In its landscape review of risks to the financial management of the EU budget, published today, the European Court of Auditors (ECA) identifies key issues for good financial management of the EU's finances. All actors dealing with the EU budget, say the EU auditors, should focus on obtaining results and EU added value, while ensuring that EU money is properly accounted for and spent as intended.
“The governments and taxpayers of the Member States want to see better value being achieved for the funds they contribute to the EU budget” stated Dr Igors Ludboržs, the ECA Member responsible for the Review. “They want to see that EU money is spent properly and is well managed, that it is used for the purposes approved by the European Parliament and Council, and that it results in the desired outcomes.”
EU auditors found that complex eligibility rules and other conditions can lead to poor targeting of EU funds and sub‑optimal use of the EU budget. In some budget areas there are too many layers of rules, which may lead to differing interpretations and thus inconsistent application of rules and increased risk of error. Many of the errors found by the auditors relate to the poor application of procurement rules and procedures – either deliberately or because the rules are not well understood.
Because of the emphasis on spending the EU budget, say the auditors, those managing the activities and projects often focus on compliance with the conditions for getting and using the money, regardless of the results achieved. The EU budget should offer clear and visible benefits for the EU and its citizens, which could not be achieved by spending only at national, regional or local level. However, in some cases the EU budget may do no more than simply increase total funds available, without adding a particular EU aspect. EU funds are sometimes used for activities that would have been carried out by the Member States and other beneficiaries anyway (‘deadweight’) or the funds may be insufficient to achieve the intended outcomes.
The Commission coordinates the many actors involved in spending the budget and faces the challenge of ensuring that the right data is collected from intermediaries on a timely basis and that it is checked effectively. The auditors found that the Commission’s monitoring and financial and performance management are often based on limited, incomplete or unreliable information. The Commission can apply corrections to the expenditure claimed from the EU budget by Member States by rejecting it or clawing it back. Such corrections are complicated to administer and provide little incentive to Member States to address weaknesses in their systems, since for some categories of spending, notably the cohesion policy, they may substitute rejected expenditure with eligible spending.
In addition to the €908 billion (payments) agreed for the multiannual financial framework (MFF) 2014–2020, Member States will in the future be required to contribute a further €326 billion for commitments made under previous MFFs. This may affect the Commission’s ability to meet all requests for payments in the year in which the requests are made.
Landscape reviews are a new type of publication from the European Court of Auditors (ECA). They consider broad themes based on the ECA’s output, accumulated knowledge and experience. They are intended to serve as a basis for consultation and dialogue with the ECA’s stakeholders, and enable the ECA to make observations on important matters which might not ordinarily be subject to audit. The first landscape review, published in September 2014, addressed issues of EU accountability and public audit arrangements.
Press release: Managing risks to good-quality spending is essential to making the best use of EU money, say EU Auditors
Press briefing by ECA Member Dr Igors LUDBORZS (available on EuropeBySatellite)