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Errors in EU spending still far too common, auditors say
EU budget

Errors in EU spending still far too common, auditors say

by Emery P. DALESIO 2 min. 26.10.2021 From our online archive
Procedures guarding against fraud and mistakes need tightening ahead of near doubling of bloc's budget in coming years, ECA report concludes
European Court of Auditors President Klaus-Heiner Lehne
European Court of Auditors President Klaus-Heiner Lehne
Photo credit: ECA

The EU needs to sharpen its efforts to prevent continued spending mistakes and fraud, particularly with pandemic recovery funds due to lead to a near doubling in expenditure in coming years, the bloc's Luxembourg-based auditing team warned in a report on Tuesday.

Problems were identified in spending on programmes from farm and fishing subsidies to scientific research, representing almost 3% of all transactions tracked last year, though these were not necessarily fraudulent, the European Court of Auditors said in their annual report. 

The problem cases represented situations in which EU programme managers "paid too much or too (little), or simply they paid and they were not obliged to pay," ECA President Klaus-Heiner Lehne told reporters on Monday before the report's release.

Drop in suspected fraud cases  

Auditors found six cases of suspected fraud, down from nine in 2019, and turned the details over to the EU’s Anti-Fraud Office for investigation.

Though OLAF can only present its investigative findings to national governments for suggested action, the Luxembourg-based European Public Prosecutor's Office launched in June means that fraudsters can be pursued directly in court for skimming EU money.

For the second year in a row, auditors found that the errors in 2020 were deemed "pervasive" or widespread – defined by the ECA as being when more than 2% of reviewed transactions contain mistakes.  

Spending errors were higher than average in programmes where national governments select projects, distribute funds and manage the EU’s expenditure, for example in schemes such as helping to improve rural communities or upgrading infrastructure in Eastern Europe, auditors said.

The most common problems involved ineligible costs and spending on such so-called "cohesion" efforts, rural development and fisheries support and in scientific research, the report said.

Expenditure to double

The EU's response to the Covid-19 pandemic will nearly double spending over the next seven years to €1.8 trillion after the decision that countries will for the first time borrow money jointly to finance recovery programmes, auditors said.

Prevention efforts should include the European Commission offering coaching on subcontracting rules and other complex issues, as well as information campaigns for scientific researchers on handling EU funds, the report said.

The EU spent €173.3 billion in 2020, the last year of its seven-year multiannual financial framework budgeting cycle, auditors said. That was equivalent to 1.1 % of the combined gross national income of the 27 EU members.

UK's Brexit debt

The majority came from taxpayer contributions, with the rest coming from customs duties, a portion of value-added tax collections and other agreements and programmes, auditors said. At the end of 2020, the UK owed €47.5 billion due to obligations agreed as part of its exit from the EU in February 2020, auditors said.

As in 2019, a lingering problem with the EU's budget is that billions in spending was committed but yet went unspent for years, auditors said. The backlog increased to €303 billion in 2020, the auditors said. As before, Luxembourg trailed only Finland and Ireland for its efficiency in claiming these European Structural and Investment funds, the report said.

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