each year been forced to qualify its statement.
The court, which surveys different aspects of spending and receipts each year going back over several years, carried out random tests on elements of the accounts and projected those to give an overall substantive error rate of 5.4 per cent of the £58 billion spent by the Union in 1996. This, however, reflects accounting shortcomings and should not be seen as a measure of fraud.
Although there was reduction of half a percentage point in "substantial material errors" on last year, the number of cases where there was no audit trail has nearly doubled to 4.3 per cent or expenditure totalling £2.5 billion.
The annual report of the Commission's fraud unit, Uclaf, put the level of detected fraud in 1996 at £750 million. Most of this is transit fraud under which customs duties are annually defrauded of several hundred million pounds when ostensibly duty-free goods in transit to non-EU states are diverted to EU sales.
The report says overall the Commission and member-states appear to be improving their control procedures.
