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Protection of the EU’s financial interests: the need for cooperation with the Member States

Posted by benjamin-nicolau en agosto 8, 2008

Protection of the EU’s financial interests: the need for cooperation with the Member States

The European Commission today published the 2007 annual report on the protection of the Communities’ financial interests and the fight against fraud, a field for which the Commission and the Member States have a shared responsibility. The report gives a statistical overview of all irregularities notified to the Commission by the Member States, and indicates those cases where fraud is suspected. The report sets out the existing fraud control measures and highlights the most significant steps taken by the Member States and the Commission in 2007 to improve prevention and the fight against fraud.

“To my mind, transparency and responsibility are the two key principles in the management of the Community’s funds. Irregularities and suspected fraud must be notified quickly and accurately and must be prosecuted vigorously and effectively,” said Siim Kallas, the European Commission Vice-President for Administrative Affairs, Audit and Anti-Fraud. “The rise in the number of notified irregularities may be a sign that fraud control is improving. The Member States have a responsibility to notify the Commission promptly of their suspicions.”

It is important to distinguish between fraud and irregularities: fraud is defined as an irregularity committed intentionally, which constitutes a criminal act that only a judge may define as such. The real financial impact of fraud can be measured only at the end of legal proceedings. All notified irregularities are currently being studied and followed up individually.

Irregularities and suspected fraud notified in 2007

     By their nature, the numbers given are approximate and preliminary. As a precaution, where the precise amount affected by the irregularity has not yet been determined, the figure given often relates to the scheme as a whole.  Although the Member States have an obligation to notify irregularities, they do so with varying degrees of conformity. Furthermore it is the Member States’ task to identify cases where fraud is suspected. The Commission ultimately depends on the information from the Member States to classify a given case as fraud.

     The estimated amount affected by irregularities has risen across the various sectors, but as a percentage of the budget it remains relatively stable. In the fields of own resources and agriculture, the rise is partly due to irregularities that occurred or were discovered in previous years but were not reported by the Member States until 2007. Other causes are the accession of the new Member States, the closure of the pre-accession funds for the 10 new Member States and the recent increase in payments made in these countries.


     The estimated impact of suspected fraud cases remains stable in the case of expenditure and has slightly decreased in the case of own resources. It should be noted once again that these are suspected fraud cases as reported by the Member States, not fraud cases established by a court of law. The actual financial impact cannot be assessed before legal and administrative proceedings have run their course and recovery and financial corrections have been completed.

     Most irregularities are notified to the Commission within the established time‑limits. However, there is still room for improvement. On average, irregularities in the field of agriculture are notified after 1.2 years; those in the field of structural support are notified after 0.9 years. In the case of certain Member States, the delay is very often considerable. Prompt notification is essential for effective follow-up.

     The number of Member States reporting electronically, in particular those using the electronic forms the Commission offers for agriculture and the structural funds, is on the rise. These forms simplify data processing and improve data quality and comparability, thereby allowing a better follow-up and facilitating strategic data analysis.

 

 

 

 

Area

Number of irregularities notified 2007

Total estimated financial impact of irregularities, including suspected fraud (€ million)

Estimated financial impact

of suspected

fraud* (€ million)

% of total appropriations affected by estimated fraud

Own resources

5 321

377

106.57

0.62% of the total amount of own resources in 2006**

EAGGF Guarantee Section

1 548

155

44.7

0.1% of the total allocations

Structural and Cohesion Funds

3 832

828

141

0.31% of the total allocations

Pre-accession funds

332

32

9

0.38% of the total allocations

Direct Expenditure

411

33

18.1

0.17% of the total allocations

* These estimates are based on information supplied by Member States concerning cases of suspected fraud (which have often not yet been established by a definitive judgment), and must be treated with caution.

**This percentage is calculated on the basis of an estimate of traditional own resources in the 2007 general budget, and not on the basis of accounts.

The report and its annexes are available at:

http://ec.europa.eu/anti_fraud/reports/index_en.html

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