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Last Updated: Wednesday, 5 May, 2004, 23:56 GMT 00:56 UK
UK body to scrutinise EU accounts
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EU spending requires closer scrutiny as 10 new countries join the union
The National Audit Office has vowed to increase its scrutiny of EU spending after Europe's own financial watchdog failed to approve euro accounts.

The NAO stressed that problems in the management of the EU's funds were a matter of concern, especially in view of worries over enlargement costs.

Its head Sir John Bourn said it was hard to tell if matters were improving.

The EU's Court of Auditors failed to approve the EU's accounts in November for the ninth year in a row.

The court found "significant errors" in four key areas which represent some 90% of total EU spending - agriculture, regional and social policy, administration and external policies, including aid to non-EU countries.

In its report, it also expressed concerns over the Commission accounting systems, which it said "do not guarantee the complete presentation of all assets and liabilities".


Sir John Bourn, head of the NAO, said in his report to the UK Parliament that EU member states had reported just over 10,000 cases of irregularity or suspected fraud in 2002 compared to some 5,500 cases in 2001 - which would apparently indicate a dramatic increase.

But he added that there was inconsistency in the report of these occurrences by individual member countries, making it difficult to tell "whether the level of irregularity and fraud is improving or worsening year on year", despite the seeming increase suggested by the figures.

As much as 80% of the EU budget is administered by national authorities, which are in charge of managing EU funds earmarked for regional and social support programmes as well as farm subsidies.


Sir John stressed that the EU's financial management had taken on a "new and significant dimension" after 10 new member countries joined the union on 1 May.

The enlarged EU, with its 25 countries, embraces now a population of about 450m people.

The NAO, which scrutinises public spending on behalf of parliament, will from now on pay even more attention to EU spending.

"The NAO is prepared to play a full part in parliamentary scrutiny of the European Union... to ensure that the revenues and expenditures of the EU are audited to international accounting standards," he said.

This year, the euro budget is expected to reach 59.6bn, 9.5bn of which will be the UK's gross contribution.

With its 2.6bn net contribution, the UK is the second largest contributor to the EU coffers.

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