In its annual report for the financial year 2019, published on Tuesday 10 November, the European Court of Auditors validated the EU’s accounts as presenting a ‘true and fair view’ of the Union’s financial situation. However, the auditors concluded that there are too many errors in the payments, especially in the category of ‘high risk expenditure’.
As a result, they have an unfavourable opinion on spending, despite improvements in some areas.
The auditors also took this opportunity to underline the need for rigorous and efficient management of the financial measures agreed in response to the coronavirus crisis, which will almost double the amount of EU spending in the coming years.
The overall level of irregularities in EU spending remained relatively stable at 2.7% in 2019, compared to 2.6% in 2018.
The auditors note that high-risk expenditure accounts for more than half of the audited spending in 2019, up from 2018.
This mainly concerns reimbursement-based payments, for example in the areas of cohesion and rural development, where EU spending is managed by Member States.
In high-risk expenditures, the level of error remains significant, with an estimated value of 4.9% (compared to 4.5% in 2018). “Due largely to a rise in ‘Cohesion’ spending, such expenditure increased to 66.9 billion euros in 2019, representing 53.1% of our audit population ”, the report says.
Having concluded that the level of error is widespread, the auditors therefore gave an adverse opinion on EU spending.
“Our adverse opinion on EU spending for the financial year 2019 is a reminder that we need simple and clear rules for all EU finances--and we also need effective checks on how the money is spent and whether the intended results are achieved”, said Klaus-Heiner Lehne, President of the Court.
On the other hand, the absorption of European structural and investment funds by Member States has remained slower than expected.
By the end of 2019, only 40% (EUR 184 billion) of the total amount of financing agreed for the period 2014-2020 had been paid out, and some Member States had used less than a third of it. This has led to an increase in outstanding commitments, which at the end of 2019 reached EUR 298 billion, equivalent to almost two years of the budget.
In 2019, total EU expenditure amounted to EUR 159.1 billion, equivalent to 2.1% of Member States’ public expenditure and 1.0% of the Union’s gross national income.
About two thirds of the budget is spent under ‘shared management’, where Member States allocate funds, select projects, and manage EU spending.
On 13 November, the Court will publish for the first time a report on the overall performance of the EU budget.
Link to the 2019 Annual Report: https://bit.ly/2IlxWXK (Original version in French by Lionel Changeur)