eurealist.co.uk

Two items in the Telegraph about EU accounting
Telegraph | Money | EC’s ’sordid accounting’ damned in email from top auditor:

“EC’s ’sordid accounting’ damned in email from top auditor”

The European Commission has a “chronically sordid” accounting system and is still unable to keep track of the EU’s £73billion budget after a decade of financial scandals, according to a top EU insider.

An internal email obtained by The Telegraph paints an ugly picture of an autocratic body with an “incestuous esprit de corps” that uses its bureaucratic muscle to “trash” any official who dares to question its methods.

It said the Budget Directorate was in “persistent denial of the real nature and depth of problems” it faced, choosing “cavity filling solutions where root canals were called for”.

The note was written by the former director-general of the commission’s Internal Audit Service, Jules Muis, who retired last year after attempting to spearhead the EU’s reform drive.

He said the Budget fiefdom relied on non-qualified accountants to manage funds, allowing it to “get away with” practices that breached its own laws. It operated a “perverse incentive structure” that rewarded staff if “they managed not to discover financial malfeasance”.

The Dutch-born Mr Muis, recruited from the World Bank as a trouble-shooter to clean up Brussels, said the commission still took “no responsibility for whether the accounts are right in the end”.

“Ten years after the Commission first failed to get normal audit blessing on its accounts and controls, it still does not have a proper accountability construct. This extraordinary situation is the major cause of the chronically sordid state of quality accounting,” he said.

And…

Email confirms what we always suspected: something’s rotten in Brussels

The email is the smoking gun de nos jours. A few paragraphs written by an official in a bad mood can say more than any number of formal enquiries, and the words, once released into the internet, cannot be recalled. An internal memo which we reveal today from the European Commission’s former audit chief, Jules Muis, confirms what so many suspect - that Brussels still cannot take reasonable care of the £73billion entrusted to it by taxpayers.

What’s worse, in a way, is how Mr Muis exposes the machine as a surprisingly nasty and vindictive outfit. The EU budget runs with a “chronically sordid” accounting system and is still culturally incapable of accepting any fault with the way it behaves, even after a decade of complaints from the European Court of Auditors.

A fraud scandal brought down the entire Commission in 1999. Three years later, a pair of whistleblowers exposed the disappearance of £3m at the Eurostat data office, in a racket described by investigators as the tip of “a vast enterprise of looting”. Yet Mr Muis reveals that even now the Commission has “systemic control weaknesses” and rewards officials for turning a blind eye to graft. The EU may even have “slipped backwards”.

The Commission is at last ditching its single-entry booking system, just 700 years after the Venetians made it obsolete. In theory it will no longer be possible to transfer money without trace. If this reform actually happens, it will be greatly due to the efforts of Marta Andreasen, the former chief accountant sacked by the Prodi Commission in a valedictory settling of scores.

The Muis email confirms that her disciplinary hearing was a crude, but highly successful, mechanism to smear a critic. “Might makes right” are the words he uses. At least the Commission is now promising to do what she recommended, even if it gives her none of the credit