1
CERTIFICATION OF THE FRENCH GENERAL
SOCIAL SECURITY SYSTEM FINANCIAL
STATEMENTS -
Financial year 2021
Main points
The certification role and its challenges
The mission entrusted to the Court
Each year, pursuant to Article L.O. 132-2-1 of
the Financial Courts Code, the Court of
Accounts
prepares
a
report
on
the
Certification of the French General Social
Security System Financial Statements, which it
submits to parliament and the government.
The Court applies International Standards on
Auditing (ISAs) in carrying out this assignment.
It formulates a reasoned and independent
opinion on the accounts, after having collected
information
allowing
it
to
assess
the
compliance and fairness of the financial
statements of the branches of the general
social security system and the accuracy of the
image these financial statements provide of
their results, financial position and assets.
Scope of certification
As a result of the creation of the autonomy
branch on 1 January 2021, the Court
’
s annual
report now presents
ten opinions
:
⚫
six
relating
to
the
accounts
of
the
contributions
collection
activity
and
the
healthcare, workplace accidents-occupational
diseases (AT-MP), family and old age branches;
⚫
four
concerning the accounts of national
bodies: Central Agency for Social Security Funds
(ACOSS),
National
Health
Insurance
Fund
(CNAM), National Child Allowance Fund (CNAF)
and National Old Age Insurance Fund (CNAV).
The
financial
statements
of
the
National
Solidarity Fund for Autonomy (CNSA) are those
of the autonomy branch.
Social security contributions subject to certification
The collection activity, i.e. the network of
URSSAF
agencies
and
CGSS
in
overseas
territories, covers the collection of social
security contributions and levies, earmarked
taxes and duties and other income for the
general social security system and for other
beneficiaries
(other
systems
and
bodies,
Unédic, central government, etc.).
The public contributions collected for branches
of the general system and other beneficiaries
amounted to €516.3 billion, of which €406.9
billion for the general system and €109
.4 billion
for other beneficiaries.
2
The certification role and its challenges
Breakdown of allocations in 2021 (in € bn)
Taking
into
account
internal transfers to social
security, as well as from
central government and
the departments (€163.1
billion,
compared
with
€126.8 billion in 2019),
the amount of receipts
falling within the Court
’
s
certification remit totalled
€619.7 billion (24.9% of
GDP) in 2021
, including
€460.6
billion
for
the
branches of the general
social security system.
A-A:
AGIRC-ARRCO - Source:
Court of Accounts
Expenditure subject to certification
Primarily,
the
expenditure
subject
to
certification corresponds to benefits paid by
branches of the general system and to solidarity
benefits paid by the child allowance bodies on
behalf of central government (housing benefit,
the allowance for disabled adults (AAH), top-up
benefits
for
low-paid
workers)
and
the
departments (income support).
In 2021, this expenditure totalled €533.2 billion,
or 21.4% of GDP, including €483.5 billion for
branches of the general system.
Expenditure of the general system (as a % of
expenses for 2021)
Source: Court of Accounts
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The contribution of the financial statements audit
Since 2006, certification has made a decisive
contribution to the transparency and reliability
of social security accounts:
- the degree of reliability of the financial
statements of the main social security scheme
is the subject of an independent and reasoned
opinion;
- the Court
’
s findings on the effectiveness of
internal
control
systems
provide
specific
guidance for improving the correct payment of
benefits
and
the
completeness
of
the
collection of social security contributions.
Changes to presentation of the certification
report
To improve readability, the presentation of the
report on the Certification of the French
General
Social
Security
System
Financial
Statements is changing this year:
- Some wording has been adjusted to be
even closer to the wording recommended by
the International Standards on Auditing;
- the Court
’
s observations make a clearer
distinction between “
material misstatements
”
which
reflect
disagreements
about
the
financial statements on the one hand, and
“
deficiencies
in
evidence
”
which
reflect
uncertainties about the amounts recognised in
the accounts on the other.
These changes in presentation do not, in
themselves, have any effect on the Court
’
s
opinions.
The Court
’
s opinions on the 2021 financial statements
For financial year 2021
, the Court:
⚫
issues a qualified opinion on the accounts
of the five benefit branches of the general
scheme
;
⚫
declines to certify the accounts of the
contributions collection activity
(the Court
also found it impossible to certify the 2020
accounts);
⚫
issues a qualified opinion on the financial
statements of the national bodies
.
For the future, any changes to the Court
’
s
findings depend on:
•
stronger measures to
control financial
risks affecting social security contributions
(incompleteness) and benefits (allocation and
calculation errors)
;
•
implementation of
large-scale IT projects
helping to meet this objective;
•
improvements to the justification given of
certain accounting entries
.
4
The
Court
’
s
main
findings
on
the
2021
financial
statements
1 -
The methods of recognising receipts of social security contributions from self-employed
workers do not give a true picture of the deficit of the general scheme in 2021 and of its
changes between 2020 and 2021.
In the final statements, the
deficit of the general scheme
and the old-age support fund
(FSV) is €24.4bn, compared with
€38.7bn in 2020.
In
2020,
the
amount
of
provisional
calls
for
social
security contributions by the
self-employed was halved to
support their cash flow during
the health crisis.
As a result, the amount of
receipts in 2020 was reduced.
Meanwhile, the amount of the
2021
receipts
has
been
increased, as the 2021 figure
includes
the
adjustment
of
contributions due by the self-
employed with regard to their
2020 income that they declared
in 2021.
This scope effect increases the
2021 net earnings of the general
scheme by €5 billion. For the
social organisations that receive
social
security
contributions
from self-employed workers as a
whole, this increase amounts to
€6.7 billion.
In
order
to
ensure
the
comparability of the 2020 and
2021 financial years, the Court
recommended neutralising the
scope effect from the reduction
in
the
social
security
contributions called in 2020, by
correcting the opening balance
sheet for 2021 and drawing up a
pro forma
income statement for
2020.
This recommendation was not
followed. If it had been, the
pro
forma
deficit for the general
scheme for 2020 would have
been €31.2bn and the deficit for
2021 would have been €27.8bn.
The deficit would have been
reduced
between
2020
and
2021 by only €3.4bn, instead of
the €13.4bn figure shown in the
2021 financial statements.
Change in the balance of the general scheme and the FSV from 2006
to 2021 (in €bn)
In view of the significance of this disagreement, the Court declined to certify
the accounts of the contribution collection activity, which accounts for all
receipts of social security contributions from the self-employed and reports on
them to beneficiaries. It also noted the effects of this disagreement on the
accounts of the health insurance, family, old-age and, to a lesser extent,
autonomy branches, which recorded receipts of social security contributions
from self-employed workers on the basis of its notifications.
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2 -
Other difficulties have affected the preparation or justification of the financial statements
The Court thus noted:
•
a disagreement linked to
the incomplete recognition by
Acoss, for the financial years
2020
and
2021,
of
the
exemptions
and
payment
support given to employers in
sectors
particularly
badly
affected by the health crisis
and of the flat-rate reductions
given to the self-employed in
these same sectors;
•
uncertainties
in
the
computation
of
accrued
income from rebates paid by
pharmaceutical companies;
•
for the health insurance branch, an erroneous increase on the balance
sheet, errors in the categorisation of certain transactions in the accounts and
significant room for improvement in the justification of some accounting
entries;
•
the CNSA’
s difficulty in preparing its financial statements and providing the
Court with evidence to support their figures. Many irregularities were detected
during the audit.
3 -
The creation of the fifth autonomy branch still incomplete
The autonomy branch was created on 1 January 2021
by the law of 7 August 2020 on the social debt and
autonomy. The Social Security Finance Act for 2021
stipulated that the National Solidarity Fund for
Autonomy (CNSA), which is responsible for managing
the branch, would produce financial statements for the
first time for the 2021 financial year.
The Court noted the difficulties experienced by the
CNSA in producing financial statements in reliable
conditions and in carrying out its tasks as a national
fund in the general scheme more generally.
In some respects, the creation of the 5th branch of social
security has been insufficiently supported.
The
CNSA
’
s
own
internal
control
is
inadequately
structured in view of the branch
’
s financial issues.
To date, the autonomy branch does not have sufficient
authority to obtain more internal control resources for the
health insurance branch (which pays financial assistance
to medical-social welfare establishments on its behalf),
the family branch (which pays the education allowance for
children with disabilities) and the departmental centres
for those with disabilities (MDPH).
4 -
In the context of the continuing health crisis, a gradual but still incomplete return to
normality in terms of internal control
Financial 2021 again featured continued measures
related to the health crisis.
The suspension of automated procedures for the non-
legal and enforced collection
of social security
contributions from contributors was maintained. Plans
were initiated for the gradual settlement of the
considerable debts accumulated by contributors as a
result of the deferral option granted to them. The level
of debt owed to URSSAF increases the financial
significance of the risk of imposing limits on these
receivables. To date, audit activities on the declared
social security contributions base have not returned to
their pre-crisis level.
The health insurance system has continued to implement
exceptional cover schemes for payments to health care
institutions and has not resumed its audits on their
valuation or billing of treatments. It is applying lighter
checks on billing by health professionals. There are other
shortcomings in the checks made on health crisis
management
(testing,
vaccination
and
remote
healthcare).
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5 -
The deployment of major new IT tools is continuing, with significant progress expected
in the long term
The development of teletransmissions and digital
interactions between recipients of social benefits and
welfare providers, accelerated by the health crisis,
continued in 2021.
Declarations by recipients of benefits paid by the CAF
frequently contain errors, unintentional or otherwise.
The monthly resources system, populated by data
transmitted
by
employers
and
social
security
organisations, is intended to make the amounts of
wages and benefits taken into account to calculate
payment of top-up benefits for low-paid workers and
income support more reliable.
Errors in the career data used to calculate pension awards
are common. The deployment in 2021 of the first
functionalities of the new career adjustment system
(called
Syrca
) is accompanied by the gradual use of the
single career management record system (RGCU), an inter-
scheme
repository
of
career
master
data.
These
developments could reduce the errors in career data.
The reliability of health insurance benefit payments
depends
on
the
development
of
digital
medical
prescriptions, tougher automated checks to verify in
advance the regulatory compliance of invoices sent by
health professionals and establishments, and the increase
in checks on these invoices after the event.
6 -
Financial risk management systems remain insufficiently effective
The extent of errors affecting benefits paid and
recorded in relation to the legal rules applying to their
payment
and
calculation
affects
the
correct
representation
in
the
various
benefit
branches
’
financial statements of their rights and obligations with
regard to their key third parties, i.e. insured persons,
benefit
recipients,
healthcare
professionals
and
establishments paid by insurance providers.
In 2021, the capability of internal control systems to
prevent or detect errors changed in different ways in
different branches.
Progress has been made in the area of old-age
pensions. The mobilisation of executing authorising
officers has made it possible to prevent more errors in
the awarding and calculation of benefits. However,
these errors continue to run at a high level.
On the other hand
, errors affecting health care
reimbursements and daily allowances have increased
in 2021.
In 2021, the difficulties encountered by the family
branch in implementing the housing benefit reform
(calculation
of
benefits
based
on
contemporary
working income and welfare benefits
and quarterly
revision of the amount), led it to once again slim down
its financial risk control mechanisms in order to
redeploy
staff.
These
systems
are
declining
in
effectiveness and are insufficiently adapted to the
increased risk of benefit miscalculation arising from
certain reforms, such as housing benefit.
For all benefit branches in the general scheme, the
values of the indicators that measure errors affecting
benefits are moving further and further away from the
reduction targets set by their agreements on objectives
and management with central government for the
period 2018-2022
One in seven newly-awarded pension benefits
was affected by at least one error of financial
significance in 2021. This is also the case for one
in ten daily allowances.
The aggregate amount of errors affecting the
benefits paid by the CAFs in 2020 due to
declarative data not corrected after 24 months
is €5.3bn,
notably for income support, the top-
up benefits for low-paid workers and housing
benefits.
The aggregate amount of errors affecting health
care payments in 2021 is €2.5 billion, but this is
a
minimum
amount
(in
particular,
it
does
not
cover
erroneous payments because entitlements are
wrongly continued to cover certain insured
persons, or stays in public and private non-profit
hospitals).
Anti-fraud measures
In 2021, the family branch repeated the survey
it conducted each year: it shows an upward
trend in cases of fraud, with certain benefits
being
particularly
susceptible
(income
support).
The health insurance branch has estimated
fraud in two areas (procedures billed by
private nurses and supplementary health
insurance) and plans to extend this approach
to other activities; this initial information
confirms that fraud represents a significant
issue.
For the old-age branch, the first results are
expected in 2022.