On Tuesday 23 November, the European Court of Auditors published a scathing report on the level of error estimated by the European Commission in its annual activity reports (AAR) on cohesion policy, which it considers to be underestimated.
“The related error rates disclosed by the Commission are not final and (...) are likely to underestimate the true level of irregularity in cohesion policy spending”, the auditors say in their statement, noting “weaknesses” in the European Commission’s control system.
For example, for the 2014-2020 period, the auditors expressed alarm that the institution releases the 10% payment retention initially withheld even though it has “evidence” that the expenditure in the accounts contains a residual error greater than 2%.
For the auditors, the European Commission’s methodology reveals many flaws, noting that the sample selected by the European Commission and the documentation are “insufficient” to link specific risks to the selected operations, given the diversity of the operational programmes’ priorities.
The Court notes that out of the 10 compliance audits analysed, the European Commission’s DGs covered 15% of the transactions audited by the audit authorities, which corresponds to 24% of the expenditures in the sample. However, the institution found errors not detected by the audit controls in 38% of the transactions. Therefore, the Residual Total Error Rate (RTER) announced by the European Commission is in fact a “minimum rate”, according to the Court.
Revising the legislation
However, for the 2021-2027 period, the auditors welcome the fact that the European Commission can no longer accept accounts with a reported residual total error rate (RTER) of more than 2%. However, the institution will continue to release the reduced 5% withholding before it has carried out its regularity checks, they regret. “These changes still do not achieve the objective of protecting the EU budget”, the Court says.
The auditors therefore suggest that the European Commission propose a revision of the legislation to take account of their observations.
The European Commission disagrees
In its response, the European Commission instead considers its methodology to be “appropriate” in terms of the objectives, the resources available, and the number of files to be examined. As for the proposal to revise the legal framework for cohesion policy, “the Commission does not accept this recommendation”. However, it “partially” accepts the recommendation to improve its audit work.
To access the Court of Auditors’ report: https://bit.ly/3oNFyUw
To read the European Commission’s response: https://bit.ly/2ZeAgZk (Original version in French by Pascal Hansens)