Report on the National Declaration 2016
The Court of Audit expresses an opinion on the reliability of the National Declaration on Accountability Day (the third Wednesday in May) every year. The Netherlands issues the National Declaration to account for the funds it receives from the European Union to implement EU projects. In our Report on the National Declaration 2016, we conclude that the declaration gives a true and fair view of the functioning of the systems in place to manage and control EU funds spent in the Netherlands. It also gives a reliable view of the regularity, accuracy and completeness of the financial transactions down to the level of the final beneficiary. The preparation of the declaration was also on the whole reliable.
The government published the National Declaration 2016 to account for the €1,492 million it received from the EU in 2016. These funds were spent ‘under shared management’ with the European Commission in wide range of policy fields. The National Declaration 2016 gives a true and fair view; it concludes that the management and control systems in place for almost all EU funds functioned adequately and that the funds were generally spent regularly. However, we have the following comments.
- Timely submission of claims. The Netherlands is at risk of losing some EU funding. Programmes from the 2007-2013 programming period must be closed before the end of March 2017. We would stress the importance of submitting the final declarations for the European Regional Development Fund, the European Social Fund and the European Fisheries Fund on time.
- Differences of interpretation of regulations. For several years there have been problems implementing the ERDF owing to differences in the interpretation of the regulations. There is regular disagreement on the depth of the audit authority’s audits. The organisations concerned should improve their working relationship as soon as possible by introducing a new dispute resolution mechanism and improving their work agreements.
- More consideration needed for the added value of funding. The error rate in expenditure should not be the only criterion used to account for the regularity of the European Commission’s expenditure. National Declarations in recent years have shown that the management and regularity of EU funding in the Netherlands are largely in order. In our opinion, it may therefore be worthwhile to pay more attention to the added value of projects and to increasing it.
- Debate of the budgeting system. The current system of granting funds for a period of seven years is an incentive for member states to ‘haul in’ as much money as possible (which then – a second incentive – ‘has’ to be spent). This is not conducive to the funding of projects that have the greatest added value.
- The National Declaration as an accounting and auditing tool. The European Commission wishes to audit EU funding more efficiently and reduce the audit burden. Problems in the management, regularity and effectiveness of expenditure, however, must remain transparent. The onus to achieve these ambitions lies on the member states themselves. The Netherlands – like Denmark and Sweden – is setting a good example by issuing an annual National Declaration. If the European Commission is to manage more by results, information on the effectiveness of EU funding should be included in the National Declaration.
- Audit burden and the National Declaration. A National Declaration can help reduce the audit burden and the related administrative burden. EU auditors can rely on the member states’ audits of the regularity of EU funding. The Netherlands has already taken steps to this end. The Netherlands Court of Audit reviews the work of the Central Audit Service and, if appropriate, relies on it to express an opinion on the National Declaration.
- Inclusion of own resources in the National Declaration. The EU is funded by means of contributions from the member states. The contribution of these ‘own resources’ must be transparent. It must be known, for example, how much the Netherlands contributes every year and whether its contribution is correct. And if not, why the Netherlands has to make additional contributions. In the Audit report concerning the Ministry of Foreign Affairs 2015 we noted that there had been improvements in the notes explaining changes in EU contributions in comparison with previous years. In the Report on the National Declaration 2014 and the Report on the National Declaration 2015 we recommended that the contribution of own resources be included in the National Declaration. This would create comprehensive financial statements of the member state’s receipts (EU funds) and outgoings (EU contributions).
Response of the government and the Court of Audit’s afterword
We received the government’s response to our draft report from the Minister of Finance on 25 April 2016. The government appreciated our positive opinion on the National Declaration 2016. It valued the additional assurance it provided on the financial management and regularity of EU expenditure under shared management, The government would act on our recommendations and would continue to pay attention to the correct use of EU funds in order to maintain the current positive situation. We expect the government’s undertakings to strengthen the orderly management, in broad lines, of EU funds in the 2014-2020 programming period and thereafter.