OREANDA-NEWS. European Court of Auditors signs off the EU accounts and records another year of continued progress on compliance.

1. What is the European Court of Auditors' annual report?

The European Court of Auditors (ECA) is the independent external auditor of the European Union. Every year, it examines the accounts of all EU institutions/bodies and provides an annual statement of assurance on the reliability of the accounts (are the books in order?) and the legality and regularity of the underlying transactions (were all payments made in line with the rules?).

The ECA publishes (usually in October or November) its statement of assurance and the related observations in its annual report. The European Parliament takes the report into consideration when deciding whether to give its final approval on how the budget for a specific year has been implemented – a process known as 'discharge'.

The ECA also frequently adopts special reports on particular topics, focussing on performance issues, for example assessing whether the spending met with EU policy objectives.

2. What is meant by "error"? Is it the same as fraud, or waste?

As the ECA points out itself, the "level or error" is not a measure of fraud, inefficiency of waste. It is an estimate of the money that should not have been paid out because it was not used fully in accordance with EU rules. Such irregularities are often of an administrative nature; for example, when documents are missing or claiming reimbursement for items which are ineligible. Such errors do not usually undermine the end result of a project.

Fraud is something completely different- it is an intentional deception and a criminal offence. The Commission has zero tolerance for fraud and is consistently fighting against it. The Commission and the ECA report any suspicions of fraud with EU money to the European Anti-fraud Office (OLAF). The ECA refers only very few cases per year, out of more than a thousand it looks at annually, to OLAF on suspicions of fraud.

3. What is the "estimated level of error"?

Throughout the year, the ECA looks at projects and other activities paid for by the EU budget. It identifies payments which were not made in line with the relevant rules and classifies these errors as either quantifiable (i.e. with a potential financial impact) or not. The impact of the quantifiable errors is then extrapolated to determine the "estimated level of error" for a number of spending areas, as well as for the EU budget as a whole.

The level of error estimated by the European Court of Auditors varies between spending areas. For the financial year 2015 the estimated level of error was 3.8% for the EU budget as a whole. This is 0.6 % points less than for 2014, which confirms a downward trend. Revenue was completely free from error.