Mr President,
Ladies and Gentlemen, Honourable Members of the European Parliament,
Ladies and Gentlemen,
Today, I have the honour and the pleasure to present, on behalf of the Council, its recommendation on the discharge to be given to the Commission for the implementation of the budget for the financial year 2004, which has been forwarded to the European Parliament, after its adoption by the Ecofin Council of 14 March.
This recommendation is accompanied, as usual, by all the Council's conclusions prepared during the year 2005 on the basis of the Court of Auditors' special reports.
The financial year 2004 was a historical year in the financial management of the European Union, as it was marked by the biggest ever enlargement on 1 May 2004 with the accession of 10 new Member States and the introduction of Activity Based Budgeting (ABB) in the decision making and implementation procedure of the Community budget.
The Council considers the Court's Annual Report to be a very useful tool for assessing the management of Community funds. It welcomes the Court's intention to inform the Council about forthcoming changes, adaptations or new aspects in its approach as regards the DAS methodology.
The Council shares the European Parliament's concerns relating to the non achievement of a Statement of Assurance, known as DAS, by the Commission for the implementation of Community funds, once again and for the eleventh time in a row. However, for the year 2004 the Court of Auditors reported improvements in the control systems as a result of the efforts made by the Commission and Member States and of the administrative and financial reform process initiated in the past years. Let me start with the positive observations.
First of all, the Council notes with satisfaction the Court's positive opinion concerning the reliability of the accounts of the European Communities except for one reservation that, according to the Commission, should be addressed with the full implementation of the action plan for the modernisation of the European Communities' accounting system.
Secondly, concerning the regularity and legality of the underlying transactions, the Court gave a favourable opinion in relation to revenue, commitments, administrative expenditure and pre-accession strategy. The Court's positive overall opinion for the pre-accession strategy again for the year 2004 is worth noticing.
Quite significant is the fact that for the first time, the Court was able to notice improvement in the supervisory and control systems regarding agricultural expenditure operated by Member States using the Integrated Administrative and Control System, the so called IACS, covering 59 % of CAP expenditure. It is very positive and encouraging that the Court considers the IACS, where properly applied, to be an effective tool to limit the risk of irregular expenditure to an acceptable level.
Moreover, the Council notes with satisfaction that the introduction of the new accrual-based accounting system is being accomplished, which constitutes an important element in the reform improving the financial management of the Community funds.
However, the Council regrets deeply that payments in 2004 have still been materially affected by errors for a large part of the transactions underlying the EU accounts, that is: in the areas of CAP expenditure not subject to IACS, structural measures, internal policies and external action.
Nevertheless, I would like to recall that, during the presentation of the 2004 Annual Report, the President of the Court of Auditors stated that the Court's qualified opinion cannot be interpreted as meaning that all transactions of the 2004 payment budget are affected by error, nor can it be interpreted as an indication of fraud.
I strongly underline that a lot of work still needs to be done to improve the financial management and to have controls working correctly and effectively, so that for all transactions underlying the EU accounts a DAS should be achieved in the medium term. The work towards the achievement of an effective Integrated Internal Control Framework must be continued. In this context, I want to recall here that the Council's position is set out in the Council conclusions of 8 November 2005.
The Council gives its full support to the work aiming at the achievement of an effective Integrated Internal Control Framework in a way which includes the identification of schemes and remedial actions in the areas of shared management as well as those of direct and joint management. When addressing these weaknesses, the utmost priority for the Council is to improve the cost-benefit ratio and to promote simplification and the requirement to build on existing control structures.
To strengthen the quality and transparency of the Commission's internal control system and to enhance comparability from year to year, the Council considers that the use and presentation of indicators are to be further improved. These indicators need to be reliable, cost-effective and easily understandable in order to be usefully audited by the Court of Auditors. The Council's opinion is that reasonable assurance for the underlying transactions be sought in a way that administrative and control costs do not increase and that the multiple internal controls are eliminated.
Honourable Parliamentarians, now I would like to add a few words on the national level declarations, an issue on which the Council took position in its conclusions of 8 November 2005. The Council considers that this proposal would cause great difficulties as regards its compatibility with the administrative organisation in Member States, in particular the federally organised ones, and the importance of maintaining, in accordance with the EC Treaty, final responsibility of the Commission for the implementation of the Community funds. Moreover, the introduction of such declarations could lead to an increased administrative burden and additional costs for the Member States. This is why we, in the Council, consider that a more appropriate approach in view of attaining the objective of a "positive DAS", would be the improvement of existing operational level declarations implying a better involvement of Member States.
Let me stress the fact that what is the most important is how good the control systems are at reducing risk, how well the systems are applied, and whether identified weaknesses are addressed properly. I am sure that this approach is shared by the European Parliament.
As a result of this examination, Honourable Members of the European Parliament, the Council has concluded that it can recommend a discharge to be given to the Commission in respect of the implementation of the Community budget for the financial year 2004.
Before finishing, let me mention the discharge recommendations for the bodies set up by the European Communities and having legal personality, which actually receive grants charged to the budget. While noting with dissatisfaction the increasing number of Agencies for which the Court gave a Statement of Assurance with reservations, the Council is able to recommend a discharge for 2004 for all fourteen.
I would also recall the importance that the Council attaches to the strengthening of cooperation between Member States and between them and the Commission in the field of financial management, including the protection of the Communities' financial interests.
It is my firm belief that together we create the synergy needed to pursue the objectives of economic, efficient and effective control systems leading to a positive DAS and full accountability for European taxpayers' money. My presence in your Committee today is one example of the good cooperation between our two institutions.
Thank you very much, Mr President, Ladies and Gentlemen.
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