13. In their Annual Report for 1996, the Court highlighted
several general administrative and control weaknesses in the financial
management of Community funds. These were:
(i) the failure of agricultural compensation
schemes to take account of changes in world market prices resulting
in unnecessary expenditure;
(ii) the extensive use by the Community
of advances which were accounted for as actual expenditure. The
rate of use of funds at final beneficiary level was unclear and
consequently substantial funds had remained in the hands of intermediary
bodies;
(iii) where there was doubt about the proper
use of Community funds the Commission could only recover those
funds if they could prove that they had been wrongly used. This
was a problem, especially in the Structural Funds, because information
and accounting systems had not been developed within all beneficiaries
and intermediary organisations to permit the Commission to exercise
this supervisory function;
(iv) the failure, particularly by authorities
in the Member States but also in the Commission, to develop appropriate
systems of accounting and financial management which kept pace
with expanding and diverse Community activities; and
(v) deficiencies in the efficiency and effectiveness
of Community financing, particularly for the Structural Funds
where the objectives were not clear and performance indicators
had not been set.
