52 Modernisation of the EC accounting
system
| (26452)
7587/05
COM(05) 90
| Report on progress at 31 January 2005 of the modernisation of the accounting system of the European Commission
|
| Legal base | — |
| Document originated | 16 March 2005
|
| Deposited in Parliament | 29 March 2005
|
| Department | HM Treasury |
| Basis of consideration | EM of 17 May 2005
|
| Previous Committee Report | None; but see (25897) 11905/04: HC 42-xxxi (2003-04), para 15 (15 September 2004)
|
| To be discussed in Council | None planned
|
| Committee's assessment | Politically important
|
| Committee's decision | Cleared
|
Background
52.1 In 2002 the Commission announced its plans for modernisation
of the accounting system of the European Communities. The project
was to address three main issues:
· compliance
with internationally accepted accounting principles for the public
sector, especially regarding accrual accounting (the recording
of accounting events when they occur, not when cash is received
or paid or at the year end);
· integration
of financial and accounting systems held on different IT platforms;
and
· meanwhile
improving the performance of the IT system SINCOM2, particularly
concerning security and consistency of data from different sources.[192]
52.2 The Commission has reported several times on
progress in implementing its proposals, most recently in August
2004.[193]
The document
52.3 In this document the Commission reports on progress
up until 31 January 2005. The reports substantive sections deal
with accounting issues, IT developments, implementation of the
modernised accounts within the Commission, including training,
implementation of accrual accounting by the other Community institutions
and future developments. The Commission summarises the present
position by saying:
· the
legal requirement to produce accrual accounts by 2005 was met
when on 10 January 2005 the new accounting system was opened on
a full accrual basis;
· the
Commission has successfully carried out its planned administrative
reform and modernisation of the accounting system, meaning that
the Communities' financial statements will now meet the highest
accounting standards;
· further
improvements of the IT systems at central and local level, of
the integration of systems and of management reporting will continue
to be tested in the months and years to come; and
· but
it should be noted the new accounting procedures will take time
to be fully established.
The Government's view
52.4 The Economic Secretary to the Treasury (Mr Ivan
Lewis) reminds us that the European Court of Auditors was unable
to give a positive Statement of Assurance on the accounts for
2003 (as was also the case for the nine preceding years) as they
were not designed to ensure that the assets were fully recorded.
The Court had noted that the Commission's planned timetable to
modernise the accounts and correct these problems was ambitious
and the Minister comments that the Commission has done extremely
well to introduce its new systems on time and effectively achieve
in three years what took ten years in the UK. The Minister says
that it will take time to reap the full benefits of the reforms,
but the Government welcomes the progress made, which should improve
confidence in the Commission's ability to manage the accounts
and comply with internationally-accepted accounting standards.
However, he adds that the Government expects that there will be
continuing review and update of the IT and accounting systems
that it will expect the Commission to continue to report regularly
on progress.
52.5 Finally the Minister says that the Government
expects to see a reduction in the qualifications of the accounts
made by the European Court of Auditors, but that this will not
happen until the report on the 2005 financial year is published
(in November 2006).
Conclusion
52.6 The need for much greater assurance in relation
to management of Community resources and to the reliability of
the accounts is well known. Proper implementation of reforms to
financial management and accounting is fundamental to such greater
assurance. So, whilst clearing this document, we draw it to the
attention of the House for its claims of useful progress in this
important matter. We draw Members' attention also to the Government's
benign view of the Commission's report and hope that its optimism
about future reports of the European Court of Auditors will prove
justified.
192 See (24144) 15872/02: HC 63-x (2002-03), para 11
(29 January 2003) and Stg Co Deb, European Standing Committee
B, 26 February 2003, cols 3-24. Back
193
(25897) 11905/04: see headnote. Back
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