# Official Journal C 179/2012

| | ISSN 1977-091X
  doi:10.3000/1977091X.C_2012.179.eng |
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| Official Journal
  of the European Union | C 179 |
| | |
| English edition | Information and Notices | Volume 5520 June 2012 |

ISSN 1977-091X

doi:10.3000/1977091X.C_2012.179.eng

Official Journal

of the European Union

C 179

English edition

Information and Notices

Volume 5520 June 2012

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| Notice No | Contents | page |
| --- | --- | --- |
| | III   Preparatory acts |
| | COURT OF AUDITORS |
| 2012/C 179/01 | Opinion No 4/2012 on the Commission’s evaluation report on the Union’s finances based on results achieved established under Article 318 of the Treaty on the Functioning of the European Union | 1 |

Notice No

Contents

page

III   Preparatory acts

COURT OF AUDITORS

2012/C 179/01

Opinion No 4/2012 on the Commission’s evaluation report on the Union’s finances based on results achieved established under Article 318 of the Treaty on the Functioning of the European Union

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EN

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III Preparatory acts

COURT OF AUDITORS

| 20.6.2012 | EN | Official Journal of the European Union | C 179/1 |
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20.6.2012

EN

Official Journal of the European Union

C 179/1

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OPINION No 4/2012

on the Commission’s evaluation report on the Union’s finances based on results achieved established under Article 318 of the Treaty on the Functioning of the European Union

2012/C 179/01

INTRODUCTION

| 1. | In February 2012, the Commission published a report to the European Parliament and the Council on the evaluation of the Union’s finances based on the results achieved (1) (the evaluation report). The Treaty requires that the Commission produce such a report, and that the report is part of the evidence on which the Parliament gives a discharge each year to the Commission in respect of the budget (2). |
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1.

In February 2012, the Commission published a report to the European Parliament and the Council on the evaluation of the Union’s finances based on the results achieved (1) (the evaluation report). The Treaty requires that the Commission produce such a report, and that the report is part of the evidence on which the Parliament gives a discharge each year to the Commission in respect of the budget (2).

| 2. | In terms of the specific intentions of the legislator, the Parliament, in its May 2011 decision on the 2009 discharge, stated that it:
  ‘believes that the evaluation report shall be drawn up so that the relation between the key performance indicators, their legal/political basis, the amount of expenditure and the results achieved is clear and transparent (3).’
  In the same document, the Parliament also emphasised that for the public to have confidence in the Union budget, delivering planned outcomes was just as important as matters of legality and regularity and the reliability of the accounts. In this context the Parliament called on the Commission to ‘review its systems for evaluating the effectiveness of expenditure programmes to assess whether they are adding value, delivering value for money, and achieving the objectives for which they were established’ (4). |
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2.

In terms of the specific intentions of the legislator, the Parliament, in its May 2011 decision on the 2009 discharge, stated that it:

‘believes that the evaluation report shall be drawn up so that the relation between the key performance indicators, their legal/political basis, the amount of expenditure and the results achieved is clear and transparent (3).’

In the same document, the Parliament also emphasised that for the public to have confidence in the Union budget, delivering planned outcomes was just as important as matters of legality and regularity and the reliability of the accounts. In this context the Parliament called on the Commission to ‘review its systems for evaluating the effectiveness of expenditure programmes to assess whether they are adding value, delivering value for money, and achieving the objectives for which they were established’ (4).

| 3. | The Parliament has invited the Court to present its opinion on the evaluation report (5). This Opinion fulfils that request. However, given the preliminary nature of the Commission’s first evaluation report, the Court does not seek to comment in detail upon the contents of that report. |
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3.

The Parliament has invited the Court to present its opinion on the evaluation report (5). This Opinion fulfils that request. However, given the preliminary nature of the Commission’s first evaluation report, the Court does not seek to comment in detail upon the contents of that report.

The Court’s view of the first evaluation report and of its development in the future

| 4. | The first evaluation report is vague, short on substance and, consequently, adds limited value. It is apparent (6) that the Commission does not yet have a clear view of how to fulfil what is being asked of it in the Treaty. The Commission states that it is examining how to develop the content of the report, and will take account of any views expressed by the Parliament and Council. The Court considers that the Commission should go further than this and actively consult these two institutions. |
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4.

The first evaluation report is vague, short on substance and, consequently, adds limited value. It is apparent (6) that the Commission does not yet have a clear view of how to fulfil what is being asked of it in the Treaty. The Commission states that it is examining how to develop the content of the report, and will take account of any views expressed by the Parliament and Council. The Court considers that the Commission should go further than this and actively consult these two institutions.

| 5. | The Court is of the opinion that the evaluation report could make a potential contribution to increasing the accountability of the Commission to the discharge authority and hence the citizens of the Union. However, for it to do this effectively, the Commission needs to consider the purpose, content, scope and timing of the evaluation report. These aspects are developed in more detail in the following paragraphs. |
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5.

The Court is of the opinion that the evaluation report could make a potential contribution to increasing the accountability of the Commission to the discharge authority and hence the citizens of the Union. However, for it to do this effectively, the Commission needs to consider the purpose, content, scope and timing of the evaluation report. These aspects are developed in more detail in the following paragraphs.

Purpose and content

| 6. | The Treaty requirement behind the evaluation report represents a further step in the gradual move to increase the focus of reporting and accountability systems on the achievement of results, rather than just on compliance with the rules. The legislators want to know whether Union spending is actually having an impact. The Court’s own special reports and opinions regularly make the point that the Commission’s systems are not very well designed to do this. |
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6.

The Treaty requirement behind the evaluation report represents a further step in the gradual move to increase the focus of reporting and accountability systems on the achievement of results, rather than just on compliance with the rules. The legislators want to know whether Union spending is actually having an impact. The Court’s own special reports and opinions regularly make the point that the Commission’s systems are not very well designed to do this.

| 7. | There are a number of potential sources of evidence on achievements — the evaluation report itself lists individual evaluations of specific programmes, impact assessments, annual activity reports, the synthesis report, activity statements and the report on the follow-up to the discharge resolution; to these can be added the Court’s special reports. However, these various sources are not brought together in a coherent way and too frequently focus on the results achieved by completed multiannual programmes, when it is too late to adjust delivery to increase their impact. |
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7.

There are a number of potential sources of evidence on achievements — the evaluation report itself lists individual evaluations of specific programmes, impact assessments, annual activity reports, the synthesis report, activity statements and the report on the follow-up to the discharge resolution; to these can be added the Court’s special reports. However, these various sources are not brought together in a coherent way and too frequently focus on the results achieved by completed multiannual programmes, when it is too late to adjust delivery to increase their impact.

| 8. | The evaluation report makes the point that the nature of Union spending often does not lend itself to assessing results on an annual basis (7). That is true, but there is scope for better reporting on whether longer term objectives are likely to be achieved. The evaluation report is an opportunity to address this issue. |
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8.

The evaluation report makes the point that the nature of Union spending often does not lend itself to assessing results on an annual basis (7). That is true, but there is scope for better reporting on whether longer term objectives are likely to be achieved. The evaluation report is an opportunity to address this issue.

| 9. | In these circumstances, the Court suggests that this evaluation report should be the starting point for a fundamental Commission re-think about its reporting and accountability systems. The evaluation report presented by the Commission argues that its current system of relatively infrequent programme evaluations is not well suited to an annual analysis of results achieved (8). The Court agrees, and sees evaluations as being only part of the evidence base for this report in the future. |
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9.

In these circumstances, the Court suggests that this evaluation report should be the starting point for a fundamental Commission re-think about its reporting and accountability systems. The evaluation report presented by the Commission argues that its current system of relatively infrequent programme evaluations is not well suited to an annual analysis of results achieved (8). The Court agrees, and sees evaluations as being only part of the evidence base for this report in the future.

| 10. | For the evaluation report to meet the needs set out in the preceding paragraphs and the expectations of the discharge authority will require some different, but not necessarily additional, reporting arrangements, designed to give the discharge authority and other stakeholders the information they need about results achieved. In particular, within the existing resource constraints, the Commission should begin to systematically build into its multiannual programmes performance indicators and milestones that would allow it to evaluate at key intermediate points whether the defined objectives and intended impacts are likely to be achieved (9). This would be a further step on the path towards measuring effectiveness. The consultations mentioned in paragraph 4 above should also allow the Commission to assess expectations as to reporting on economy and efficiency. |
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10.

For the evaluation report to meet the needs set out in the preceding paragraphs and the expectations of the discharge authority will require some different, but not necessarily additional, reporting arrangements, designed to give the discharge authority and other stakeholders the information they need about results achieved. In particular, within the existing resource constraints, the Commission should begin to systematically build into its multiannual programmes performance indicators and milestones that would allow it to evaluate at key intermediate points whether the defined objectives and intended impacts are likely to be achieved (9). This would be a further step on the path towards measuring effectiveness. The consultations mentioned in paragraph 4 above should also allow the Commission to assess expectations as to reporting on economy and efficiency.

| 11. | The Court has published opinions on the Commission’s proposals for regulations governing the two main areas of Union expenditure, cohesion and agriculture, for the period 2014-2020 (10). In both cases, the Court has drawn attention to the failure of the Commission to define policy objectives in terms of results — what the EU funding is designed to achieve. Without clear targets for expected results, it will continue to be difficult for the Commission to demonstrate that its expenditure achieves European added value — and thus difficult to provide assurance that its spending is effective and efficient. |
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11.

The Court has published opinions on the Commission’s proposals for regulations governing the two main areas of Union expenditure, cohesion and agriculture, for the period 2014-2020 (10). In both cases, the Court has drawn attention to the failure of the Commission to define policy objectives in terms of results — what the EU funding is designed to achieve. Without clear targets for expected results, it will continue to be difficult for the Commission to demonstrate that its expenditure achieves European added value — and thus difficult to provide assurance that its spending is effective and efficient.

| 12. | In addition, the Commission must pay special attention to the quality of the data used in its annual evaluation reports, including those data coming from the Member States. As the Court noted in paragraph 39 of its Opinion No 7/2011 (11):
  ‘The Commission should ... consider how far it is possible to ensure that the data produced by the Member States in relation to the monitoring, evaluation and performance of programmes have an acceptable quality in terms of relevance, comparability and reliability.’ |
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12.

In addition, the Commission must pay special attention to the quality of the data used in its annual evaluation reports, including those data coming from the Member States. As the Court noted in paragraph 39 of its Opinion No 7/2011 (11):

‘The Commission should ... consider how far it is possible to ensure that the data produced by the Member States in relation to the monitoring, evaluation and performance of programmes have an acceptable quality in terms of relevance, comparability and reliability.’

Scope

| 13. | The evaluation report presented by the Commission ostensibly covers the achievements of two policy areas, education and culture, and research. However, the actual scope is even more limited than this. For example this report gives five general objectives for education and culture, but then only provides vague evaluation information on the last one of these. No explanation is provided for why the first four objectives are excluded from analysis. |
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13.

The evaluation report presented by the Commission ostensibly covers the achievements of two policy areas, education and culture, and research. However, the actual scope is even more limited than this. For example this report gives five general objectives for education and culture, but then only provides vague evaluation information on the last one of these. No explanation is provided for why the first four objectives are excluded from analysis.

| 14. | The Commission has pointed out (12) that attempting to cover all programmes financed by the Union every year would run the risk of resulting in a long, unfocused report. This is one of a number of issues that might be considered by the Parliament and the Council in cooperation with the Commission. Others include whether the evaluation should cover not only results and thereby effectiveness or if economy and efficiency should also be dealt with. The evaluation could be thematic, covering issues over time only or be a more broad analysis of what the Commission has achieved during the past year. Any such consideration must take into account the usefulness of the information included in the evaluation report to the annual discharge procedure. |
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14.

The Commission has pointed out (12) that attempting to cover all programmes financed by the Union every year would run the risk of resulting in a long, unfocused report. This is one of a number of issues that might be considered by the Parliament and the Council in cooperation with the Commission. Others include whether the evaluation should cover not only results and thereby effectiveness or if economy and efficiency should also be dealt with. The evaluation could be thematic, covering issues over time only or be a more broad analysis of what the Commission has achieved during the past year. Any such consideration must take into account the usefulness of the information included in the evaluation report to the annual discharge procedure.

Timing

| 15. | The evaluation report is one of the documents that, according to Article 319 TFEU, must be examined by the Council and the European Parliament as part of the discharge procedure. Accordingly, the Commission has stated that it intends in the future to adopt it by mid-November each year. (13) This is at the same time as the Court’s Annual Report is published. However, the Parliament has (14) asked the Court to present its observations on the evaluation report at the same time as the Court’s Annual Report. For the Court to do so, it would need to receive this document significantly earlier. |
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15.

The evaluation report is one of the documents that, according to Article 319 TFEU, must be examined by the Council and the European Parliament as part of the discharge procedure. Accordingly, the Commission has stated that it intends in the future to adopt it by mid-November each year. (13) This is at the same time as the Court’s Annual Report is published. However, the Parliament has (14) asked the Court to present its observations on the evaluation report at the same time as the Court’s Annual Report. For the Court to do so, it would need to receive this document significantly earlier.

CONCLUSION

| 16. | The Commission’s first annual evaluation report is required under Article 318 TFEU. The report is vague, short on substance and, consequently, adds limited value. However, the Court is of the opinion that it presents the Parliament, the Council and Commission with an opportunity to discuss and agree how the evaluation report can be made useful to the discharge authority. The Court suggests that the issues to be addressed in such a discussion should include:






  — | whether the evaluation report should cover not only results and thereby effectiveness but also whether economy and efficiency should be dealt with, |
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16.

The Commission’s first annual evaluation report is required under Article 318 TFEU. The report is vague, short on substance and, consequently, adds limited value. However, the Court is of the opinion that it presents the Parliament, the Council and Commission with an opportunity to discuss and agree how the evaluation report can be made useful to the discharge authority. The Court suggests that the issues to be addressed in such a discussion should include:

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whether the evaluation report should cover not only results and thereby effectiveness but also whether economy and efficiency should be dealt with,

| — | the scope and coverage of each year’s evaluation report, and |
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the scope and coverage of each year’s evaluation report, and

| — | the legislators’ expectations as to the role of the Court of Auditors in examining this report. |
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the legislators’ expectations as to the role of the Court of Auditors in examining this report.

Were the Court to be requested to present its observations on the evaluation report at the same time as its Annual Report (as the European Parliament has already asked), the Court points out that it would need to receive this document significantly earlier than proposed by the Commission.

This Opinion was adopted by Chamber CEAD, headed by Mr Igors LUDBORŽS, Member of the Court of Auditors, in Luxembourg the 14 May 2012.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  COM(2012) 40 final.

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(2)  Articles 318 and 319 TFEU.

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(3)  European Parliament decision of 10 May 2011 on discharge in respect of the implementation of the general budget of the European Union for the financial year 2009, Section III — Commission (SEC(2010)0963 — C7-0211/2010 — 2010/2142(DEC)), paragraph 200.

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(4)  European Parliament decision of 10 May 2011 on discharge in respect of the implementation of the general budget of the European Union for the financial year 2009, Section III — Commission (SEC(2010)0963 — C7-0211/2010 — 2010/2142(DEC)), paragraphs 71 and 72.

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(5)  European Parliament decision of 10 May 2011 on discharge in respect of the implementation of the general budget of the European Union for the financial year 2009, Section III — Commission (SEC(2010)0963 — C7-0211/2010 — 2010/2142(DEC)), paragraph 201.

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(6)  See, for example, the last two paragraphs on page 16 of the Commission’s report COM(2012) 40 final.

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(7)  COM(2012) 40 final, p. 3, second and third paragraphs.

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(8)  COM(2012) 40 final, p. 16, second paragraph.

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(9)  The Court notes that the legislator has an important role to play in ensuring that the Commission’s proposals include ‘SMART’ (specific, measurable, achievable, relevant and timely) objectives to enable performance measurement.

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(10)  See also paragraph 10 of Opinion No 7/2011 (OJ C 47, 17.2.2012, p. 1), paragraphs 8 and 151 of Opinion No 1/2012, as well as paragraph 8.54 of the 2010 ECA Annual Report (OJ C 326, 10.11.2011, p. 1).

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(11)  Whilst this Opinion was in respect of the Structural Funds, the point is generally applicable for all areas of shared management.

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(12)  COM(2012) 40 final, p. 3.

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(13)  COM(2012) 40 final, p. 2.

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(14)  Cocobu report A7-0098/2012 on discharge on the general budget for 2010.

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