The European Commission tends to be more optimistic than the EU auditors when it comes to reporting on the achievements of the EU budget, according to a review report released on Monday by the European Court of Auditors (ECA).
It is hardly surprising that the Commission takes a more positive view on its achievements than EU’s financial watchdog when publishing the Annual Management and Performance Report (AMPR). The report is the Commission’s main high-level performance report on the EU budget.
What is more surprising is that there is no consensus on the overall error rate in the EU spending because of differences in the methodologies used by ECA and the Commission to estimate the error level.
By means of the report, the college of commissioners also takes political responsibility for management of the EU budget. ECA stresses that the AMPR is crucial for the European Parliament and the Council of the EU, which hold the Commission to account for implementing the EU budget through the annual discharge procedure that is currently ongoing.
The EU budget is a key vehicle for delivering on the EU’s goals, and the EU’s oversight bodies must have reliable information at hand,” said Jorg Kristijan Petrovič, the Slovenian ECA member in charge of the review.
“Although the Commission’s procedures for its high-level reporting remain good overall, we still see scope for improving the quality of performance data, while its reporting on budgetary performance is frequently more positive than ours.”
As regards the EU’s 2022 budget spending of €196 billion, ECA has reported many more payment errors than the Commission (4.2 % vs 1.9 %). The biggest difference was in the area of cohesion spending, which totalled €79 billion or 40 % of the EU budget, where the auditors reported a 6.4 % error rate, while the Commission’s maximum estimate was 2.6 %.
As previously reported, ECA signed off the 2022 EU accounts as giving a true and fair view of the union’s financial position but found that the errors in spending from the EU budget increased significantly in 2022. As in the last four years, the auditors concluded that the level of error was material and pervasive, and have thus issued an adverse opinion on the EU’s spending in 2022.
The Commission has taken note of the ECA report, a Commission spokesperson told The Brussels Times at a press conference on Tuesday. It welcomed that the auditors had found that the Commission has good procedures in place for the reporting although there is still room for improvements.
As regards the significant differences in the error estimates, they depend on different methodologies. ECA’s estimates are based on a representative sample of payment transactions while the Commission’s management assurance is obtained in a “bottom-up approach” where the Commission is relying on “hundreds of thousands of controls made on EU and national level”.
There is apparently no intention to find common ground and agree on whether the error level is above or not the so-called materiality level of 2 %. The Commission is not obliged to reply formally to a review report.
Another issue is the timing of the Commission’s performance reporting. The annual AMPR is made available to ECA in June of the following year, by which time the auditors have already completed their audit work for the annual report of the year in question. This somewhat limits the coverage of the AMPR in its annual report for the same year and ECA and the Commission talk past each other.
In its discharge resolution earlier this year, the European Parliament remarked that due to the legal deadlines in place, ECA may find it difficult to include its assessment of the AMPR in its annual report.
The Parliament called for ECA to take account of the AMPRs in its “annual reporting or through a separate document if necessary in order to account for the annual discharge exercise”. In the past, ECA used to split its annual report on the EU budget in two parts but this year it returned to previous practice and published a separate review report on the budget performance.
The Commission spokesperson commented that the Commission is complying with the regulatory deadline for publishing the AMPR and that it is up to the auditors to decide when to review it.
M. Apelblat
The Brussels Times
