What we audited
This spending area covers expenditure in the fields of foreign policy, support to EU candidate and potential candidate countries, as well as development assistance and humanitarian aid to developing and neighbouring countries (with the exception of the European Development Funds).
Expenditure is dispersed throughout more than 150 countries, using a broad range of cooperation instruments and delivery methods. Spending is implemented directly by Commission directorates‑general, either from their headquarters in Brussels, by EU delegations in recipient countries, or jointly with international organisations.
What we found
| Affected by material error? |
Estimated level of error1: |
| Yes |
2.7% (2013: 2.1 %) |
1 Equivalent estimated levels of error for 2013 to reflect the new MFF headings.
The majority of errors we identified from our audits involve ineligible expenditure claimed by final beneficiaries, particularly expenditure incurred outside the eligibility period, inclusion of ineligible taxes, non‑compliance with the rule of origin, and indirect costs wrongly charged as direct costs. We also found cases of beneficiaries claiming costs without supporting documentation to justify the expenditure, instances of non‑compliance with procurement rules, as well as errors in calculation.
Other errors we found related to the acceptance and clearance of payment by the Commission for services, works or supplies that had not yet been incurred by the beneficiary.
Example: Expenditure not incurred
The Commission concluded a €6.5 million contribution agreement with a Caribbean bank for the establishment of a revolving credit facility for sugar cane replanting in Belize. In 2014, the Commission accepted expenditure amounting to €2.3 million, of which €740 000 represented loans to farmers which had been approved by the bank but had not been paid out at the time. They led to the Commission clearing a higher amount of pre‑financing than was justified.
The testing of transactions of EuropeAid, one of the directorates‑general of the Commission managing a significant
part of the Global Europe spending, revealed, in some cases, a failure to detect errors. The shortcomings in these
checks, carried out ex ante by auditors appointed by the beneficiaries, led to the reimbursement by the Commission
of ineligible costs.
What we recommend
We recommend that the Commission:
- sets up and implements internal control procedures to ensure that pre‑financing payments are cleared on the basis of actual incurred expenditure; and
- strengthens the ex ante controls for grant contracts, including the use of risk‑based planning and systematic follow‑up and on‑the‑spot visits.
Want to know more? Full information on our audit of EU expenditure for Global Europe can be found in Chapter 8 of the 2014 annual report on the EU budget.