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,
and
• Ensure spending complies with EU rules,
and
• Ensure it achieves valuable
results
for citizens
Spending
• 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 =
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 =
5.2%
• In areas mostly managed directly by the EC =
3.7%
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
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 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
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 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
Conclusions
• 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