Mr. Kevin Cardiff:

On the area of global Europe, which is Europe's engagement with the external world, most errors involved expenditure that was not eligible and should not have been paid in the first place. For example, it might have been outside the period the money was spent but not within the period when it should have been spent. For this area, the error rate is about 2.7%, and it is usually very low. One would expect it to be high in developing countries because one would expect more error and less efficiency. In fact, these transactions are mostly EU to government, which means most of the money is passed directly from the EU to the relevant government. That is a very simple transaction, so there will not be much error. Again, for the purposes of this audit, we do not see how much value that developing country government then gets out of the money, but we do special reports in the course of the year to look at those kinds of issues.

As I said, the overall estimated level of error was 4.4%, which is stable relative to recent years but is a good deal less than in the mid-2000s. While we keep saying that things could be better still, the Commission resists this idea and sometimes the member states resist it as well, and we have to explain why we think that. We think it, first, because 80% of expenditure is done through member states and our auditors say that most of the errors they spot could have been spotted at the member state level and corrected before our audit. That seems to us to be reasonable evidence that, even without very great change in the control systems themselves, things could be better. Second, although the error rate is 4% to 4.5%, reflecting the small size of the average error found, in some areas the number of errors found is huge. In many areas, there are a huge number of small errors contributing to the error rate in some parts of the budget. I recall from last year that in 60% of transactions we would find small errors. For example, in four Irish transactions this year in the agricultural area, three had errors. Each of the errors was very small, so they did not contribute greatly to the error rate, but we have to ask why we keep seeing this level of error. Those two things together suggest that, even without a huge additional spend on control systems, there is more that could be done to push that down.

The Commission does find and correct errors and the member states do find and correct errors before we get to the audit. If it was not for that, the error rate would probably be 1% or 1.5% higher again.