Execution of annual budgets 2007-2013

Execution of annual budgets 2007-2013:
recommendations for regional and local
Axel Volkery
Senior Fellow and Head Environmental Governance
5 September 2013
Committee of the Regions, Brussels
File note was commissioned by COR to
1. Review recommendations of relevance to local and
regional authorities (LRAs) included in official EU reports
on implementation of EU budget in the period 2007-2013
2. Analyse development of pending claims and Reste à
Liquider (RAL) in the period 2007-2013 and their
implications for LRAs
Information sources
• The following sources of information were utilised:
– Last five annual financial reports from European Court of Auditors
– Comments / requests from Parliament & Council as part of the
discharge process for the same period
– Response from Commission as part of the discharge process for
the same period
– Other relevant EU documents
• Note:
– ECA reports are factual documents
– Reports do seldom contain any statements or recommendations
addressing LRAs directly
Synopsis of ECA reports: key areas of concern
Error rates
• Budget implementation has been regularly found to be affected by
material level error of legality and regularity
• Cohesion Policy stands out: > 5per cent for Cohesion, between 2 and 5 per
cent for employment and social affairs
• Eligibility errors are the most frequent errors in ERDF, ESF, EMFF, but error
rate is decreasing
• Accuracy errors are most frequent errors under EARDF
• Cohesion Policy is also affected by public procurement errors
Withdrawal practice
• Eligibility errors should not result in new irregular expenditure being
• High level of outstanding commitments is repeatedly criticised
Synopsis of ECA reports: root causes
Lack of sufficiency and
transparency in information
and evaluation systems
Difficult to apply
eligibility rules
Root causes
Lack of effective evaluation and
audit systems (particularly for
first level checks)
Lack of effective
sanctioning systems
Incoherent requirements for
reporting and monitoring
Synopsis of ECA reports: key recommendations
Improve feedback between
Better guidance and training
for managing and audit
Simplify eligibility rules and
ensure strict compliance
Cohesion Policy
Apply corrective mechanisms
on operational programmes
Strengthening sanctions
(interruptions, suspensions)
Align reporting periods for
annual control reports
Synopsis of ECA reports: key recommendations
More rigorous administrative
and on-the-spot checks
Better control of beneficiaries
in terms of keeping obligations
and EMFF
Simplify rules and conditions
Take a more systemic approach
towards addressing
weaknesses in EMFF
Parliament and Council responses
• Reiterates many of ECA’s conclusions – emphasizes differences in Member
State management and control systems
• Criticises lack of incentives for norm compliance, part. Cohesion Policy
• Reiterates need for simplification, uniform auditing standards and greater
cooperation between Commission and authorities
• Calls for greater supervisory role of Commission and strengthening of
• Urges national authorities to apply ex-ante controls more effectively
• Improve management and control systems, simplify rules and apply
correction mechanisms more rigorously
• Points to the relevance of supervision and action by European Commission
Outstanding commitments 2012
Source: European Commission
RAL as per main programme of funding
A much larger than thought proportion of 2013
payment appropriations will need to be used to
honour 2012 claims – already the additional EUR 11.2
bn claimed by the Commission were at risk of falling
short but Council approved only EUR 7.3 bn so far
Gap in meeting 2013 commitments remains present
after draft amending budget 06/2013, putting greater
pressure on annual budgets from 2014 onwards
RAL is projected to grow to EUR 250 bn by 2020
Source: European Commission
RAL over time
RAL normally increased towards ends of MFF periods, but RAL in 2013 is much
higher compared to RAL in 2006
Underlines the need for greater flexibility, as discussed in budget negotiations
Member State implications
• Main implications arise under funds under shared
– for example, support from Cohesion Policy amounts to – on average –
around 55 per cent of expenditure on environment or 25 per cent on
transport, energy, telecom.
• RAL differs between Member States (MS)
• MS with largest pending claims are Poland, Italy, Spain
• Ireland, Denmark, Cyprus and Luxembourg have lowest amount
• Differences in RAL often have a specific domestic connotation
• Change in economic context conditions, administrative capacities,
incoherence between programme planning and project selection
• Quality and capacity of authorities seem to be much more relevant
influencing factors compared to other factors (level of decentralisation)
Thank you!
Axel Volkery
[email protected]
T. +32 2111090
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