Europe's budget management is "out of control", a Brussels whistleblower has warned.

Leaked documents from the EU's spending watchdog have backed claims by the European Commission's former chief accountant that budgetary controls are fundamentally flawed.

Europe's 98 billion euro - £65 billion - budget lacks "fundamental" accounting controls, Marta Andreasen told the FT.

She was removed from her post in May after refusing to sign the EU's accounts for 2001.

Andreasen told the newspaper that she discovered parts of the multi-billion budget management process "out of control".

She believed that Brussels was on track to administrative reform following the resignation of the entire Commission three years ago over lax control of public finances and a failure to tackle fraud.

"I thought I was going to be involved in a reform process. I wasn't aware that the shortcomings of the system and the accounting framework were so fundamental," she told the FT. "I tried to show them the urgency of the situation.

"If your bank gives you the wrong balance, you would want the problem sorted out straight away, not five years later."

Andreasen claims that her campaign for a new accounting system led to her being removed form her post.

Commission vice-president, Neil Kinnock, launched disciplinary proceedings against Andreasen, alleging she made unfounded allegations against senior officials and broke staff rules.

An EU Court of Auditors paper also takes Brussels accounting controls to task - after 1999 and 2000 annual reports by the spending watchdog highlighted problems with the commission's Sincom 2 system.

"The commission has been warned. but to date has not taken any remedial action," the leaked report says.

The auditors warn that "no account has been taken of generally accepted accounting standards, mainly double-entry book-keeping" in the system.

"Failures abound and are a waste of public funds (it is impossible to put a figure on the amount involved)."

Although admitting that "technical errors" existed, Brussels officials have said the auditor's report "contained inaccuracies and the tone of the language was inappropriate".

UK MEP Chris Heaton-Harris believes Brussels managers are covering up for the absence of basic accounting controls.

"These are the most serious accusations to have emerged since the old commission's dismissal and come at a time when the news is full of the commercial world's accounting failures," he said. "This is truly turning into a cover-up commission."