EU Trend Report 2012
Developments in the financial management of the European Union
In the EU Trend Report 2012 the Netherlands Court of Audit outlines developments in the financial management of the EU in the past year. This tenth volume of the EU Trend Report also presents a summary of the trends in the past ten years. We ask whether there has been any real improvement in financial management and what improvements can still be made.
Improvement in the regularity of EU funds coming to a halt
Many initiatives have been taken since 2001 to improve the financial management of the EU. The regularity of the use of EU funds has increased but the improvements have come to a halt in recent years, especially in the agricultural funds (the largest item in the EU budget) and the cohesion funds. The European Court of Auditors has not been able to issue a positive statement of assurance on the EU budget; its opinion in 2011 was again negative.
Improved EU financial management requires more cooperation from the member states
The European Commission has made many changes in its internal management, control and accountability procedures in recent years. Most of the problems, however, occur in the EU funds the Commission manages together with the member states that receive the funding (about 80% of the EU budget). The situation could be improved if stricter accountability obligations were made on the member states but a large number of them are not willing or able to accept such obligations. There are still only four member states, one being the Netherlands, that voluntarily issue a member state declaration to account for the use of the EU funds they receive. We think this is undesirable. If there is no improvement in the insight available into the financial management and regularity of the use of EU funds in the member states, it will not be possible to take appropriate remedial measures and the European Court of Auditors will not be able to issue a positive statement of assurance.
Greater transparency on beneficiaries of EU funds but not on the projects implemented
The Netherlands has improved its compliance with the EU requirement to post the names of beneficiaries of EU funds and the amounts concerned on a website every year. This public information, however, says little about the actual projects carried out using EU funds. The European Commission's Transparency Initiative therefore seems to be missing its goal.
Insight into the effectiveness of EU funds still poor
Although the European Commission, the European Court of Auditors and the Dutch government have given higher priority to the effectiveness of EU policy, there has been no demonstrable improvement in the insight available into the impact of EU funds in the past ten years. There is reasonable insight into performance in the member states, but little is known about the impact. This general conclusion is equally applicable to the Netherlands as a member state.
To improve accountability and transparency across the EU, we recommend that the ministers concerned:
- continue to insist at European level on compulsory annual statements, signed at the appropriate political level, on the management and use of EU funds in each member state;
- insist during the negotiation of the new Multiannual Financial Framework on improvements in accountability for the effectiveness of EU funds;
- call on the European Commission to deepen its Transparency Initiative so that insight is provided into the projects carried out using EU funds.
To improve accountability and transparency in the Netherlands we recommend that the ministers concerned:
- publish not only information on the beneficiaries of EU funds but also as much up-to-date information as possible on the projects themselves;
- improve the match between funding and actual rural development needs, and formulate the rural development objectives in specific and measurable terms.
Response of the government
The government informed us that it would continue to insist during the negotiation of the EU Financial Regulation that the member states issue better and transparent accountability reports. The government is in favour of transparency on the use of EU funds but notes that the publication of information on individual projects would impose a significant administrative burden on the beneficiaries and increase implementation costs. Furthermore, the Netherlands already complies with the EU obligation to publish information. The government will continue to call attention to the effectiveness of EU funding during the negotiation of the new Multiannual Financial Framework. The government will take the recommendation to match available financial resources to the actual rural development needs into account when working out the new rural development programme.