European Commission’s estimate of error in EU Cohesion policy provides an incomplete picture

Source: European Court of Auditors i, published on Tuesday, November 23 2021.

The European Commission annually discloses what it estimates to be the level of irregularity in EU Cohesion policy spending. To this end, it carries out a substantial amount of work to accept Member States’ annual accounts and verify the reliability of the regularity information that they provide for this policy area. But, in a report published today, the European Court of Auditors (ECA) concludes that the related error rates that the Commission discloses are not final, and are likely to underestimate the real level of irregularity in Cohesion policy spending. This is because of the shortcomings that the auditors found in the Commission’s control system.

Cohesion, a policy aimed at reducing development disparities between the EU’s Member States and regions, has become the largest EU policy area; it accounts for over a third of the EU budget (€390 billion from 2014 to 2020). It is also an area where the risk of irregular spending is high, because the rules governing it are complex, and because much of the expenditure is based on the reimbursement of declared costs. Each year, after Member State audit authorities have completed their audits of Cohesion expenditure, the European Commission carries out its own verifications and assessment of Member State auditors’ work and findings. From this, the Commission aims to confirm whether the residual level of error in Cohesion spending reported by Member States is below the 2 % threshold.

The European Commission’s own control system does not sufficiently compensate for the weaknesses in the work of Member state audit authorities when they check Cohesion spending”, said Tony Murphy, the member of the European Court of Auditors responsible for the report. “The estimated level of error the Commission discloses annually in the relevant Directorate-General activity reports and in the Commission’s management and performance report is not final, and can only represent a minimum level.

Press Release: European Commission’s estimate of error in EU Cohesion policy provides an incomplete picture