AR 2013 Final Presentation CONT

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Transcript 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 overall • Significant room for further improving how funds are spent

EU financial management challenge

• Use all available resources,


• Ensure spending complies with EU rules,


• Ensure it achieves valuable


for citizens


• 2013 payments almost 99% of the maximum available • Total spending €148.5 billion - €290 for every EU citizen.

Clean opinion

A clean audit opinion

on the reliability of the EU accounts • 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 forecast.

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 =


• 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 =


Effective internal controls can make a significant difference

• 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


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 beneficiaries • 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


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 accountability Annual evaluation report produced by Commission Framework too fragmented – needs further improvement 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 better • 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 President 5 November 2014