EU auditors call for financial management overhaul

10 Nov 15

A “wholly new approach” to the management of European Union funds is needed, the European Court of Auditors has said.

In its latest annual report, published today, the court signed off on all of the EU’s 2014 accounts – the eighth consecutive year this has happened. The ECA said, however, that a financial management overhaul ­‒ including a rethink of priorities, a freeing up of backlogs and greater compliance with the rules and achievement of desired results ‒ will be crucial if the EU is to address the challenges it faces.

ECA president Vítor Caldeira said: “The EU must invest its money better. It must ensure its investments match its priorities more closely, simpler rules are framed to achieve results and resources are managed more efficiently.”

The auditors found that their estimated error rate for expenditure ‒ which measures approximately how much money was paid out while not fully in compliance with EU rules ‒ had fallen only minimally since 2013, from 4.5% to 4.4% last year.

The error rate for expenditure under shared management between the European Commission and member states was almost exactly the same, at 4.6%. The highest levels of error were found in spending under ‘economic, social and territorial cohesion’ (5.7%) and ‘competitiveness for growth and jobs’ (5.6%).

The lowest levels of error were in administrative expenditure (0.5%) and collection of EU revenue, which was entirely free from error.

The auditors noted that the estimated error rate would be much higher had it not been for the commission and national authorities’ corrective action and recovery efforts.

The commission said that between 2009 and 2014 around €3.2bn was collected due to “rigorous” financial corrections and recoveries.

However today’s report highlights that more could have been done, and calls on the commission to step up its corrective efforts.

It also urged the commission to realign its budget with the EU’s long-term strategic goals and ensure spending achieves the desired results.

Kristalina Georgieva, European Commission vice president in charge of budget and human resources, said: “EU money belongs to our citizens and we owe it to them that every euro is well spent. We share the ECA’s view that new realities require new action.

“We at the commission are working to align the budget with priorities, focus on results and strengthen controls.”

The commission highlighted an initiative set up this year that uses clear performance indicators to monitor the results of projects and link further financing to results achieved.

In response to the ECA’s observation that the commission allocates funds to member states without sufficiently considering their capacity to invest them, the commission said it was simplifying rules to improve ease of access and actively encouraging member states to improve their financial management and control systems.

The commission also said it shares good practice guidance with and provides training for member states, who control 80% of the budget under EU management, for this purpose.

This is intended to ensure member states detect, report and correct irregularities before the EU audit. If member states are unsuccessful in this they will lose the money they are entitled to, the commission said.

Did you enjoy this article?

Related articles

Have your say


CIPFA latest

Most popular

Most commented

Events & webinars