EU accounts fail to clear watchdog for 11th year

The European Union's financial watchdog has refused to give the annual euro-accounts the all-clear - for the 11th year running.

A report from the European Court of Auditors today repeats familiar concerns about the accuracy of the books on the 2004 budget totalling nearly £70 billion.

And it points the finger at member states themselves more than Brussels - because about 80% of EU spending is conducted by national and regional authorities.

The auditors have acknowledged European Commission efforts to improve the situation by bringing in accounting reforms to answer complaints that lax procedures could be wide open to fraud and mismanagement.

But yet again this year they say they cannot give a formal "Statement of Assurance" about the validity of the annual accounts.

Conservative MEP James Elles warned that the accountants' refusal to clear the books was in danger of becoming a permanent feature of the EU unless member states faced up to their responsibility to ensure euro-funds channelled through them were better accounted for.

And he said Britain's EU presidency had been a missed opportunity to tackle the problem.

Last week Chancellor Gordon Brown, chairing talks between EU finance ministers, made clear it was for the auditors to set out ways to improve the procedures for clearing the accounts.

Ministers said the system of verification needed updating and rejected Commission calls for national authorities to take more responsibility.

They insist the auditors' failure year after year to endorse the budget is because of the technical rules governing the delivery of a "Statement of Assurance" rather than a result of widespread fraud.

But Mr Elles, Tory spokesman on budgetary control in the European Parliament, said the blame rested with EU governments.

"The commission always gets the blame but the situation is more complicated than that. Eighty per cent of EU money is spent at national level. Member states should not be passing the buck.

"The British presidency of the EU has had a good opportunity to grasp this problem. But Gordon Brown is yet again saying one thing and doing another. He says he wants everyone to do their bit to improve the situation but he's not prepared to take the lead himself."

Mr Elles added: "Faced with an opportunity to take the lead in ensuring member states are held responsible for funds disbursed at national level, the UK government has dodged the issue."

Chris Davies, leader of the British Liberal Democrat MEPs and a member of the European Parliament's Budget Control Committee, said: "The finger of blame should be pointed towards Gordon Brown and his fellow finance ministers who have refused to accept responsibility for the money spent by their own administrations.

"The public will assume that fraud is widespread and the Brussels bureaucracy incompetent but in fact the EU administration is now subjected to greater scrutiny than that of any government in Europe."

He added: "Despite many improvements made in accounting procedures the auditors have refused to specify what steps must be taken if the EU accounts are to be given a clean bill of health. It's like telling an athlete to run a race without announcing the distance."