Report on the Dutch EU member state declaration 2010

Opinion on preparation

In our opinion, the EU member state declaration for 2010, as issued by the Minister of Finance on behalf of the government, was on the whole prepared in a sound manner.

Opinion on the assertion on management and control systems

In our opinion, the assertion made in the member state declaration for 2010 is sound with regard to the functioning of the management and control systems and the measures in place in the Netherlands for Dutch remittances to and receipts from the European funds, with the exception of non-compliance with local public contracting rules and the lack of checks of compliance with those rules down to the level of the beneficiaries of EAFRD grants. The shortcomings detected in the functioning of the systems in place for the ERDF and ESF are referred to in the member state declaration.

Opinion on the assertion on financial transactions

In our opinion, the assertion made in the member state declaration for 2010 on financial transactions down to the level of the final beneficiaries of European funds is sound, with the exception of the completeness of the errors and irregularities referred to in the subsidiary declaration on the ERDF regarding payment applications submitted to the European Commission in 2009.

A number of recommendations made in our previous report still require attention from the ministers concerned. They relate to:

• the reliability of control statistics (EAFRD inspection results) and the availability of accounting information on checks of cross-compliance (EAGF);
• shortcomings in management and control systems (ERDF);
• implementation of measures to improve management and control of ESF grants.

New recommendations we made this year relate to:

• the inclusion of remittances to the European Commission (own resources) in the member state declaration;
• compliance with public contracting rules below the EU threshold for the EAFRD. In contravention of EU regulations, the Minister of LNV (currently EL&I) has not recovered €14.5 million from farmers. The minister decided not to do so after consultation with the House of Representatives;
• assurances should be provided on the quality of satellite checks used in area aid schemes;
• problems that have arisen in the National Audit Authority's audits, such as lack of capacity and poor standardisation of audit procedures, especially for the ERDF.

In response to our conclusions, the Ministers of Finance, EL&I, SZW, BZK and I&A undertook to follow up seven of the nine open recommendations. Unfortunately, they will not adopt two of our recommendations in whole or in part. They relate to the inclusion of own resources in the member state declaration and compliance with local public contracting rules down to the level of final beneficiaries. Regarding public contracting, the undertaking relates only to applicable provincial regulations.

We think not including own resources in the member state declaration is a missed opportunity. Denmark already includes them. With regard to compliance with public contracting rules, we would note that the conditions referred to in provincial grant decisions are also subject to regularity requirements.

By addressing an EU member state declaration to the European Commission and the Dutch parliament, the Netherlands wishes to improve management, control and accountability for the funds it spends under shared management with the European Commission. The member state declaration is issued annually by the Minister of Finance on behalf of the government. The Netherlands Court of Audit has been asked to express an opinion to parliament each year on the Dutch EU member state declaration.

The Dutch EU member state declaration for 2010 considers the following European funds:

1. the European Agricultural Guarantee Fund (EAGF, € 895.2 million);
2. the European Agricultural Fund for Rural Development (EAFRD, € 62.7 million);
3. the European Regional Development Fund (ERDF, € 51.0 million);
4. the European Social Fund (ESF, € 50.8 million);
5. the European Fisheries Fund (EFF, € 8.2 million);
6. the European External Borders Fund (EBF, € 0.3 million);
7. the European Integration Fund (EIF, € 0.5 million).

Since no expenditure has been declared in respect of the European Refugee Fund and the European Return Fund, these funds are not included in the subsidiary declarations for 2010.