11 EU assistance implemented through
UN organisations
(31266)
5513/10
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| Court of Auditors' Special Report: EU assistance implemented through UN organisations: decision-making and monitoring and the Commission's response
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Legal base | Article 287 TFEU
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Basis of consideration | Minister's letter of 24 November 2010
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Previous Committee Report | HC 5-xi (2009-10), chapter 5 (24 February 2010)
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Discussed in Council | 15 February 2010
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Committee's assessment | Politically important
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Committee's decision | Cleared, but further information requested (reported to the House on 24 February 2010); further information now provided
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Background
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."
Conclusion
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 http://eca.europa.eu/portal/page/portal/eca_main_pages/home
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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