In or out?

[richardoe]

The european court and the european human rights charter are nothing to do with the EU. Both of them were set up in 1950 long before the EEC.

[palo5]

Originally Posted by haroldeye

...
Finally Palo old son, would you put your money into an organisation that has not had it's accounts signed off by the auditors for at least 20 years?

Not only would I, but I actually do it

Btw, the term "signed off" is misleading because there is no process for "signing off" EU accounts like in a corporation

scoundrel can explain this better because he's a professional, but the EU Auditors approve about 99%, iow virtually everything, of what they check

The trouble is the statistical methods they have to use. They only audit about 1% (or less) of the budget, and if 0,9% of that 1% is not correctly accounted, they must report it

So, where are are the problems? Say you have a Swedish farmer who gets a reindeer subsidy or something similar, and forgets to document how he spent the money - it's very likely he did spend the money on reindeer and actually has the documents, but it's a problem for the Auditors if they can't follow a 'paper trail', and discretion doesn't seem to play a role for them

Corporations and even sovereign states don't have such problems with discrepancies in fractions of a percent, but the EU does because it is too meticulous imho

It's almost as if Audit Reports are designed to fail so that politicians have a 'back-door'

[calypsored]

Originally Posted by richardoe

The european court and the european human rights charter are nothing to do with the EU. Both of them were set up in 1950 long before the EEC.

That might well be the case, but you don't need too much of an imagination to link the too far left (imho) leanings of both those institutions with the similar sentiments at the heart of the greater 'project'.

[richardoe]

I wouldnt say that the european court was that left leaning, after all they upheld the governments decision to ban trade unions at GCHQ.

[scoundrel]

Originally Posted by palo5

Not only would I, but I actually do it

Btw, the term "signed off" is misleading because there is no process for "signing off" EU accounts like in a corporation

scoundrel can explain this better because he's a professional, but the EU Auditors approve about 99%, iow virtually everything, of what they check

The trouble is the statistical methods they have to use. They only audit about 1% (or less) of the budget, and if 0,9% of that 1% is not correctly accounted, they must report it

So, where are are the problems? Say you have a Swedish farmer who gets a reindeer subsidy or something similar, and forgets to document how he spent the money - it's very likely he did spend the money on reindeer and actually has the documents, but it's a problem for the Auditors if they can't follow a 'paper trail', and discretion doesn't seem to play a role for them

Corporations and even sovereign states don't have such problems with discrepancies in fractions of a percent, but the EU does because it is too meticulous imho

It's almost as if Audit Reports are designed to fail so that politicians have a 'back-door'

There is a very high inherent risk of fraud in the European Union; very large sums of other peoples' money are controlled by officials from rather poor countries which have never been noted for their honesty at government and civil service level. The member countries do not all run honest government. The grossly fraudulent accounts maintained by the Greek government enabled Greece to run up her national debt to utterly unsustainable levels in order that Greece could squander the money on projects which involved kickbacks enriching politicians and state officials. Greece is a known example; it would be optimistic to believe that there are no other problems in the EU accounting records.

In order to deal with high inherent risk, audit testing has to be stricter than would be necessary in a low risk environment. Not all areas are equally risky. If you are using your PC, and your mouse fails, it's annoying, but it can be worked around; but if your hard-drive crashes, you are in serious difficulties. So performance materiality (total acceptable error in that area) and acceptable error rate in audit samples are set lower in critical areas in order to reduce the risk of a reported set of accounting results being so inaccurate that they mislead people who seek to rely on them. In this case, the European Court of Auditors have not said that the transactions are not being accuratey reported; rather it has cast doubt on whether the transactions are always legal. This is why they have not approved the EU's published accounts.
http://news.bbc.co.uk/1/hi/world/europe/6078982.stm

But I would add a warning note. I know a chap who spent two years at a City audit firm which audited a lot of EU development projects. The EU has strict record keeping requirements for anyone claiming grants for anything, and auditors are used to visit recipients and check their books. My friend was one such auditor and his firm sent auditors all over Europe to check the records. But it is spurious to place any assurance on this testing. XYZ in Hungary can get ABC in Slovenia to produce invoices to order and does the same for Pig Sticker in Bulgaria, who in turn sends invoices to ABC in Slovenia. It is very easy to falsify accounting records and even easier when your auditor is English and doesn't speak the local language. You can even run off a false invoice from a desktop printer from a company which doesn't exist: the Rastogi brothers created bogus companies and invented huge non-existent commodities trades in order to conceal holes in their balance sheet; all done with fake documents. It's not an unusual device for a fraudster to employ.

As it happened, my friend is fluent in several European languages, but did not choose to share this with the local staff of recipient agencies in Hungary and the Czech Republic, because he wanted to know what they didn't want him to know. My point is that audit testing is far from infallible and determined fraudsters can deceive the auditors for some time. Usually, they come unstuck in the end when they overreach themselves or when their lies become too elaborate: Andrew Fastow at Enron was a perfect example of someone who wove too tangled a web. Frauds on such an epic scale will almost certainly unravel, but too late; they first reach a scale at which the unravelling will cause a lot of damage.

[palo5]

Originally Posted by scoundrel

...My point is that audit testing is far from infallible and determined fraudsters can deceive the auditors for some time...

That is always true - everywhere

Do you think your own national accounts are better?

[scoundrel]

Originally Posted by palo5

That is always true - everywhere

Do you think your own national accounts are better?

Yes I do; though I don't think they are free of error or fraud. The British civil service used to be politically independent and used to keep the accounts very well. Their independence has been undermined ever since the Thatcher government; under Blair this got worse. But I don't believe that our accounts are themselves fraudulent on anything remotely like the same scale as the Greek government's were. The parliamentary expenses scandal exposed the potential for such shennanigans in British officialdom, but it also highlighted the cultural barrier. When it was exposed, the backlash was severe; we are not used to things like that here.

[palo5]

Originally Posted by scoundrel

...The parliamentary expenses scandal exposed the potential for such shennanigans in British officialdom...

The potential?

Didn't it expose the actual situation of officialdom?

[Reclaimedwg]

When I read the title of this thread, before I open it, I thought it was about something else.

After all, this IS a porno forum so it is a common mistake that anyone could had made.

[scoundrel]

Originally Posted by palo5

The potential?

Didn't it expose the actual situation of officialdom?

The British MPs mulcted tens of millions of pounds from the public purse. When the music stopped in early 2010, the Greek government had run up debts of over €300bn and the whole country had a gross domestic product of about €225bn. This was not apparent in the financial accounts of the Greek government. It was the financial markets who belatedly realised how much Greek debt they held, and how small Greece is.

So, while I certainly do not defend the conduct of British officialdom over the parliamentary expenses scandal, I do not think for a moment that this malfeasance is comparable in degree to the false accounting of the Greek government.