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SPECIAL REPORT ON EVIDENCE TAKEN ON THE ANNUAL REPORT OF THE COURT OF AUDITORS OF THE EUROPEAN COMMUNITIES FOR THE FINANCIAL YEAR 1986.The Committee heard evidence on 14 January, 1988 from Mr. Richie Ryan, Member of the Court of Auditors of the European Communities on the Annual Report of the Court for the financial year 1986. This was the Committee’s first formal meeting with a Member of the Court of Auditors and the broad insight gained by the Committee into the workings of the Court of Auditors and the financial difficulties associated with the running of the Community affairs was such that the Committee agreed that the Minutes of Evidence of the meeting would be beneficial to other members of both Houses of the Oireachtas. The Court of Auditors of the European Communities audits all Community revenue and expenditure. Its duties are comparable to those of our own Comptroller and Auditor General. To carry out its task, the Court has extensive powers to audit EEC and Member States’ administration of public revenue and expenditure related to EEC policies. It publishes a report on the financial administration of the Community each year and this report is considered by the European Parliament in the context of the annual budgetary discharge procedure in the same way as the Dáil takes account of the annual report of the Comptroller and Auditor General. Mr. Ryan outlined the Court’s attitude regarding the Communities’ finances and its concern that the Communities have not observed the fundamental principles of their financial organisation, including, first and foremost, the principle laid down in Article 199 of the EEC Treaty, namely that the expenditure of each financial year must be covered by equivalent annual revenue. In its Report, the Court points out that, by not taking account of the expenditure legally incurred in 1986, i.e. some payments were postponed, the budgetary authority (the Council of Ministers and the European Parliament) created the illusion of a balanced budget whereas revenue was less than expenditure by some IR£1,177 million. The Court calculates that the debts accumulated by the Communities at the end of 1986 amounted to about IR£27 billion — a sum equal to the annual budget. Mr. Ryan indicated that the administration of Community expenditure left a lot to be desired. Whilst the Commission is responsible for financial management, it is not entirely to blame for many of the weaknesses in the system because its powers are severely limited by the inadequacy of existing EEC legislation. Many of the reforms recommended by the Court of Auditors and proposed by the Commission over the years have not been translated into the legislation necessary to give the Commission tighter control over financial matters. The fault in this regard lies with the Council of Ministers which has the legal authority for legislation but which has failed to implement nearly 140 recommendations for financial legislation. Other main areas of concern to the Court included: (1) Weaknesses of the EAGGF (FEOGA) Guarantee Section resulting in a continuing accumulation of surplus stocks — the Court’s view is that the set of policy instruments, adopted in the early years of the Common Agricultural Policy, are not adapted to the situation of today and have in fact contributed to a large extent to creating the present problem. (2) The EAGGF (FEOGA) Guidance Section — the Court finds that, after a quarter of a century, the Guidance Section has failed to come up to expectations and, to a large degree, has been deprived of its raison d’être. (3) The Regional Fund — the Court criticises the poor project selection criteria, the inadequate appraisal of aid applications and the fact that 50 per cent of projects fail to reach their targets. (4) The collection of Own Resources — the Court questions the justification of the 10 per cent re-imbursement to cover collection costs and points out that no standards of service were laid down in return for such re-imbursement. (5) Frauds and irregularities — the Court could not say what is the extent of fraud involving Community funds because Member States are highly secretive about fraud within their own domains. In this latter regard, the Committee agrees with Mr. Ryan when he stated that there is a mutual interest between Member States and the European Community in ensuring that all money is spent in a regular and lawful manner and that there is value for money particularly as expenditure by the European Community is often matched by an equivalent amount in contributions from Member States. In 1986 Ireland was paid 1,573.9 million ECU (IRL£1,224 million) out of the budget of the European Communities or 5.2 per cent of the funds distributed to Member States. Revenue collected by Ireland on behalf of the Communities amounted to 343.8 million ECU (IRL£267 million) or 1 per cent of the Communities’ own resources in the same year. The following table shows the headings under which Ireland received payments from the European Communities: PRINCIPAL PAYMENTS FROM COMMUNITY BUDGET TO IRELAND IN 1986
The critical state of the Communities’ finances has serious implications for the future. Since the Irish taxpayer contributes to the running of the Community, it is relevant that the Committee of Public Accounts should examine and report on matters involving Community funds particularly where fraud, or poor accounting standards, are detected. It is recommended that such an examination be carried out, and reported on, by the Committee of Public Accounts annually. GAY MITCHELL, T.D. Chairman. 25th February, 1988. |
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