EU accounts not signed off for 17 years.

Benjamin Franklin once observed that “In this world nothing can be said to be certain, except death and taxes.” I would venture that we could add a third: the inability of the European Union to guarantee that it has legitimately spent all of the taxpayers’ cash which the British and other EU member state governments have given it.

For today the European Court of Auditors – the body charged with auditing the EU’s accounts – has presented its annual report to the European Parliament and for the 17th – yes, seventeenth – year running, it has concluded that the payments underlying the 2010 accounts are “still affected by material error”.

Should you wish to wade through it, the full 250-page document is here, but here are the killer extracts:

“The Court concludes that overall the supervisory and control systems are partially effective in ensuring the legality and regularity of payments underlying the accounts. The policy groups Agriculture and Natural Resources and Cohesion, Energy and Transport are materially affected by error. The Court’s estimate for the most likely error rate for payments underlying the accounts is 3.7 %.

“In the Court’s opinion, because of the significance of the matters described [above] on the legality and regularity of payments underlying the accounts paragraph, the payments underlying the accounts for the year ended 31 December 2010 are materially affected by error.”

What does all that actually mean?

As the ECA’s press release this morning explains, the “error rate” represents “the degree of non-compliance with the rules governing the spending, such as breaches of public procurement rules, ineligible or incorrect calculation of costs claimed to EU co-financed projects, or over-declaration of land by farmers”.

And that 3.7% error rate is as a proportion of the EU’s annual budget of €122.2 billion (£104.2 billion), which means that serious questions remain about a staggering €4.5 billion (£3.9 billion) of payments which have been made by Brussels – a figure which has increased since 2009.

And the error rate across the “Cohesion, energy and transport” budget alone was no less than 7.7%.

The fact that this happens year after year does not make it any more acceptable. Moreover, it underlines just how outrageous it is that the European Commission is seeking another increase in its budget when there are question marks over billions of its spending.

UPDATE: With a press release that anyone who knows the first thing about accounting concepts like material error would find hilarious, the EU is claiming that failing to get their accounts past the auditors yet again is some kind of triumph.  They claim that: “For the fourth year in a row, the EU’s annual accounts have received a clean bill of health from its external auditors.”


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