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EU: Commission Accounts

Volume 691: debated on Wednesday 2 May 2007

asked Her Majesty's Government:

Why a pre-financing figure of €28 billion was not recorded as an asset in the European Commission's 2004 annual accounts; and [HL3366]

Whether they came to a conclusion on the accuracy of the €28 billion pre-financing figure given in the 2004 annual accounts of the European Commission, bearing in mind the absence of a double-entry book-keeping system; and, if so, what was that conclusion; and [HL3367]

Whether the European Commission's pre-financing figures in their 2004 annual accounts were collected by means of spreadsheets submitted by the directorates, based on their conversations with beneficiaries and intermediaries; if so, which body checked the resultant figures; and whether they were reconciled by the European Commission with their own accounting records; and [HL3368]

What is their response to the view of Mr Brian Gray, the European Union's chief accounting officer, as expressed in the Sunday Telegraph of 4 February, that a figure of €28 billion was excluded from the European Commission's 2004 annual accounts because it did not represent cash. [HL3369]

According to the explanation provided in the Final Annual Accounts of the European Communities 2004, pre-financing amounts for operational purposes are included in the year's expenditure and do not appear as assets in the balance sheet. Pre-financing amounts which had not been received by the final beneficiary at 31 December 2004 and which are included in the year's budget expenditure are entered as short-term assets on the balance sheet under “Sundry debtors”. This amounted to €4,140 million at 31 December 2004.

Following a modernisation of the accounts of the European Communities in 2005 and the change to an accruals accounting system, (as outlined by Mr Brian Gray, the Commission Chief Accountant, in his letter to the Sunday Telegraph of 4 February), an asset entitled pre-financing is now recognised on the balance sheet and represents the advances paid to beneficiaries. In the 2005 accounts, the restated amounts of long and short-term pre-financing are given as €21,285 million (as at 31 December 2004) and €6,728 million (as at 31 December 2004) respectively—totalling some €28 billion.

In accordance with European Council Regulations on Structural Funds, the Cohesion Fund and the European Fisheries Fund, national authorities provide the Commission with forecasts of requests for payment for current and the following years. These forecasts may be provided in spreadsheets and should include payments concerning pre-financing. It is for the Commission to decide how it compiles, checks and presents the annual accounts, which are then analysed and reported on by the European Court of Auditors.