AR 2013 Final Presentation CONT

5 November 2014
European Court of Auditors
Annual Reports 2013
Vítor Caldeira, President
A moment of change
• New Parliament
• New Commission
• New spending programmes and financial rules for
2014 - 2020
• Need to make best use of limited financial resources
Lessons from 2013
• EU financial management not yet good enough
• Significant room for further improving how funds are
EU financial management challenge
• Use all available resources, and
• Ensure spending complies with EU rules, and
• Ensure it achieves valuable results for citizens
• 2013 payments almost 99% of the maximum
• Total spending €148.5 billion - €290 for every EU
Clean opinion
• A clean audit opinion on the reliability of the EU
• As since start of programming period in 2007
Managing cash-flows
• Outstanding commitments and other liabilities
continued to grow
• €322 billion at year end - likely to rise
• Commission should prepare a long range cash-flow
Financial engineering instruments
• Commission plans to make even greater use of them
• Slow to reach recipients
• Complex and difficult to account for correctly
• Commission should ensure contributions to such
instruments reflect real cash-flow needs and are
properly accounted for
Compliance with the rules
• Revenue regular
• Financial commitments regular
• Payments materially affected by error
2013 error rate
• Estimated error rate for 2013 payments = 4.7%
• Close to 4.8% for 2012
• Persistently higher than “materiality threshold” of 2%
Error in different spending areas
• All spending areas apart from administrative
expenditure affected by material error
Higher errors for shared management
• Spending shared between the MS and the
Commission is 80% of EU funds
• Error rate for payments under shared management =
• In areas mostly managed directly by the EC = 3.7%
Effective internal controls can make a significant
• EC and national authorities took corrective actions on
errors they found
• Otherwise, overall error rate would have been 6.3 %
rather than 4.7%
Internal controls could be more effective
• National authorities had sufficient information
available to have detected and corrected many errors
before claiming reimbursement
• In rural development, could have reduced error rate
from 6.7% to 2.0%
What needs to be done
• EC and MS need to generate better information
about errors in spending and the corrective action
they take
• Address the source of the problem
Main sources of error
• Claims for ineligible costs, projects, activities or
• Serious breaches of public procurement rules
• Incorrect declarations of agricultural areas
Financial managers not focused on results
• Primarily on spending the money available
• Secondly on complying with the rules
• Only to a limited extent on achieving results
Current spending culture
• Officials under pressure to spend or lose funding lack incentives to achieve results
• Systems set up to use resources and to ensure
compliance, rather than get results
• Need for change
Towards a culture of performance
• Court welcomes Commission initiatives
• Must be based on genuine commitment at EU and
national level
• Essential that right incentives are in place
• Need suitable targets for results up-front
• Need reliable information on progress towards
achieving them
Framework for reporting performance
• Better information is a pre-requisite for more effective
• Annual evaluation report produced by Commission
• Framework too fragmented – needs further
• Does not cover EU added-value or progress towards
Europe 2020
Recommendations to Commission
• Propose more coherent performance reporting
framework at next review
• Summarise progress towards 2020 targets in annual
evaluation report
• Further develop responsibility for contribution of EU
spending to policy achievements
• EU Budget management could – and should – be
• Not a choice between spending, compliance and
results - need all three at once
• More manageable budget = clearer objectives and
simpler arrangements for spending
European Court of Auditors
Annual Reports 2013
Vítor Caldeira
5 November 2014

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