Dutch EU member state declaration

Accountability for Dutch remittances to the European Union is inadequate

Despite improvements in the management of and reporting on EU funds, the European Commission has again imposed financial corrections on the Netherlands due to its failure to satisfy certain grant conditions in previous years. A total of €52 million in corrections relating to the EU agricultural funds was imposed in 2011. If the financial corrections are to be reduced, the way in which these funds are managed and controlled needs to be improved.

This is the conclusion drawn by the Netherlands Court of Audit in its report on the Dutch EU member state declaration for 2011. The EU member state declaration is a document in which the government accounts for the way in which nine EU funds are spent in the Netherlands. For a number of years now, the European Commission has imposed corrections on the Dutch government in order to recover certain grant payments, either on the grounds that the payments in question were ‘irregular’ or because the management and control system did not satisfy the relevant conditions. The corrections imposed in 2011 consisted of €22.7 million for 2005-2008, and a further sum of €29.3 million for 2003-2008.

The Minister of Economic Affairs, Agriculture and Innovation manages four of the nine EU funds, including two agricultural funds. The Court concluded that the Government Service for Sustainable Rural Development (DLG) is not properly managing and controlling the disbursement of grants from the European Agricultural Fund for Rural Development (EAFRD). Neither the DLG nor the National Service for the Implementation of Regulations (which manages payments under the European Agricultural Guarantee Fund) have made proper data security arrangements.

Since 2006, the Dutch government has compiled an annual ‘national report’ on the resources received by the Netherlands from European funds. The aim of this document, which is known as an ‘EU member state declaration’ and is intended for the European Commission and the Dutch parliament, is to improve the management of, accountability for and control of grant payments. This money is spent by the government under a system of shared management with the European Commission. Other countries in addition to the Netherlands that publish member state declarations are the United Kingdom, Denmark and Sweden,

Not enough reliable information on source data for GNI component

The Court again points to the problems surrounding the remittance of own resources to the European budget. The Court believes that, in order to paint a full picture of the Dutch payment position as an EU member state, these remittances need to be included in the member state declaration. The remittances are based on import duties, VAT revenue and an estimate of the country’s gross national income (GNI). The GNI component accounts for around 75% of the own resources. The total amount remitted by the Netherlands to the EU in 2011 was €6.5 billion.

The Court claims that, although the figures for import duties and VAT revenue are checked by external auditors, this does not apply to the data used by Statistics Netherlands (the Dutch statistical office) for the purpose of compiling the national accounts. Whilst import duties and the VAT resource fall within the scope of the audits performed by the European Court of Auditors and the Netherlands Court of Audit, this does not apply to the source data used for computing the GNI.

Consistency between member-state and EU audits

The Court welcomes the year-on-year improvements made in the auditing of European money flows in the Netherlands, and also in the quality of the reports published on the regularity and accuracy of expenditure. Thanks to the publication of specific information on the own resources, with assurance provided by independent audits performed in each member state, consistency is now guaranteed between the audit chains in the member states and the audits conducted by the European Commission.

In response to the Court’s report, the government said that it was not planning to adopt two of the 15 recommendations. Apart from not wishing to provide the annual financial information requested on budget overshoots and undershoots in relation to multi-year EU programmes, the government also rejected the recommendation to account for the size of the own resources. The government believes that sufficient safeguards have been put in place to guarantee the accuracy of the Dutch remittances and that the Netherlands satisfies the relevant EU requirements. In its afterword, the Court maintained its view that the mechanism for auditing source data in the member states are not adequate and that greater priority needs to be given to this aspect in the years ahead.