Delivering in times of crises while preserving the EU financial interests through the 2022 EU budget

The Commission welcomes the decision of the European Court of Auditors (ECA) to give the EU annual accounts a clean bill of health, for the 16th year in a row. The revenue part of the EU budget also continues to be free from material error, like in previous years.

The Commission takes note of ECA`s reserves as regards the regularity of expenditure under both the Multiannual Financial Framework (MFF) and the Recovery and Resilience Facility (RRF).

A strong and flexible EU budget to overcome major crisis

In 2022, just as the global economy was beginning to bounce back from the COVID-19 pandemic, Russia launched a war of aggression against Ukraine. In that context, the EU budget provided crucial support to Ukraine, while at the same time supporting those affected by the socio-economic consequences of the war. The EU budget assisted Ukraine and the Member States with €15.4 billion, while support from the RRF – for a total of €138.7 billion in 2022 – has continued to foster inclusive green and digital transitions through concrete reforms and investments.

The EU budget also delivered on the EU’s climate commitments and achieved tangible results for households across Europe. In 2022, €119.4 billion were dedicated to measures contributing to climate objectives, representing 36% of the EU budget and NextGenerationEU. Through cohesion policy, 22 million citizens benefitted from flood protection and 19 million citizens benefitted from forest fire related measures.

Despite the more difficult market environment, encountered by all issuers, the demand for EU bonds remained high in 2022. The Commission is implementing a debt management strategy that aims to build a strong and liquid issuance programme. Thanks to its funding strategy, the Commission has further strengthened its already well-established name in debt markets.

Commission’s views on ECA report on the 2022 EU budget

The Commission recalls that the estimated level of error reported by the ECA is not a measure of fraud, inefficiency, or waste. It is an estimate of EU expenditure made that did not comply with certain rules. For operations under the MFF the Commission does not always share the ECA’s assessment on whether an irregularity has taken place, or on how to assess the financial impact of the errors identified. This leads to different conclusions on the extent and depth of the issues identified in certain policy areas.

As regards the implementation of the RRF, the Commission welcomes that the ECA agrees with the Commission’s assessment of the vast majority of milestones and targets included in the 2022 RRF grant payments. The Commission disagrees however with the ECA’s findings of limited instances of irregular RRF payments. The Commission also notes that, in any case, the ECA’s estimated financial impact for what it alleges are irregular RRF payments is below the materiality threshold of 2%. We maintain that all RRF payments in 2022 were made correctly.

The Commission keeps improving the management of the EU budget to reduce the risk of errors

Thanks to the hundreds of thousands of checks performed by national authorities, other partners, and the Commission itself, the Commission knows where the risks are for the EU budget and can take targeted remedial actions, both before and after payments are made. The objective of the Commission is to ensure that, once a programme is closed, and all controls and corrections are carried out, the remaining level of error is well below 2%. This objective was achieved for 2022, as the Commission estimates, based on projected future corrections, the risk at the closure of the programmes to be at 0.9%.

The Commission continues to improve its financial management of the EU budget as necessary. As the main source of errors is the complexity of the rules for implementing partners and beneficiaries, the Commission introduced simplifications for the 2021-2027 programmes, including the roll-out of electronic management of all grants for programmes managed directly by the Commission. In addition, the Commission continues to extend the use of simplified forms of funding to further reduce the administrative burden for final recipients, starting with small and medium enterprises. The Commission also keeps working closely with the Member States and other partners towards ensuring a sound financial management of the EU funds.

As regards the RRF the Commission has to a large degree already implemented ECA’s recommendation to improve its internal processes for the assessment of payment requests compared to the financial year 2022. In addition, the Commission has over the last year significantly increased the level of clarity and transparency of its assessment procedures. In 2023, also taking into account the recommendations of the European Parliament, the Council and the European Court of Auditors, the Commission further strengthened the robustness of its control framework to provide additional assurance on the regular use of RRF funds and the effective protection of the Union’s financial interests, thereby complementing the primary responsibility that lies with the Member States.

Background

The publication of the Annual Report of the ECA, and the presentation of the Integrated Financial Accountability Reporting (IFAR) package to the European Parliament, kicks off the annual ‘discharge procedure’ of the EU budget to take stock of the achievements of the EU budget in 2022.

The IFAR is a package of Commission’s reports that provides detailed information, from different angles, about how the EU budget was implemented. These reports are key to ensure transparency and accountability on how taxpayers’ money is used.

When deciding whether to grant, postpone or refuse the discharge, the European Parliament takes into consideration the IFAR package prepared by the Commission, the ECA Annual Report and any relevant ECA Special Reports.

The European Commission works hand in hand with the Member States, and other partners, to ensure that the EU budget continues to be spent effectively, to the benefit of citizens, remains protected from fraud and irregularities and helps achieve concrete results according to the Union’s policy priorities.

For More Information

Integrated Financial and Accountability Reporting 2022

Annual management and performance report 2022

Factsheet – Delivering on results and protecting the EU budget in 2022

Official website of the European Court of Auditors