EU auditors publish first ever report on the performance of the EU budget

EU auditors publish first ever report on the performance of the EU budget

The European Court of Auditors (CoA) write in a new report that the EU needs to improve the quality of the performance information about its programmes.

The auditors examined whether the European Commission has a robust process for high-level yearly reporting on the performance of EU policies and spending programmes and on whether they achieve their objectives effectively, efficiently and economically (the "3 E's").

In an earlier report this month - ECA’s annual report on the 2019 EU accounts - the auditors issued an adverse opinion on the EU expenditure because over half of it was deemed to be high risk with an estimated error rate of 4.9 %. The two reports will serve as input to the European Parliament’s debate on approval (discharge procedure) of how the EU budget was implemented.

The auditors sampled nine spending programmes, which make up around 75 % of all payments made by the end of 2019. “The citizens want to know whether EU programmes deliver results and value for money,” said Jan Gregor, the Czech ECA Member responsible for the report and a former deputy minister of finance.

“The Commission has good procedures for preparing high-level performance reports and presents more balanced and clearer assessments than in the past. However, it does not clearly indicate the reliability of reported information.”

The EU’s 2014-2020 budget amounts to €1 092 billion and was allocated to 58 spending programmes. In recent years, ECA has focused on auditing their performance in special reports. This year, in a kind of mega report, it reported for the first time on the overall performance of the EU budget, based on the Commission’s own information and assessments.

The Commission has put in place an elaborate result-oriented performance management system but the results are mixed, according to ECA.  Indicators do not always give the full picture and reports tend to be overly positive. “The Commission does not fully control or guarantee the reliability of performance information,” ECA summarizes.

Obstacles to performance

What were the main obstacles for good performance in the policy areas covered by the report?

“There are various obstacles hindering better performance,” Jan Gregor told The Brussels Times. “To some extent, underperformance is explained by weaknesses in the measurement framework, such as overambitious targets, outdated data and lack of a clear intervention logic, for example in the Common Agricultural Policy.

“We also note programme design weaknesses and implementation problems, such as a late start of implementing programmes, low absorption and accelerated spending towards the end of implementation periods, e.g. in the Cohesion programme. Some obstacles are beyond the control of the Commission, such as a challenging context in providing development aid and external assistance.”

Evaluations play an important role in the performance framework but ECA found that the Commission’s Regulatory Scrutiny Board (RSB) issued negative opinions on the 40 % of the evaluation reports. How does ECA explain that?

“Carrying out evaluations is a very complex task. To some extent, it is normal that methodological and implementation difficulties occur. But one can expect there to be a learning curve. We noted that while the RSB scrutiny frequently leads to improvements in the evaluations’ presentation or the validity of their conclusions, it often comes too late to remedy design or methodological flaws in the evaluations.”

Over the last few years, ECA has seen little improvement in the results of the RSB and hence it recommends the Commission to ensure that lessons learnt from its scrutiny are disseminated.  “The issue of establishing a central evaluation function was outside the scope of the audit. We have not received any indication that decentralised evaluations is a cause for quality problems.”

Input to performance auditing

Performance information is above all collected by the organisations that are carrying out the activities for their self-assessments on whether they are on track. External audit institutions are using the same information for their audits but the availability of performance information is not a condition for performance auditing.

“Reliable performance information is first and foremost needed for managing operations and for taking strategic decisions,” explains Jan Gregor. “Performance auditing may look at the availability and reliability of this information and assess how it was used in decision-making.”

“Performance auditing may to some extent be based on existing performance information but can of course also look at outcomes and impacts of spending programmes in the absence of good performance information. Such performance auditing provides in itself additional and independent information on performance.”

Will the findings in the report result in specific performance audits by ECA? “The new report covering the performance at an aggregate level has indeed the potential of providing valuable information in that respect,” he replied. “In fact, the results of all our audits feed into the programming of ECA’s audit tasks.”

Following up to what extent the EU institutions accept and implement audit recommendations is a recurrent task. In a special chapter in the report, ECA analysed the recommendations from 33 of the 36 special reports published in 2016. In total, ECA followed up on 315 recommendations. Of these, 270 were addressed to the Commission and the rest to other EU institutions and agencies.

Most of the recommendations of the performance audits have been implemented but the rate of implementation by the Commission is lower than that of other auditees. How do the EU institutions differ in this regard and would you expect a higher uptake and implementation of recommendations?

“Overall, we would indeed expect a higher uptake and implementation of recommendations,” ECA member Gregor replied. “The Commission implemented fully or in most respects 77% of the recommendations. For other auditees, this percentage amounts to 91%. The Commission receives a larger number of recommendations, of much more complex nature than other institutions.”

Jan Gregor concludes on a positive note. “The budgetary control committee discussed the report already the first working day after its publication. We consider this to be a positive signal. The reactions received to the first ECA report on performance of the EU budget at an aggregate level were very encouraging.”

M. Apelblat

The Brussels Times

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