EU 'still struggling' on spending

The European Union needs major financial management improvements to win statement of assurance from auditors, NAO says.

A report published today says redressing the failure to win backing from the European Court of Auditors (ECA) for the last 13 years represents a "significant challenge".

It expresses concern about "material errors" in some transactions which it says makes the common agricultural policy (CAP) and structural funds "not legal or regular".

The CAP's error levels are only narrowly above the level required for a "positive opinion" to be given, however.

"There has been some improvement in financial management of EU funds in 2006, but there are still significant challenges to achieving a positive statement of assurance on legality and regularity of expenditure," NAO chief Tim Burr said.

"With some three-quarters of European expenditure managed by member states, they too have a major role in improving the financial management of EU funds. The UK's forthcoming account of its own use of European funds is a helpful development."

The Treasury is due to publish its summary of how the UK spends all funds received from the EU in June this year.

British involvement in efforts to improve the financial management of the EU is crucial, the report says.

It calls on the Treasury to play a "proactive part in exploring options for increasing transparency" and says all parties need to "maintain the momentum" if they are to win a statement of assurance.