The European Court of Auditors (ECA) gave the European Union (EU) annual accounts a clean bill of health, but its president, Klaus-Heiner Lehne, warned that the European institutions have to a degree lost the trust of EU citizens.

Presenting the ECA annual report of the EU’s budget for financial year 2015 to the Budgetary Control Committee of the European Parliament, Lehne said the European institutions had lost the trust of EU citizens and that a major challenge for the EU in the months and years to come would be to regain that trust through reforms that should be built on solid financial foundations.

That meant the EU had to keep good accounts; it had to make sure its financial rules were correctly applied; it had to deliver value for money, and it had to provide transparency and assurance.

“People cannot even begin to trust the EU institutions if they do not believe we are looking after their money properly and keeping a good account of how we are doing that,” he said.

In 2015, the EU budgetary spending totalled €142.5bn ($156.6bn), which represents around €285 for every citizen.

The ECA, which audits the revenue and expenditure of the EU budget annually and provides an opinion on the extent to which the annual account comply with the applicable rules and regulation, said that the EU’s consolidated accounts for FY15 had been presented fairly in all material respects, and in accordance with the financial regulation and with accounting rules based on IPSAS.

Equally the ECA said it had found no error in the examined revenue transactions.

However the ECA gave an adverse opinion on the legality and regularity of payments underlying the accounts. The court noted that the expenditure recorded in FY15 covering operational spending was materially affected by error. The ECA estimated the level of error at 3.8%, which is an improvement on the previous financial year when the level of error in this area was estimated at 4.4%. This is an estimate of the money that should not have been paid out because it was not used fully in accordance with EU rules, but is not a measure of fraud, inefficiency or waste.

Suspected fraud
However in its audit, the ECA did encounter cases of suspected fraud. Its report stated that it had assessed the legality and regularity of around 1,200 transactions. The court noted that it had found 12 instances of suspected fraud, fewer than last year when it had highlighted 22 potential cases of fraud.

The suspicious transactions have been forwarded to the European Anti-Fraud Office for investigation.

The ECA said the most frequent instances of suspected fraud concerned conflicts of interest and the artificial creation of conditions to receive subsidy followed by declarations of costs not meeting the eligibility criteria.

Kristalina Georgieva, European Commission vice-president in charge of budget and human resources, said: “The EU budget is all about delivering for people and I am pleased by the progress we are making in this regard and which can be clearly seen in the ECA's latest report. Money is being better directed to where it is needed but it is also being managed more effectively. We need to do more of this. EU money belongs to our citizens and we owe it to them that every euro is well spent, in accordance with the rules.”

The report is accessible on the European Parliament’s website