1
CERTIFICATION OF THE FRENCH GENERAL SOCIAL SECURITY
SYSTEM ACCOUNTS
–
Financial year 2022
Main points
The certification role and its challenges
The mission entrusted to the Court of Accounts
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 accounts,
which it submits to the French parliament and 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 accounts of the branches
of the general social security system and the accuracy of the image these accounts provide of
their results, financial position and assets.
Scope of certification
The Court’s Annual Report presents
ten opinions
:
•
six relating to the accounts of the contributions recovery 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 Family Allowances
Office (CNAF) and National Pension Fund (CNAV). The accounts of the National
Solidarity Fund for Autonomy (CNSA) are those of the autonomy branch.
Social security contributions subject to certification
The recovery activity, i.e. the network of URSSAF agencies and CGSS in overseas territories,
covers the recovery 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 by this network for branches of the general system and other
beneficiaries amounted to €
559.5 billion, of which €
430.7 billion for the general system and
€
128.8 billion for other beneficiaries.
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Taking into account other income and internal transfers to social security, including from central
government and the departments (€
105.3 billion, compared with €
103.4 billion in 2021), the
amount of income falling within the Court’s certification remit totalled
€
664.8 billion (25.2 %
of GDP) in 2022
, including €
483.8 billion for the branches of the general social security
system.
Breakdown of allocations in 202
2 (in € billion)
A-A: AGIRC-ARRCO FC: France compétences
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, disability allowance for adults (AAH), top-up benefits for
low-paid workers) and the departments (income support).
By 2022, these costs had risen to €
556.2 billion, 21
% of GDP, including €
503.9 billion for the
branches of the general system.
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Expenditure of the general system (as a % of expenses for 2022)
Source: Court of Accounts
The contribution of the financial statements audit
Since 2006, the financial statements audit has made a decisive contribution to the
transparency and reliability of social security accounts:
- the degree of reliability of the accounts of the main social security system 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 recovery of social
security contributions.
In its report on the certification of the accounts of the general social security system, the Court
distinguishes between:
-
“material misstatements”, which reflect discrepa
ncies with the accounts; and
-
“evidence deficiencies”, which reflect uncertainties about the amounts recognised.
The Court’s opinions on the 2022 accounts
For financial year 2022, the Court of Accounts :
•
has issued an adverse opinion on the accounts of the family branch and the CNAF
(the Court issued a qualified opinion on the 2021 accounts);
•
has issued a qualified opinion on the accounts of the remaining four benefit
branches of the general system;
•
has issued a qualified opinion on the accounts of the recovery activity
(on which
the Court issued an adverse opinion in 2021);
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•
has issued a qualified opinion on the accounts of the national bodies.
In the future,
changes in the Court’s findings will depend on
increased resources being allocated
to large-scale projects relating to computer-based systems and internal control
, in
order to control the financial risks affecting social security contributions (non-
completeness) and benefits (allocation and calculation errors), and
improving the
justification of accounting computations and estimates.
In total, the Court of Accounts has made 54 observations on all the branches and recovery
activity of the general system.
It identified 11 material accounting misstatements, compared with 14 in 2021 (-3), and 43
evidence deficiencies, compared with 40 in 2021 (+3).
The Court’s main findings on the 2022 accounts
1 - The 2022 financial year is subject to the specific context of the consequences of the
adverse opinion on the 2021 accounts of the recovery activity and the consequences
that the French parliament has drawn from this and entered into the Social Security
Finance Act (LFSS) for 2023
In its report on the financial statements audit of the general system for 2021, the Court noted
that the comparability of the income from social security contributions of the self-employed and
the results of their beneficiaries between the 2020 and 2021 financial years was not
guaranteed. This major discrepancy across the accounts led the Court to issue an adverse
opinion on the 2021 accounts of the recovery activity.
In order to ensure the comparability of the 2022 financial year with the 2021 financial year, the
Court requested as part of its audit that
pro forma
accounts be drawn up for the 2021 financial
year. This recommendation was not followed. If this had been the case, a
pro forma
deficit of
€
27.7 billion would have been recorded for the general system in 2021, after neutralising in
2021 the effect of the adjustment of instalments called for in 2020.
Given that the organic legislator has specifically provided for the introduction of a law approving
social security accounts, the Court considers that the modification by law of the balance tables
must be presented in the accounts for the 2022 financial year, to serve as a reminder of the
2021 accounts. This
discrepancy relating to the presentation of the income from social
security contributions from the self-employed between the 2021 and 2022 financial
years affects the accounts of the recovery activity as well as the balances for the 2021
financial year of the healthcare, family and old-age branches and, to a lesser extent, the
autonomy branch of the general system
, leading the Court to note a material anomaly
affecting each of these sets of accounts.
Changes to the balance tables by the French parliament when the LFSS for 2023 is adopted
The balance tables are drawn up on the basis of the income statement of the branches of the general
system or of the basic systems as a wh
ole. They present an aggregated amount of “income”
(corresponding to the income recorded in the accounts, after restatement), an aggregated amount of
“expenditure” (corresponding to the expenses recorded in the accounts, after restatement) and a
“balance”
which corresponds exactly to the result recorded in the accounts of each branch.
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During the examination of the Social Security Finance Bill (PLFSS) for 2023, the French
parliament amended the balance tables for the general system and the compulsory basic social
security systems.
In fact, it has approved an amount of income for the general system branches for
2021 that is €5 billion lower than that shown in the accounts approved by these branches, due to a
correction relating to this income. The deficit is
affected by the same amount (€27.7 billion instead of
€22.7 billion).
The national bodies of the general system and their supervisory bodies have decided not to change the
presentation of the accounts and only to explain in the notes to the accounts of the branches of the
general system the data included in the balance table approved by the LFSS for 2023.
The Court of Accounts considers that the information provided in the notes to the accounts of the
recovery activity and the branches concerned for the 2022 financial year does not allow for a satisfactory
assessment of the effects of this impairment of the true and fair view of the 2021 accounts, which are
repeated in those for the 2022 financial year. Furthermore, this presentation does not reflect the scope
of the decisions adopted by the French parliament during the examination of the draft LFSS for 2023.
2 - The 2022 financial year will continue to be affected by the consequences of the health
crisis
With regard to
recovery activity
, exceptional measures were taken in the context of the health
crisis. ACOSS has continued to suspend the application of some of its internal control systems
in 2022, in the absence of a complete resumption of the usual automated measures for the
enforced, out-of-court recovery
of receivables. URSSAF’s receivables from contributors, which
are still at a high level, are particularly exposed to the risks of non-recovery and limitation
periods.
For
the healthcare branch
, 2022 was the year in which the crisis would be resolved, with a
clear reduction in the amount of expenditure linked to the health crisis as the months go by.
Nonetheless, certain exceptional measures (such as special daily allowances and guaranteed
funding for healthcare agencies) were maintained throughout the year, and several control
measures were reduced (on daily allowances) or suspended (on the pricing of stays by
healthcare establishments).
3 - Contrasting trends in financial risk management systems in 2022
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’ accounts of their rights and obligations with regard to their key third parties, i.e.
insured persons, benefit recipients, healthcare professionals and agencies paid by insurance
providers.
The main feature of the 2022 financial year in terms of internal control remains the decreased
ability of risk management systems to prevent financial risks, with varying trends depending
on the branch.
While progress had been noted by the Court of Accounts in 2021 for
the old-age branch
due
to increased efforts by the national fund and the network to prevent errors in the payment of
benefits, in 2022 errors continued to be at a high level (15 % of cases), particularly among the
branch’s main bodies.
Errors affecting
healthcare branch
reimbursements are on the rise, with the frequency of
errors in this area increasing to over 10% of reimbursements. Errors relating to daily
allowances remain at a high level (9.4 % of cases).
For all benefit branches in the general system, the values of the residual financial risk indicators
achieved in 2022 are far from the targets set by their agreements on objectives and
management with the central government for the period 2018-2022.
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One in seven newly-awarded pension benefits was affected by at least one error of financial
significance in 2022, as in 2021. This is also the case for one in ten daily allowances.
The aggregate amount of errors affe
cting health care payments in 2022 is €
3.4 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).
Social security benefit fraud
Following the implementation of the interministerial roadmap set for december 2020 and in response to
the Court’s requests:
- the
health insurance system
continued and extended its fraud estimation process to several areas
in 2022 (general practitioners, mobile emergency doctors, massage physiotherapists, pharmacists),
confirming that fraud is a significant issue, with total estimates of between €
0.9 and 1.3 billion for this
area alone;
- the
old-age branch
has produced an initial estimate of fraud in 2022 (€
0.2 billion) which, although it
has the limitations noted in the basis of the opinion on the accounts of the old-age branch, indicates a
positive development;
- the
family branch
has not repeated the investigation it used to carry out each year, as fraud is now
estimated every two years.
4 - The situation of the family branch leads the Court of Accounts to note that it is not
in a position to certify its accounts
The situation of the family branch is more worrying than that of the other branches.
After
taking into account the difficulties encountered in implementing the 2021 housing benefit
reform, in the previous audit report, the Court of Accounts emphasised the continuing
deterioration or lack of any significant change in the family branch’s performance in terms of
risk management, noting the declining effectiveness of the measures implemented and the
insufficient anticipation of the adjustments made necessary by the reforms. The situation has
changed little in 2022.
A quarter of the amounts paid in 2022 in benefits for low-paid workers are affected by errors
that have not been corrected nine months after payment.
This proportion is almost one-sixth for RSA and one-eighth for housing benefit.
Adverse opinion on the branch’s accounts
-
a further deterioration in the residual financial risk indicator at 24 months to 7.6 % for benefits paid in
2021 (compared with 7.1 % for those paid in 2020 and 5.5 % for
those paid in 2019), equating to €
5.8
billion in undue payments and arrears that will never be detected, an amount that has doubled in four
years;
- despite the changes in these indicators, audits have been maintained at a lower level than before the
health crisis and the number of supervisions by the executing authorising has been reduced to ensure
the quality of settlements;
- progress has been attributed to changes in two essential projects, but the effects will only be felt in the
medium term.
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5 - There are implementation difficulties involved with the new IT tools that call for
changes in risk management systems
The
development of teletransmissions and digital interactions
between recipients of
social benefits and welfare providers, which had been accelerated by the health crisis,
continued in 2022.
While the declarations made by recipients of benefits paid by the
family branch
frequently
contain errors, whether deliberate or not, the monthly resources system (DRM) offers the
possibility of relying on trusted third parties to acquire data relating to the amounts of salaries
and social benefits.
In terms of the
old-age branch
, the new system for making careers more reliable is being
introduced very gradually. Despite an effort to update the data in the inter-regime exchange
register (EIRR) in 2021, there will still be a large number of increases to survivors’ pensions
and the minimum contributory pension awaiting calculation in 2022, which introduces
uncertainty into the timing of this expense and the estimation of its provision.
In the case of the
healthcare branch
, the IT projects relating to the settlement of benefits in
kind
(METEORe)
and daily allowances
(ARPEGE)
, the replacement of the medical service
software
(MATIS)
and the switch to electronic prescriptions are taking an increasingly long
time to implement, despite the fact that these tools, combined with an increase in a posteriori
checks, are essential for ensuring that the settlement of benefits is reliable.
The increase in data exchanges between systems and organisations
highlights the need for
strengthened governance in the realisation and management of projects
, as well as the
need to adapt internal control measures.
The high degree of diversity among
computer-based accounting systems
and their
limitations indicate that projects aimed at providing the national bodies of the general system
with common tools that facilitate the production of accounts and limit the risk of errors should
be accelerated.
6 - Other discrepancies, as well as limitations with regard to the audit of the accounts,
have been noted
Generally speaking, there is considerable room for improvement in the justification of the
health insurance branch’s
accounts, despite the progress that has been made, in particular
with an improved distinction between provisions for service liabilities and accrued liabilities, in
response to a request made by the Court of Accounts several years ago.
Improvements were also made to the accounts of the
autonomy branch
in 2022.
Discrepancies across
the accounts for recovery activity
are linked to persistent non-
compliance with the principle of accrual accounting. Uncertainties surrounding the recovery of
receivables formerly covered by a repayment plan limit the level of assurance regarding the
reliability of the amount of impairment calculated.
In addition, uncertainties continue to affect the estimate of income receivable from rebates
owed by pharmaceutical companies, which will rise sharply again in 2022 (with possible effects
on the balance of the health insurance branch, as well as on the rate of change in expenditure
covered by the National celling for health insurance expenditure
(ONDAM).