On Thursday 28 September, the Court of Auditors of the EU issued a warning over the very high level of payments the EU has still to make against future budgets.
Presenting the annual report of the Court of Auditors on the 2016 budget, which notes a number of improvements, the President of the Court, Klaus-Heiner Lehne, also observed that the amount of unpaid bills was higher than ever in 2016, standing at €238.8 billion.
Avoiding a new payment backlog. “Eliminating the backlog and avoiding creating another should be one of the stated priorities in the planning of EU expenditure post-2020”, Lehne went on to say. He said that the citizens' confidence in the European and national institutions is at stake. It is vital that they know that public money is being spent properly, he said.
If current trends continue, the report anticipates that commitments still to be settled will reach the record level of €262 billion by 2020. These commitments will be settled using the payment appropriations under the forthcoming MFF (multi-annual financial framework), mainly in the first three years of the period, the Court predicts. The previous backlog occurred between 2013 and 2015.
In the details of the report, the Court Auditors was able to issue a favourable opinion on the reliability of the accounts (and therefore to approve them), as it has done every year since 2007.
EU spending was deemed legal and regular, with the exception of the spending based on cost reimbursements. The Court considers that the revenue side is without significant error.
Opinion with reservation rather than negative opinion. For 2016, the Court has issued an opinion with reservation concerning payments made under the EU budget, for the first time since 1994, when it began to issue a Statement of Assurance. For the previous years, it had issued a negative opinion. The President of the Court takes the view that this move to an opinion with reservation bears witness to a remarkable improvement of the financial management of the EU.
Low level of error. There is more good news: the Court reports that taken overall, the level of error in the expenditure is 3.1%. It stood at 3.8% in 2015 and 4.4% in 2014. In particular, however, the estimated level of error for payments made out of the EU budget is constantly improving. Around half of EU expenditure checked in 2016 was below the materiality limit of 2%, Lehne told the members of the budgetary control committee of the European Parliament.
'Payments based on rights', which are paid once specific conditions have been met, account for around 49% of EU spending and present levels of error below 2%. These payments include direct aid to farmers, bursaries to students and researchers and personnel costs. For the 'natural resources' (concerning 'market support and direct aid' budgetary posts) and 'administration' headings, the levels of error were estimated to stand at 1.7% and 0.2% respectively.
The Court notes that higher levels of error affected the 'payments based on the reimbursement of costs', which are used to reimburse eligible costs. As for the 'cohesion' heading, the Court calculated an estimated level of error of 4.8%, compared to 4.9% for 'natural resources' (the rural development, environment, climate action and fisheries planks).
Stepping up controls. The President of the Court said that although the actions carried out by the member states and Commission have reduced the estimated level of error, his institution had observed that they had sufficient information to prevent, detect and correct many errors. In other words, it will not be necessary to carry out any extra checks: the existing controls need to be correctly applied.
EU financing mechanisms are too complex. The financing systems have developed greatly over the years, due to the need to find extra money to meet new challenges (financial crisis, climate action, migration and refugee crisis, stimulating investment in the EU). The number of instruments has therefore risen considerably. This makes it harder effectively to ensure the management and auditing of EU spending. If this tendency continues, accountability and transparency in the EU budget could be compromised, according to the Court.
During the debate at the budgetary control committee, Petri Sarvamaa (EPP, Finland), who was speaking on behalf of the rapporteur on the budgetary discharge for 2016, Joachim Zeller (EPP, Germany), stigmatised the problem of the payment backlog, which he said is “due to the delay in implementing the cohesion and rural development programmes”.
The European Budget Commissioner, Günther Oettinger, said that the Commission had made some progress, although “it is not yet paradise”. He described the annual report of the Court of Auditors as positive overall, particularly as regards the drop in the rate of error. “But we must not let our efforts to slack off”, he said. (Original version in French by Lionel Changeur)