The Government announced to the House of Commons in November 2006 that, as part of its work to improve the accountability of EU funds, HM Treasury would prepare an annual consolidated statement on the use of funds from the budget of the European Communities (EU funds) in the United Kingdom. In line with this commitment, we are today laying before Parliament the second of these statements for the year ending 31 March 2008, along with the Comptroller and Auditor General’s (C&AG) audit opinion and report.

Our aim is to strengthen the audit and Parliamentary scrutiny of the UK’s use of EU funds, which will help detect any weaknesses in the UK’s management of these funds so that they can be effectively and rapidly tackled.

The C&AG’s positive opinion on regularity clearly shows that the management of EU funds by UK authorities during the period covered by the statement has been sound, and that there has been no evidence of material irregularity in the payments made to beneficiaries. The Government welcome this finding.

The C&AG’S opinion is that this is true and fair except for debtor, creditor, cash balances and the treatment of provisions. It is clear therefore that more needs to be done to improve the consistency with which EU funds are accounted for and recorded across the UK. The Government continue to work to ensure these accounting issues are addressed. Being able to make this type of improvement was a key motivating factor behind producing this statement.

The Government also hope this statement and the C&AG’s audit opinion will be helpful to the European Court of Auditors and the Commission when they are performing their own audits and controls; and that the statement and the C&AG’s audit opinion will encourage similar initiatives from other EU member states, whose contributions to improving financial reporting and management across the EU are also important.