Documents considered by the Committee on 12 January 2011 - European Scrutiny Committee Contents

11 EU assistance implemented through UN organisations




Court of Auditors' Special Report: EU assistance implemented through UN organisations: decision-making and monitoring and the Commission's response

Legal baseArticle 287 TFEU
Basis of considerationMinister's letter of 24 November 2010
Previous Committee ReportHC 5-xi (2009-10), chapter 5 (24 February 2010)
Discussed in Council15 February 2010
Committee's assessmentPolitically important
Committee's decisionCleared, but further information requested (reported to the House on 24 February 2010); further information now provided


11.1 The European Court of Auditors (ECA) is the EU Institution established to audit EU finances. Under Article 287 TFEU (which lays down its functions), the ECA examines whether financial operations have been properly recorded and disclosed, legally and regularly executed and managed so as to ensure economy, efficiency and effectiveness. It also provides its opinion on financial management issues.

11.2 The Court may, at any time, also submit observations, particularly in the form of special reports, on specific questions and deliver opinions at the request of one of the other institutions of the Union.[57]

The Court of Auditors' Special Report 15/2009

11.3 The ECA's report considers the implementation of the EU development assistance that is channelled through UN organisations. EU funds channelled in this way increased from €500 million in 2002 to over €1 billion in 2008. The audit addresses two questions:

—  Does the process for deciding to implement aid through the UN demonstrate that this is the most efficient and effective option?

—  Do monitoring arrangements provide assurance on the robustness of financial procedures and on the achievement of objectives?

11.4 The ECA's conclusions and the Commission's responses are summarised in paragraphs 5.4-5.7 of chapter 5 of our predecessors' Report.[58]

11.5 The ECA also said that the UN Panel of Auditors had "continually questioned the Commission's right to carry out financial checks", and continued thus:

"It argues that its own audit arrangements are sufficient, but does not provide the Commission with satisfactory evidence that financial control procedures work in practice. The Court of Auditors has also encountered difficulties accessing information from UN organisations when carrying out its annual financial audit of the Commission's accounts."

11.6 On the basis of these observations, the ECA made recommendations which it said would enable the Commission to "improve decision-making procedures and to focus on the achievement of results which could help the Commission to provide more efficient and effective aid."

11.7 In his Explanatory Memorandum of 4 February 2010, the then Minister of State at the Department for International Development (Mr Gareth Thomas) supported the Commission's policy of routing some development funding through the UN where there was a clear case made for this option to be used, and described as an important part of the principles enshrined in the 2005 Paris Declaration on Aid Effectiveness and the European Consensus on Development.

11.8 The then Minister agreed with the ECA that the monitoring of EU-funded activities undertaken by the UN should be fully robust, professing himself encouraged that the Commission and the UN had agreed on an improved system of joint monitoring, and saying that he would urge the Commission to press the UN to improve its reporting on these activities. He said monitoring systems that help better track results and impact were especially important; this was why DFID had developed Performance Frameworks for the five UN Agencies receiving the majority of DFID's core funds (UNDP, UNAIDS, WHO, UNFPA and UNICEF), which linked funding to agency performance and monitored how well the agencies delivered and met agreed outputs and targets.

11.9 The Minister also acknowledged the ECA's concern that it did not have the ability to request additional external audits beyond the scope of the work of the UN Board of Auditors:

"However, HMG supports the UN's single audit principle and we would not want to see duplication of effort. It would not be financially sustainable if all UN partners sought to do external audits on top of the work carried out by the UN Board of Auditors as this would lead to significant costs to the UN system. It is clear that under the terms of the Financial and Administrative Framework Agreement between the EU and the UN that the latter should provide all necessary supporting financial evidence. We will support all such reasonable requests by the Commission for access to appropriate information but this stops short of supporting the Court generating additional audit exercises for the UN outside the scope of its own plans."

11.10 The Minister concluded by saying that the Council would discuss the ECA report on 15 February 2010.

The previous Committee's assessment

11.11 There was, in the previous Committee's estimation, strength in both approaches to the single/dual audit matter and no need to raise any questions about the Commission response or the Minister's own evaluation. But it felt that the issues were nonetheless important, and warranted being drawn to the attention of the House.

11.12 In clearing the document, the previous Committee also asked for further information on the outcome of the Council discussion.

The Minister's letter of 24 November 2010

11.13 The Minister of State at the Department for International Development (Mr Alan Duncan) says that the Council conclusions welcomed and approved the Court's recommendations, and called on the Commission to report to the Council, in the framework of the Commission's annual report, on its experience with implementation through the United Nations (UN) and on the improvement made to the Commission's own decision mechanisms. He then continues as follows:

"The Council agreed with the Court that monitoring of EU-funded activities undertaken by the UN should take place in a coherent and transparent manner. It also noted that the Commission had initiated the development of joint monitoring methods which could be carried out with the UN agencies, should the UN decide to participate in this endeavour. It urged the Commission to encourage the UN to take part in these activities.

"The Council also supported the UN's single audit principle, with the understanding that the UN — under the terms of the Financial and Administrative Framework Agreement with the EU — should provide all necessary supporting financial evidence, in line with the provisions of this Agreement. The Council would regard as appropriate all such reasonable requests by the Commission and the Court for access to relevant information, but would not support the Court generating additional audit exercises for the UN outside the scope of the UN's own plans. It noted that there was considerable goodwill on the part of the UN to ensure that the Court received access to UN systems and documents, and encouraged the Commission to continue to support the Court's requests in case of any difficulties encountered.

"The Council also welcomed initiatives to strengthen and monitor the effectiveness of the UN and other major multilateral development organisations. With regard to humanitarian aid, the Council reaffirmed the central and coordinating role of the UN in striving to achieve a coherent international response. It encouraged the EU and its Member States to continue to fully support all efforts that bolstered the central role of the UN in humanitarian coordination.

"In conclusion, the Council welcomed the Commission's responses, which confirmed that:

  • "it fully supported the Court's requests for obtaining necessary supporting evidence from UN organisations;
  • "it was already relying on the audit work of the UN and would continue to explore further means of obtaining assurance on the actions it funded through the UN system; and constantly ensured that the terms of the Financial and Administrative Framework Agreement were applied;
  • "it had agreed on Joint Reporting Guidelines which were significantly improving the quality of UN reporting, particularly on financial aspects;
  • "it had already initiated the development of joint monitoring methods which could be carried out with UN agencies;
  • "it would explore ways of enhancing the focus on UN performance to better achieve objectives, using existing provisions under the EU Financial Regulation."


11.14 We are reporting this further information in order to complete the picture regarding this important component of the EU's development assistance work (over €1 billion in 2008).

11.15 It has taken the Minister a long time to respond to the request for information, the dissolution and the change of Government notwithstanding. We ask that he ensures that any requests from the Committee for further information on any other topics are responded to in a more timely fashion.

57   See for full information on the Court of Auditors. Back

58   See headnote: HC5-xi (2009-10), chapter 5 (24 February 2010). Back

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