Jacques Santer's entire Commission resigned after a report revealed a culture of corruption

The NAO - a parliamentary watchdog whose role is to keep tabs on taxpayers' money - found "considerable weaknesses in the management and control of Community funds by the Commission and member states" in its review of the EU's spending in 1999.

The NAO found problems including unreliable accounting and high levels of fraud.

In March 1999 all 20 European Commissioners, including President Jacques Santer resigned after revelations of corruption.

Since then Vice-President Neil Kinnock has been responsible for a reform programme aimed at shaking out corruption and inefficiency.

Reforms stalling

The report praises Mr Kinnock's attempts to introduce reform, but expresses disappointment at the slow pace of progress.

EU irregularities in 1999

1,235 cases of fraud involving 190m euros (�118m) 4,912 other irregularities, involving 429m euros (�266m) 252 cases of fraud reported to European Anti-Fraud Office, involving 224m euros (�139m) 100 of the cases reported to Anti-Fraud Office involved European Commission

For example, although a convention aimed at protecting the EU's financial interests has been agreed, until all 15 member states ratify it the protocols cannot come into force.

Anti-fraud activities have also been held up by delays in staffing the European Anti-Fraud Office.

Most of the irregularities highlighted in the report involve the Common Agricultural Policy, which gives out subsidies to farmers and Structural Funds, which aim to even out differences between rich and poor regions in the EU.

These included significant overpayments and lengthy delays. Farmers were found to commonly over-declare their stock or the size of their lands.

While the report called on the UK Government to encourage Mr Kinnock's attempt to reform the Commission, it warned that improvements will have to be seen soon to restore public confidence.