Select Committee on European Scrutiny Fortieth Report



Commission report on Member States' replies to the Court of Auditors' 2000 annual report.

Legal base:
Document originated:18 July 2002
Deposited in Parliament: 31 July 2002
Department:HM Treasury
Basis of consideration: EM of 27 August 2002
Previous Committee Report: None
To be discussed in Council: Not known
Committee's assessment:Politically important
Committee's decision:Cleared, but relevant to any debate on the Court of Auditors' 2001 annual report


  17.1  Following the Dublin European Council in 1996 the Commission and the Court of Auditors set up a framework allowing Member States to:

  • comment on the observations made by the Court of Auditors in its annual and special reports;

  • add to or comment on the Commission's answers to the Court's observations.

It is an opportunity to support or challenge the Court's recommendations. This report is an analysis of the responses of Member States.

The report

  17.2  The first part of the report is a general analysis. In their responses Member States broadly agreed with the Court's assessment that weaknesses still remained in the financial management systems. Nevertheless Member States disputed some particular findings of the Court and commented adversely on some aspects of the Court's methodology and time-tabling. In their responses Member States also commented on any necessary corrective actions. The Commission summarizes them as being limited in number and not necessitating any fundamental reassessment of systems.

  17.3  The longer second part of the report is a sector-by-sector analysis of comments on particular issues including:

Own Resources:

  • anti-dumping duties — such as inadequate follow-up to mutual assistance messages;

  • keeping of separate accounts whilst disputed items are determined;

  • VAT collection problems;

Common Agricultural Policy:

  • improvements to the Integrated Administration and Control System;

  • issues of clearance of accounts;

  • the Court's accuracy and methodology;

Structural measures:

  • implementation of controls in relation to co-financed operations;

  • inspection target rates.

  17.4  This part of the report also deals briefly with administrative expenditure, internal polices and external action. As these sectors are mainly the preserve of the Commission rather than Member States, little of interest was revealed. But the Commission does note comment from the UK under the internal policies (research) and external action headings, asking for more investigations.

The Government's view

  17.5  The Financial Secretary to the Treasury (Ruth Kelly) tells us:

    "The Government welcomes this report as this can be used as an effective tool in sharing information between Member States. Also, by being aware of the current weaknesses, the Commission and the Member States are in a better position to cut down on both fraud and waste.

    "The Commission holds the responsibility for implementing the Community's budget (under Article 274 of the Treaty) and therefore also takes the responsibility for responding to the Court of Auditors' findings. However, the Government also takes the UK's responsibility for managing its share of the budget seriously. The UK argued in the Council in 1995 for a procedure for Member States to respond to the Court of Auditors' comments, which was endorsed by the November 1996 ECOFIN Council. The UK was the only Member State to respond to the 1994 Court of Auditors' Report, but since then the procedure has become a regular event for all Member States."


  17.6  We clear this document. But many of the issues raised in the document would be relevant to a debate in European Standing Committee B on the Court of Auditors 2001 Annual Report, which we are likely to recommend once the report is received. (We have already recommended for debate a Commission report on sound financial management in 2001[24] which would be debated with the Court of Auditors report.)

24  (23669) 10625/1/02; see HC 152-xxxix (2001-02), paragraph 2 (23 October 2002). Back

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