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MYTH: The European Union has never had its accounts signed off

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MYTH: The European Union has never had its accounts signed off

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Phoenix One UK
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MYTH: The European Union has never had its accounts signed off
« on: May 30, 2011, 12:58:28 »

Seems like this very recurrent myth is rearing its ugly head again. Let's have a closer look into it:

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"1. Myth: The European Union’s accounts are not audited, or, the Auditors refuse to sign off on the accounts.

1. Fact: The Auditors actually audit the European Union’s accounts every year, and the funds spent by the EU itself are signed off. However the Auditors annually criticise the member state governments for not providing information on how THEY spent the money given to them by the European Union."

http://jebadel.com/visionsoftomorrow/?p=10

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If the European Union gives a certain sum of money to, say, Holland, and this country fails to explain how it's spent this sum, why should the EU be blamed? If anything, it's Holland's fault. As stated above, "the funds spent by the EU itself are signed off".

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"The Court of Auditors has given last year, as it did in previous years, a clean bill of health on the EU accounts. The Court confirms these accounts faithfully reflect how the EU budget was spent. The Court also gives a separate opinion on whether all payments have been correctly processed, i.e. paid on time, the invoice properly signed, amounts paid correctly, whether the best and cheapest suppliers have been chosen, etc. The Court says it can only give positive assurance on some spending, not on the whole budget, as it has found errors in some of the payments under scrutiny.

Most of the errors found by the Court concerned EU funds under national management.

The EU test is much more rigorous than that of the private sector, where only book-keeping records are audited.

Sir John Bourn, the UK's Comptroller & Auditor, has recently confirmed that if the UK had a similar test to the European one, he might have to qualify the whole of British Central Government expenditure. In the UK some 500 accounts representing the expenditure of the British government are audited and signed off separately, with some not passing the test each year, whereas the whole of EU expenditure is subject to a single verdict."

http://www.ecademy.com/node.php?id=109141

==========

And, from Terry Wynn's webpage:

Budget Control

"Is it true that the accounts of the EU have not been signed-off for 10 years?"

The simple answer is no.  What follows tries to show why. [...]
"

http://www.terrywynn.com/Budget/Budget%20Control.htm

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Come on, Daily Mail and other Fleet Street rags, keep those Euromyths coming!  Thumbs up Thumbs up Thumbs up

EU spending not signed off for 16th year running

Tuesday, November 09, 2010

 For the 16th year running the EU’s auditing body, the European Court of Auditors (ECA), has refused to give EU spending a clean bill of health. As last year, the ECA has said that the annual accounts for 2009 represent an accurate picture of how the EU spent its funds.

However, the auditors found that “payments from the budget continue to be materially affected by error” except in two areas[1]. In the ECA’s opinion, payments in the two biggest spending areas, agriculture and regional spending, as well as in ‘Research, energy and transport’, ‘External Aid, development and enlargement’ and ‘Education and Citizenship’ are all “materially affected by error” and has therefore refused to sign them off.

Open Europe will tomorrow publish a new list of examples of wasteful spending funded by the EU budget.

Open Europe analyst Stephen Booth said,

“This is a hugely embarrassing annual tradition and it remains absolutely unacceptable that the EU budget cannot be signed off by its own auditors. This year we have seen improvements in some areas, which should be welcomed, but also worrying steps backwards.”

“The sheer size and complexity of the EU budget means that it remains vulnerable to waste and mismanagement. Until member states and the European Commission resolve the inherent flaws in the EU’s spending there should be no talk whatsoever of budget increases.”

BACKGROUND

What did the auditors say about the 2009 accounts?

 The EU’s auditors have once again refused to sign off EU spending, making it the 16th year in a row they have refused to do so. They found that the overall situation is improving, noting that “the Court's estimate of error has fallen over recent years”[2].

However, the two biggest areas of the EU budget, agriculture and regional spending, have not been signed off and remain “materially affected by error.” The error rate for agricultural spending has increased since last year but there has been a significant improvement in the amount of errors for regional spending.

The only two areas to receive a clean bill of health were ‘Economic and financial affairs’ and ‘Administrative expenditure’.

As they did last year, the EU’s auditors said that the accounts “give a fair presentation of the financial position and the results of operations and cash flows.” This means that, in the ECA’s opinion, the accounts are a reliable record of how EU money was spent in 2009[3].

The EU budget had expenditure of €118bn in 2009 but is set to increase to at least €126 in 2011

 In 2009 the EU spent €118.4bn. This week the EU is set to agree an increase in spending in 2011 to around €126.5bn, a 2.9% increase on 2010, based on an agreement made by EU leaders in Brussels in October[4]. MEPs have called for a larger 6.2% increase but Prime Minister David Cameron has secured a blocking minority among other EU leaders to cap the increase to 2.9%.

The UK Treasury forecasts that the UK’s net contribution to the EU budget is set to increase from £4.7bn in 2009-10 to £9.5bn in 2014-15[5].

Agriculture

 In 2009, the EU spent around €55.9bn on agriculture programmes under the Common Agricultural Policy[6].
 
The auditors found that 27% of the transactions they looked at were “affected by error”. Based on their sample, the auditors estimate that the financial impact of errors to be between 2% and 5%, an increase on last year where the impact was estimated to be less than 2%[7].

Regional spending

 In 2009 the EU spent around €33.9bn on ‘Cohesion’, which includes the European Regional Development Fund and European Social Fund, which are aimed at creating jobs, boosting growth and reducing gaps in the level of development between different regions.[8]

In their report on the 2009 accounts, the EU’s auditors found that “As in previous years, a large number of payments to projects in Cohesion was affected by errors”. Of the payments they inspected, 36% were affected by errors. The financial impact of the errors remains above 5%[9].

However, there has been improvement compared to previous years. The auditors estimate that 3% of the payments made in 2009 should not have been paid out. This is compared to 11% in both 2008 and 2007[10].

Ultimate responsibility lies with the Commission

The EU Commission has consistently argued that responsibility for the mismanagement of the EU budget lies at the national level, not with itself, as 78 per cent of EU funds are distributed by member states in agricultural payments and structural funds.

However, as the ECA made clear in this year’s report, “Responsibility for the legality and regularity of spending on Cohesion Policies starts in the Member States, but the Commission bears the ultimate responsibility for the correct implementation of the budget.” And in previous reports, the ECA has noted, "Regardless of the method of implementation applied, the Commission bears the ultimate responsibility for the legality and regularity of the transactions underlying the accounts of the European Communities (Article 274 of the Treaty)."

NOTES FOR EDITORS

1) For more information, please contact Mats Persson on 00 44 207 197 2333 or 00 44 779 94 606 91 or Stephen Booth on 00 44 788 162 5889
 
2) Open Europe is an independent think-tank calling for reform of the European Union. Its supporters include: Sir Stuart Rose, Executive Chairman, Marks and Spencer plc; Sir Crispin Davis, Former Chief Executive, Reed Elsevier Group plc; Sir David Lees, Chairman, Tate and Lyle plc; Sir Henry Keswick, Chairman, Jardine Matheson Holdings Ltd; Lord Sainsbury of Preston Candover KG, Life President, J Sainsbury plc; Sir John Egan, Chairman, Severn Trent plc; Lord Kalms of Edgware, President, DSG International plc; Hugh Sloane, Founder, Sloane Robinson.

For a full list, please click here: http://www.openeurope.org.uk/about-us/supporters.aspx
 
--------------------------------------------------------------------------------
 
[1] ECA press release, ‘The European Court of Auditors’ Annual Report on the implementation of the 2009 EU Budget’, 9 November 2010; http://eca.europa.eu/portal/pls/portal/docs/1/5960726.PDF; The areas unaffected by error are ‘Economic and financial affairs’ and ‘Administrative expenditure’.
 
[2] ECA press release, ‘The European Court of Auditors’ Annual Report on the implementation of the 2009 EU Budget’, 9 November 2010; http://eca.europa.eu/portal/pls/portal/docs/1/5960726.PDF
 
[3] ECA, ‘Annual report concerning the financial year 2009’, 9 November 2010, p12; http://eca.europa.eu/portal/pls/portal/docs/1/5926723.PDF
 
[4] http://www.europarl.europa.eu//eplive/expert/multimedia/20101021MLT89628/media_20101021MLT89628.pdf
 
[5] Office for Budgetary Responsibility, ‘Budget 2010: The economy & public finances – supplementary material’, p27; http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/documents/digitalasset/dg_188584.pdf
 
[6] European Commission, http://ec.europa.eu/budget/library/publications/fin_reports/fin_report_09_data_en.pdf
 
[7] ECA, ‘Annual report concerning the financial year 2009’, 9 November 2010, p84; http://eca.europa.eu/portal/pls/portal/docs/1/5926723.PDF
 
[8] European Commission, http://ec.europa.eu/budget/library/publications/fin_reports/fin_report_09_data_en.pdf
 
[9] ECA, ‘Annual report concerning the financial year 2009’, 9 November 2010, p101; http://eca.europa.eu/portal/pls/portal/docs/1/5926723.PDF
 
[10] ECA, ‘Annual report concerning the financial year 2009’, 9 November 2010, p101, footnote 9; http://eca.europa.eu/portal/pls/portal/docs/1/5926723.PDF
 
 
http://www.openeurope.org.uk/media-centre/pressrelease.aspx?pressreleaseid=150

======================

Expected that one, so stuck round. Bye for now everyone.
 
stonefish
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MYTH: The European Union has never had its accounts signed off
« Reply #1 on: May 30, 2011, 15:15:33 »

Quote
and the money it gives to its Member States to spend (the part that has not been signed off).

Right,so its not how these countries spend their money,but how much they get in the first place

Clearly all above board then.
 
Phoenix One UK
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MYTH: The European Union has never had its accounts signed off
« Reply #2 on: May 30, 2011, 15:16:51 »

Thank you for illustrating this thread with a fine example of the myth I wish to tackle. Alas, proving that Open Europe has been parroting a myth does not make it any more real...

As usual, the text you provided fails to see the difference between the money the European Union spends itself (which has always been validated by the ECA) and the money it gives to its Member States to spend (the part that has not been signed off).

See? Two different things. It really isn't that difficult.

==========

This one comes straight from the horse's mouth. Let's ask the European Court of Auditors whether they approved the EU accounts in their most recent report...

"VII. In the Court’s opinion, the ‘Annual Accounts of the European Union’ present fairly, in all material respects ( 7 ), the financial position of the Union as of 31 December 2009, and the results of their operations and cash flows for the year then ended, in accordance with the provisions of the Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

( 7 ) According to the International Standard on Auditing 700 ‘Forming an opinion and reporting on financial statements’ (ISA 700, paragraph 35), the terms ‘present fairly, in all material aspects’ or ‘give a true and fair view’ are equivalent."

http://eca.europa.eu/portal/pls/portal/docs/1/7158724.PDF

Just popped back for moment. Hmm, Danny, you put your foot in it. Can you see where you went wrong?  Cool
 
Phoenix One UK
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GREY SECTOR:SECTION 5

MYTH: The European Union has never had its accounts signed off
« Reply #3 on: May 30, 2011, 15:20:43 »

Hint: Open Europe IS an independent think tank. How did they support their findings? Hmm, 1,2,3,4,5,6,7,8,9,10, and your own.
 
Phoenix One UK
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GREY SECTOR:SECTION 5

MYTH: The European Union has never had its accounts signed off
« Reply #4 on: May 30, 2011, 16:27:55 »

There, fixed it for you.

===========================

"But I think people in Brussels ignore at their peril the impact of a small, but assiduous Eurosceptic campaign group, Open Europe. Calling itself an independent think tank, which it is not, Open Europe does two exceedingly clever things to influence British press coverage of Europe."

http://www.economist.com/blogs/charlemagne/2010/03/spoon_feeding_lazy_journalists

===========================

Now, are you going to claim that The Economist is a sloppy source, or what?

Quote:

X. In the Court’s opinion, payments underlying the accounts for the year ended 31 December 2009 for the policy groups ‘Agriculture and natural resources’, ‘Cohesion’, ‘Research, energy and transport’, ‘External Aid, development and enlargement’ and ‘Education and Citizenship’ are materially affected by error. The supervisory and control systems are partially effective in preventing or detecting and correcting the reimbursement of overstated or ineligible costs.

Unquote.

And that was just one small extract taken from YOUR GIVEN PDF link.

End of.
 
RJD
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MYTH: The European Union has never had its accounts signed off
« Reply #5 on: May 30, 2011, 16:32:52 »

I may well be out of date, but was one of the criticisms of the EU that it did not use conventional Bookkeeping methods.
One usually finds that most of the so called myths turn out to be true. For instance why are Madeiran bananas not in our Supermarkets. They certainly are small and bendy, sweet too.
 

Can I have some of that guacamole with my fish and chips?"
Phoenix One UK
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GREY SECTOR:SECTION 5

MYTH: The European Union has never had its accounts signed off
« Reply #6 on: May 30, 2011, 16:48:07 »

Another extract from Danny's supplied link.

Quote:

6.51. Based on its audit work, the Court concludes that the payments for the year ended 31 December 2009 for the External aid, Development and Enlargement were affected by material error.

6.52. Based on its audit work, the Court concludes that the supervisory and control systems for the External aid, Development and Enlargement were generally partially effective in ensuring the regularity of payments.

Unquote.

Open Europe got everything - to use your words Danny - from the horses mouth. It even supplied links from the horse itself (see 1 to 10). Further, Open Europe is an independent think tank that does not work towards shutting the EU down. It works toward reforming the EU to make it better, something you said you wanted to see, but clearly that is not the case. The same can be said for StateWatch, another independent think tank.

Note I use a mobile net. My credit warning jumped up this morning, so when it goes I will be gone until at least Saturday.
 
Phoenix One UK
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GREY SECTOR:SECTION 5

MYTH: The European Union has never had its accounts signed off
« Reply #7 on: May 30, 2011, 17:00:27 »

EUSSR accounts not signed off for 16 years, part2/2 (13Nov10

liarpoliticians on 14 Nov 2010


Part 2 of 2: The EUSSR's accounts have not been signed off for the 16th year in a row. The new phrase is "errors" in the accounting, they seem to not want to call it what it is - FRAUD and CORRUPTION.

The British taxpayer is being defrauded by the EUSSR Communist club, and a compliant British government who doesn't give a f*ck. Time to call in the forensic accountants to see which MEPs or their lackey, or friend of a corporation has got the money.

Recorded from BBC parliament "The Record Europe", 13 November 2010.

Video news link: http://www.youtube.com/watch?v=-rZ1IaayqCE
 
Phoenix One UK
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GREY SECTOR:SECTION 5

MYTH: The European Union has never had its accounts signed off
« Reply #8 on: June 04, 2011, 14:24:14 »

This is exactly the very mistake I've been trying to point out throughout the entire thread! You're completely right, the payments weren't signed off. But the accounts were signed off, as I showed in a previous post. Therefore, the myth "The European Union has never had its accounts signed off" is false!

The difference between "accounts" and "payments" may seem superfluous but it's actually very important, and they shouldn't be confused with one another. If any forum member doesn't know the difference between these two terms in accounting, just ask and I will provide you with a succint explanation.
It is no independent think tank, it just claims to be one. Open Europe is widely recognised as a eurosceptic lobby group. I've already backed up this assertion with an Economist link and can back it up with other reputable sources, including eurosceptic ones.

I see where you are coming from Danny, but the relationship between the two does not function as you proposed. To understand this would at least require the basics of double entry, which I am assuming is knowledge you possess. In such a system the books must balance. If the payments weren't signed off then neither were the accounts, because to sign off on accounts requires balancing the books.

Public auditing of EU is required by independent and impartial accountants. Note the liability of auditors is not limited to the clients who hire them. They can also be held liable by third parties - like investors and creditors - who rely on their audited financial statements in making investment decisions.

Note following extract from chartered accountant, quote

No auditing technique can be foolproof, and misstatements can exist even when auditors apply the appropriate techniques. The auditor's opinion is, after all, based on samples of data. A management team that engages in organized fraud by concealing and falsifying documents may be able to mislead auditors and other users and go undetected. The best any auditor can provide, even under the most-favourable circumstances, is a reasonable assurance of the accuracy of the financial reports.

Unquote.

With regard Open Europe, I disagree. Using your argument, anyone who criticises the EU is a eurosceptic, and that is absurd.
« Last Edit: June 04, 2011, 14:26:01 by Phoenix One UK »  
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