On Monday 21 October, the European Court of Auditors (ECA) published a special report on double-funding in the European Union budget. The creation of the EU’s post-pandemic recovery fund has created a risk, according to the ECA, insofar as this new mechanism finances cohesion objectives, as traditional budget programmes already do.
It should be noted that the EU Financial Regulation prohibits double funding for grants managed directly by the Commission. So, while it is possible to combine EU funding, it is forbidden for them to cover the same costs.
“The Recovery and Resilience Facility (RRF) funding model was supposed to bring simplification. But simplification should not come at the cost of weakening the protection of the EU’s financial interests”, said Annemie Turtelboom, the ECA member responsible for the audit.
A structural risk. As RRF payments are linked to the achievement of milestones and targets at national level, the Commission is absent from the details of spending on the ground. With the RRF, funding is no longer equivalent to a specific cost.
According to the Court of Auditors, the RRF, which was supposed to make the implementation of “reforms” more efficient, has introduced a number of grey areas. “The design of the RRF created a two-tier system. On the one hand, the Commission releases funds to the Member States on the basis of the achievement of milestones and targets, and on the other, the Member States distribute the funds to the final recipients”, explained Ms Turtelboom.
The European Commission lacks information on the final recipients and “does not even have direct access to the full list of final recipients in countries”, regretted the Court of Auditors. In fact, the Member States only provide a list of their one hundred largest recipients.
Lack of controls. In fact, the RRF mechanism forces the Commission to “rely on the Member States to control, but while the RRF may represent a huge amount of money [for the EU], for the Member States, it represents only a very small proportion of their GDP”, warned the Court.
In addition, the Court of Auditors disagreed with the idea that “zero-cost” reforms - which, in its view, account for a large proportion of the RRF’s funding - are free from the risk of double funding. The first stumbling block, according to the Court of Auditors, is that the reforms considered to be zero cost were based on declarations by the Member States, which “did not provide cost estimates for these measures” to the Commission.
In general, the Court of Auditors deplored the fact that the absence of double-funding is verified on the basis of sworn declarations by the recipients of EU funds, as the Member States do not have interoperable IT tools that would make it possible to cross-check data between the recipients of traditional EU programmes and those of the Recovery and Resilience Facility, which obligates them to check everything manually.
The European Commission does not share the ECA’s view. In its response to the Court of Auditors’ report on Monday 21 October, the European Commission stated that it “does not share the observation” that the RRF entails a higher risk of double-funding.
While confirming that “controls are carried out by the Member States, which are primarily responsible for preventing, detecting and correcting double-funding”, the Commission assured that a “robust control system is in place”. In particular, risks would be prevented upstream, through Commission audits of the reliability of national control systems.
The European Commission has rejected four of the six recommendations made by the Court of Auditors, further highlighting the difference in the way the two institutions view the situation. The Commission does not see how to adjust the definition of double-funding to the specificities of the non-cost-related funding model and does not want to strengthen controls on zero-cost measures, insofar as EU support for a single measure can come from several instruments.
In addition, the Commission has agreed to strengthen coordination between programmes and funding instruments and to introduce interoperable IT tools.
To see the Court of Auditors report: https://aeur.eu/f/dz4 (Original version in French by Florent Servia)