What we audited
The audit covered the EU’s revenue, through which it finances its budget. In 2014, revenue contributions calculated on the basis of Member States’ GNI and the VAT collected by them, provided 66 % and 12 % of the total respectively.
Traditional own resources, mainly customs duties collected on imports and the sugar production charge collected by Member State administrations on behalf of the EU, provided 12 % of the revenue, with the remaining 10 % being from other sources.
What we found
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Our audit of EU revenue
GNI and VAT‑based EU revenue is calculated on the basis of macroeconomic statistics and estimates provided by Member States. Our audit of the regularity of the underlying transactions covers the Commission’s systems for the processing of the data it receives but not the initial generation by the authorities in the Member States. As a consequence, our audit conclusion addresses the impact of any errors by the Commission on overall revenue.
For customs duties and sugar levies, we examine the Commission’s treatment of the statements submitted by the Member States and the controls in selected Member States, the receipts of the amounts by the Commission and their recording in the accounts.
Our overall audit evidence indicates that these systems were overall effective and we found no errors in the transactions we tested.
We draw attention to the updates to GNI data in 2014 that led to adjustments to Member States’ contributions of an unprecedented size, in particular those addressing reservations and those revising Member States’ methods and sources (see pages 132-135 of the 2014 annual report).
A reservation is a means by which a doubtful element in GNI data submitted by a Member State is kept open for possible correction. The verification cycles of the Commission for GNI cover a long period. The resulting corrections can have a significant impact on some Member States’ contributions.
In parallel, we identified the need for the Commission to reduce the impact of major revisions made by Member States on methods and sources they use for the compilation of their GNI. For example, Cyprus and the Netherlands both experienced significant increases in their contributions due to such revisions. The proposals put forward by the Commission in 2013 to manage this risk are still outstanding with no further action having been taken by the Commission to introduce a common EU revision policy.
Regarding customs duties, the Member States’ customs authorities perform checks to verify whether tariff and import regulations are respected by importers. We found, as in previous years, that the quality of these checks varied across the Member States we audited. We also observed that the updated version of the Customs Audit Guide, issued by the Commission in 2014, does not cover some of the shortcomings we identified in our visits to Member States, such as issues related to how to deal with imports cleared in other Member States.
What we recommend
We recommend that the Commission:
- takes measures to reduce the number of years covered by reservations at the end of the next verification cycle for GNI‑based contributions;
- puts in place arrangements to reduce the impact of revisions of methods and sources presented by Member States for the compilation of their GNI;
- improves the guidance given to Member States’ customs authorities for the checks they make; and
- ensures that Member States have the appropriate systems in place for preparing and managing their statements of customs duties and sugar levies.
Want to know more? Full information on our audit of EU revenue can be found in Chapter 4 of the 2014 annual report on the EU budget.