MBR_Issue_27 -January 2017 low res

Malta Business Review
ECA REPORT
Malta Business Review
European Court of Auditors Report
2015 presented to Parliament
Photo: DOI / Pierre Sammut
“For a reform to work it has to be built
on transparency and accountability,
together with strong financial foundations.
Citizens cannot possibly begin to consider
trusting the European Union Institutions
unless they are convinced that we are
appropriately taking care of their money
and that we are keeping a good account of
how we are doing this.”
This was the message delivered by Mr Leo
Brincat, Member of the European Court
of Auditors (ECA) when on Monday, 12
December 2016 he presented the Court’s
Annual Report covering the financial year
2015 to Deputy Speaker Ċensu Galea
and then to a joint session of the Public
Accounts Committee, the Economic and
Financial Affairs Committee as well as the
Foreign and European Affairs Committee.
The ECA Member said that European
citizens are interested in the source of
the budgetary funds; how they are spent;
what is the present financial situation; and
whether the accounts represent a true and
fair view, as well as whether the estimated
overall level of error remains significantly
above the materiality threshold of 2%.
People want to know whether the
European Institutions are transparent in
the way they manage these finances, even
more so at a time when public interest
and awareness are becoming increasingly
evident as to the determination of whether
there were errors, waste and/or potential
fraud during the past financial year. Saying
that the level of error stood at 3.8% does
not mean that €5bn from the EU finances
were wasted. What would have actually
happened is that, at the testing stage the
ECA would have verified whether the EU
budget was used in accordance with their
intended purpose, whether the costs
charged were properly calculated, and
whether the eligibility conditions were
adhered to. In fact, the percentage of 3.8%
refers specifically to this.
The report clearly shows that errors relate
mainly to ineligible costs being declared
by beneficiaries. Additionally, some of
the projects that were examined did not
meet eligibility conditions set out in the
regulations and/or the national eligibility
rules.
Mr Brincat announced that while the
European administrative expenditure had
the lowest estimated level of error (0.6
%), the Court again found the highest
estimated levels of error in EU spending
under ‘Economic, social and territorial
cohesion’ (5.2 %) and for ‘Competitiveness
for growth and jobs’ (4.4%). The ECA
Member remarked that if the Commission,
authorities in the Member States or
independent auditors had made use of
all information available to them, they
could have prevented, or detected and
corrected a significant proportion of the
errors before the related payments were
made.
Mr Brincat highlighted the expressed EU
Audit’s concern that the Commission has
not produced a cash flow forecast covering
the next 7 to 10 years. He made this
remark in view that such a forecast would
EDITOR’S
Note
enable stakeholders to anticipate future
payment requirements and budgetary
priorities. The ECA Member also welcomed
the spending of EU money in line with the
principles of sound financial management:
economy, efficiency and effectiveness.
In the 2015 Annual Report, Malta is
mentioned generally in the context of the
reporting data on all 28 Member States,
as well as being sampled for reviews in
the Court’s assessment of the European
Commission’s control systems. During
2015, no specific findings on Malta were
reported in the Annual Report.
During the meeting, Mr Brincat explained
in detail the Court’s commitment to
further renew and strengthen itself, after
pointing out that the ECA is presently
facing a number of new challenges and
opportunities.
He concluded by saying that as the Court
is approaching the 40-year mark since its
establishment, its commitment towards
its inter-institutional enhancement and
strengthened links with stakeholders is
increasing thus, helping it to continue
working towards fulfilling its own mission
MBR
statement.
Creditline: House of Representatives/DOI
The European Court of Auditors is the independent external audit institution of the European Union
established by the EU Treaty. The ECA plays a crucial role in ensuring effective EU accountability to
citizens for the public funds put at stake to meet EU objectives by identifying risks to the financial interests
of EU citizens; providing independent assurance on EU financial management; and advising policy makers
on how to improve the use of EU public funds. The Court of Auditors operates as a collegiate body of 28 Members, one from
each Member State. The college adopts: Annual reports (on the EU budget and the European Development Funds, covering the
reliability of accounts, the regularity of income and spending and performance issues); Specific annual reports (on EU agencies and
bodies); Special reports (assessing the economy, efficiency and effectiveness of selected areas of the EU budget); Landscape reviews
(on selected areas of EU policy, analysing broader challenges and long term trends) and Opinions (on new or revised rules and
regulations with financial impact audit reports and opinions by the Court). ECA’s publications contribute to public oversight of
the implementation of the EU budget and to informed decision-making on EU governance arrangements, policy and programme
design and the allocation of EU funds. Spending totalled €145.2 billion in 2015, or around €285 for every citizen. It represented 2.1
% of the total general government spending of EU Member States. The full 2015 Annual Report of the European Court of Auditors,
together with other materials, including photos and videos, can be accessed on the ECA website at http://www.eca.europa.eu/en/
Pages/AR2015.aspx
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