The European Court of Auditors (ECA) issued a clean opinion on the reliability of the 2024 EU accounts and on the legality and regularity of revenue for 2024, according to its annual report published last Thursday. ECA also found that the estimated level of error in spending from the EU budget decreased in 2024, breaking an increasing trend during the COVID crisis.
Still, the overall error rate and the existence of material errors in especially cohesion funding remain a concern and obliged the EU watchdog to issue two separate opinions: an ‘adverse’ opinion on EU expenditure, for the sixth consecutive year, and a ‘qualified’ opinion on the Recovery and Resilience Facility (RRF), the main pillar of the EU’s pandemic recovery package.
The use of different methodologies for estimating the error rate is a constant sticking point between ECA and the European Commission and results in different estimates. The issue was discussed at a hearing in the European Parliament's Committee on Budgetary Control (CONT) on Thursday morning directly after the report had been published.
The hearing started the Parliament’s discharge procedure as to whether grant discharge to the Commission for its implementation of the EU budget and approve the budget. The decision will be taken in plenary in April 2026.
The auditors told The Brussels Times that discharge is a political decision. Notwithstanding its audit opinions, ECA does not recommend for or against discharge. As the EUs independent external auditor, its role in this procedure is defined in article 287 of the treaty (TFEU), which requires it to provide the co-legislators with a statement of assurance on the reliability, legality and regularity of the accounts.
Deciding on the discharge is the prerogative of the Parliament and its most powerful form of oversight, underlined MEP Niclas Herbst (EPP, DE), chair of the budget control committee, when opening the discharge debate.
“While the reduction in the level of error is a step forward, there are still too many irregularities across EU spending,” commented ECA President Tony Murphy when presenting the report on Wednesday, shortly after having been reelected for a second term as President until 1 October 2028. “These are down to persistent weaknesses in oversight and accountability structures.”
He added that, “The findings of this year’s report and other recent publications provide lessons that are highly relevant as the negotiations on the EU’s seven-year budgetary period – the 2028–2034 Multiannual Financial Framework (MFF). Policymakers should draw lessons from our findings to ensure the sustainability and transparency of future EU budgets.”
Furthermore, in 2024, ECA reported 19 cases of suspected fraud to OLAF, the European Anti-Fraud Office. This can be seen as a surprisingly low number considering the high error rate. ECA defines errors as referring to cases where money was not used in compliance with EU and national rules, perhaps because of their complexity and red tape.
While errors should be corrected and the money recovered, they do not necessarily imply intentional fraud. At the hearing, Tony Murphy assured that ECA has no discretion in the matter and that all cases of suspected fraud are sent to OLAF.
Error rates across policy areas
According to the previous annual report, the error rate in spending increased to 5.6% in the 2023 budget (2022: 4.2%; 2021: 3.0%). The auditors highlighted last year that the increase in the estimated error rate was largely driven by the errors found in cohesion expenditure reaching 9.3%. Cohesion (including the structural funds) accounts for 40 % of the budget and is a high-risk spending area.
In 2024, the overall error rate decreased to 3.6% but remains material. It is too early to say if it signals a decreasing trend as the estimate is the mid-point in a confidence interval (2.6% and 4.6%), based on a statistical sample. A small comfort for the European Commission was that the error level in administration expenditure remains immaterial.
The error rate is compiled by consolidating rates identified across various policy areas, ECA President Murphy explained. Starting with cohesion, the error rate decreased to 5.7%. Ineligible costs/projects and procurement infringements remain the main contributors to this error rate.
Second place in the error ranking was taken by Neighbourhood and the World. This policy area, which includes development aid and assistance to candidate countries, was assessed for the first time since 2016. There the error rate was estimated to 4.9 %. Ineligible costs and procurement breaches account for over half of identified errors.
The error rate in the single market, innovation and digital, which encompasses mostly research and innovation expenditure, remains also material at 3.2% (3.3% in 2023); Research spending is considered a high-risk area, with a large number of errors related to personnel costs.
Natural resources and environment, including agriculture and rural, is a major spending area. There the error rate increased to 2.6% (2.2% in 2023), still above the materiality level of 2%. There the main issues include administrative errors, ineligible costs/projects, and non-compliance with agricultural, environmental and climate commitments.
“The key takeaway from our work on the EU budget, particularly in cohesion, is that over the past eight years our audits have found many errors that national audit authorities should have detected but did not,” the ECA President summarized. “This undermines the reliability of their work and limits the Commission’s ability to rely on their results.”
Asked in a recent interview with The Brussels Times about the single audit approach, where ECA is relying on the audits carried out by previous layers in the national control and audits system, he replied that the approach has its limitations. “Based on our experience in cohesion policy we cannot fully rely on their work and need to carry out our own audits.”
Concerns about new spending model
The above is valid also in ECA’s RRF audits. “It is especially worrying that these same authorities often oversee the RRF funds and that the Commission’s next MFF proposal relies heavily on them,” he said when commenting on the ‘qualified’ opinion on the RFF expenditure. He warned against a “self-declaration model” where member states attest compliance without independent checks.
2024 was the fourth year of implementation of the RRF, under which EU countries receive funds in exchange for achieving predefined milestones or targets and not linked to costs. According to ECA, payments to member states under the RRF are not contingent upon compliance with EU and national rules unlike traditional budget expenditure.
Of the 28 grant payments paid out under the RRF in 2024, 6 payments did not comply with the applicable rules and conditions. By end-2024 the Commission had disbursed €178.5 billion in RRF grants which is about 50% of available funds. With implementation ending in August 2026, a substantial amount of funds still needs to be disbursed.
A “rush to spend” the remaining money could result in more errors and lack of impact. ECA is adamant that as spending model not linked to actual costs should only be used in the future when it can be ensured that responsibilities are clear, that funding is directly linked to measurable results, and that payments are traceable to actual costs.
ECA raised also concerns about increasing budget pressure due to how borrowing may increase risks for future EU budgets. By 2027, outstanding EU borrowing could surpass €900 billion, the auditors warn, nearly ten times the level before the pandemic recovery package was launched. To safeguard the sustainability of the new MFF, the growing borrowing burden needs to be seriously considered.
Can any conclusions be drawn from the questions and interventions in the budget control committee in what direction its decision on discharge is heading?
“The hearing in the committee is an opportunity for MEPs to ask questions about what they are interested in or seek additional information. However, this does not allow us to conclude in which direction the decision is heading. The decision is the outcome of a complex process which involves a series of hearings and the drafting of proposals for amendments,” the auditors replied.
“No obvious difference by political party group could be noted but a common theme of interest was the next MFF,” an ECA spokesperson said.
The European Commission was represented at the hearing by Piotr Serafin, Commissioner responsible for budget, anti-fraud and public administration. The Brussels Times tried to reach out to him with a question whether he accepted ECA’s concerns and why the Parliament should grant discharge to the Commission but did not receive a reply in time of press of the article.
Does the Commission and ECA still disagree about the risks for next MFF if the same paying model as in the RRF will be used?
“We have repeatedly stated that both institutions have a different role in the control and audit of the EU budget which is reflected in their methodologies for estimating the error level,” ECA replied. We have shared our main messages / challenges concerning the RRF in the review report this year which consolidates a series of RRF audits.”
“The national plans should be based on results, deliver information on actual costs, and provide for sufficient assurance that control systems adequately protect EU financial interests, including checking actual costs and their compliance with EU and national rules. If the possibility of borrowing is considered, it would be important to clearly establish the financing needs and sources.”
