PURPOSE: to present the report
by the Court of Auditors on the 2006 accounts of the implementation of the
6th, 7th, 8th and 9th EDFs (European Development Fund).
CONTENT: The Court of Auditors
has published its 30th annual report. In this context, it examined
the accounts of the 6th, 7th, 8th and 9th
EDFs, as well as underlying transactions for the 2006 financial year. These
accounts comprise the financial statements, the reports on financial
implementation, and the financial statements and information supplied by the
European Investment Bank (EIB).
Financial implementation:
in 2006, as in previous years, the EDFs were implemented simultaneously.
Although they are committed over a period of 5 years, there is no time limit
for payments. 21 years after the sixth EDF came into force, the Authorising
Officer of the EDF decided to close the Fund on 31 July 2006. At closure, EUR
7 339 million had been paid, i.e. 99.3 % of the EUR 7 391 million allocated
to projects. The remaining balance of EUR 52 million was transferred to the
ninth EDF.
Some examples of financial
implementation for 2006:
- individual commitments :
EUR 3 073 million (after deductions of cancellations), compared with EUR
2 652 million in 2005;
- net payments: EUR 2
762 million, in comparison with EUR 2 489 million the year before;
- rate of disbursements
(measured as net payments in relation to new financial commitments): 102
%, compared with 82 % in 2006;
- unspent commitments:
stable at EUR 10 300 million, or 25 % of total funds committed;
- sectoral payments: i)
education, health, water and basic sanitation: EUR 836 million in 2006,
i.e. 29 % of the total expenditure; ii) transport, communication,
energy: EUR 663 million (23 %) in 2006;
- direct non-targeted budget
aid and sector policy support programmes: EUR 638 million (23 % of
the total).
The Court recalls that the Stabex
instrument is in the process of being phased out and that the 10th
EDF should be approved in the near future. The amount of Community
aid via the 10th EDF has been set for the period 2008 to 2013 at
EUR 21 966 million. This represents a 62 % increase compared with the
financial allocations of the ninth EDF. The possibility of delays to the
ratification of the tenth EDF and the adoption of the applicable financial
regulation beyond the deadline of 1 January 2008 would (according to the
Court and the Commission) entail a major risk of late approval of new
operations in ACP States, which could affect the continuity of EDF-funded
activities.
Statement of assurance:
pursuant to the financial regulations, the Court is required to provide the
European Parliament and the Council with a Statement of Assurance as to the
reliability of the accounts and the legality and regularity of the underlying
transactions in respect of the part of the EDF resources for whose financial
management the Commission is responsible. The Court made the following
statement:
- Reliability of the
accounts: the Court is of the opinion that the reports on financial
implementation for the financial year 2006 and the financial statements
at 31 December 2006 reliably reflect the revenue and expenditure of the
EDFs. Without qualifying the above opinion, the Court draws attention
to certain shortcomings. It indicates that the validity of the
assumptions used for the estimate of the provision for invoices to be
received has not been demonstrated by the Commission and that there is
an overstatement of the amount of guarantees disclosed in the notes to
the financial statements.
- Legality and regularity
of the underlying transactions: in view of the results of its
audit, the Court is of the opinion that the transactions underlying the
revenue, allocations, commitments and payments for the financial year
are, taken as a whole, legal and regular, with the exception of
authorised payments in the ACP States which are the responsibility of
the Commission’s delegations in the countries in question. The Court is
of the opinion that the decisions taken by the Commission to allocate
budgetary assistance (25% of the aid allocated under the EDF and
injected directly into the budgets of ACP States and verified by the
latter) should be documented in a more formal and structured manner to
ensure there is compliance with the Cotonou Agreement (on which the EDF
is based). The Court highlights:
- that payments authorised by
the central services of the Commission (mainly EuropeAid) were legal
and regular. However, the audit of payments in the ACP countries
revealed a material incidence of errors affecting underlying
transactions authorised by Delegations. These related to the
eligibility of expenses, the calculation of their value, as well as
shortcomings in regard to supporting documentation;
- a certain number of
recurring errors that may have an impact on the amount of the
underlying transactions, although this could not be precisely
determined.
- Supervisory and control
systems: according to the Court’s standardised evaluation criteria
partly satisfactory. Certain systems, in particular those of the
Commission’s delegations in the ACP States, however, need to be
improved and an overall strategy needs to be introduced in order to
guarantee more efficient and effective implementation of these
systems.
Recommendation of the
Court: the Court considers that the Commission should continue to
improve the design and implementation of control systems, in particular by
means of an effective control strategy. The management of projects financed
by work programmes should be better supported and follow-up improved. The controls
undertaken by the delegations need to be improved and better monitored. The
quality of the controls performed by external auditors should be enhanced by
ensuring that the new terms of reference include a clear definition of the
purpose of the audit and follow-up at central level. The procedures relating
to the approval and the follow-up of budget support need to be improved.