Integrated financial and accountability reporting : overview : financial year 2019.
Date: 2020-07-23
Institutions: Directorate-General for Budget
Subjects: EU budget, consolidated account, financial year, implementation of the budget, long-term forecast, public finance, withdrawal from the EU

Integrated 
financial and 
accountability 
reporting 
Overview

#EUBUDGET

FINANCIAL YEAR

2019

INTEGRATED FINANCIAL AND  
ACCOUNTABILITY REPORTING 2019

Budget

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Integrated financial and 
accountability reporting 
Overview

Foreword

2019  was  both  a 
year to conclude and 
to look forward with 
the completion of the 
Juncker  Commission 
priorities  and  pre-
the 
parations 
transition  to  a  new  Commission  led  by 
President von der Leyen.

for 

In  this  context  the  EU  budget  played 
a  crucial  role.  It  demonstrated  that  it 
makes a tangible difference to the life 
of  EU  citizens,  be  it  through  improved 
transport  offers,  better  connectivity  or 
improving the environment by delivering 
on its promise to spend at least 20 % 
on combating climate change.

The  current  coronavirus  crisis  has 
shown  once  more  how  important  it  is 
for the EU to be able to rely on a well-
dimensioned  and  flexible  multiannual 
financial  framework  (MFF).  The  next 
EU long-term budget will play an even 
more  important  role  as  it  will  be  at 
the  heart  of  the  recovery,  acting  as  a 
catalyst  for  solidarity,  responsibility 
and  innovation,  while  ensuring  sound 
financial management.

The Commission carefully monitors the 
implementation  of  the  EU  budget  on 
the  ground.  This  integrated  financial 
and  accountability  reporting  package, 
which  fulfils  our  obligations  under  the 
financial  regulation,  describes  how  EU 
tax  payers’  money  was  spent  in  2019 

and  what  steps  were  taken  to  ensure 
that  the  EU  budget  was  managed 
according  to  the  highest  standards.  It 
demonstrates the shared commitment 
of  the  EU  institutions  along  with  the 
Member  States  to  get  the  most  out 
of every euro invested through the EU 
budget.

Johannes  Hahn,  Commissioner  for 
Budget and Administration

3

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

I. The EU budget in a nutshell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

II. EU budget performance — delivering maximum results. . . . . . . . . . . . . . . . . . . . . . 17

III. EU annual accounts — providing an accurate picture of EU finances . . . . . . . . . . . 25

IV. EU budget financial management and scrutiny — every euro counts . . . . . . . . . . . 39

5

Introduction

Introduction

The  integrated  financial  and  accountability  reporting  package  brings  together 
comprehensive  information  on  the  implementation,  performance,  results,  sound 
financial management and protection of the EU budget in 2019.

It consists of five reports:

•  the 2019 annual management and performance report;

•   the 2019 consolidated annual accounts of the European Union;

•   the report on the follow-up to the discharge for the 2018 financial year;

•   the Commission report to the discharge authority on internal audits carried out in 

2019; and

•   the long-term forecast of future inflows and outflows of the EU budget (2021-

2025).

These documents provide essential input for the annual discharge procedure, through 
which  the  European  Parliament  and  the  Council  of  the  European  Union  hold  the 
Commission accountable for the way it manages the EU budget. This is in line with 
the highest international standards for transparency and accountability.

This brochure highlights the key messages of these reports and explains the main 
features of the EU budget.

7

Content of the integrated ﬁnancial and accountability reporting package 
2019:

The 2019 annual management and performance report provides 
an overview of the performance, management and protection of the 
EU  budget.  It  explains  how  the  budget  supports  the  EU’s  political 
priorities and describes both the results achieved with the EU spending 
programmes by the end of 2019 and the role of the Commission in 
ensuring the highest standards of financial management.

The 2019 consolidated annual accounts of the European Union 
contain financial information on the activities of the year, the assets 
and  liabilities,  and  the  revenue  and  expenditure  of  the  institutions, 
agencies and other bodies of the EU. They are produced in accordance 
with the International Public Sector Accounting Standards.

In the report on the follow-up to the discharge for the 2018 ﬁnancial 
year, the Commission reports on how it proceeded with the requests made 
by  the  Parliament  and  the  Council  during  the  discharge  procedure.  The 
requests  cover  wide-ranging  topics  and  help  the  Commission  to  further 
improve the way it manages and implements the EU budget.

The Commission’s annual  report  to  the  discharge  authority  on 
internal  audits  carried  out  in  2019  presents  a  synthesis  of  the 
recommendations  made  by  the  Internal  Audit  Service  (IAS)  and  the 
actions taken on those recommendations to improve the Commission’s 
governance, risk management and control processes.

The long-term forecast of future inﬂows and outﬂows of the EU 
budget (2021-2025) provides the payments and revenue forecast 
covering  the  next  5  years,  based  on  the  applicable  multiannual 
financial frameworks (MFFs).

Annual  
Management  
and Performance  
Report for  
the EU Budget

#EUBUDGET

FINANCIAL YEAR

2019

INTEGRATED FINANCIAL AND  
ACCOUNTABILITY REPORTING 2019

INTEGRATED FINANCIAL AND  
ACCOUNTABILITY REPORTING 2018

Budget

I

S
S
N
2
5
9
9
-
7
0
9
2

I

S
S
N
2
5
2
9
-
6
6
8
X

Consolidated 
annual accounts of 
the European Union 
and Financial Statement 
Discussion and Analysis

#EUBUDGET

FINANCIAL YEAR

2019

INTEGRATED FINANCIAL AND  
ACCOUNTABILITY REPORTING 2019

Budget

I

S
S
N
2
5
2
9
-
6
6
6
3

Report on  
the follow-up  
to the discharge
for the 2018 financial year

#EUBUDGET

INTEGRATED FINANCIAL AND  
ACCOUNTABILITY REPORTING 2019

Budget

Annual report  
on internal  
audits carried out 
in 2019

#EUBUDGET

FINANCIAL YEAR

2019

INTEGRATED FINANCIAL AND  
ACCOUNTABILITY REPORTING 2019

Budget

Long-term 
forecast of future 
inflows and 
outflows of the 
EU Budget  
2021-2025

#EUBUDGET

INTEGRATED FINANCIAL AND  
ACCOUNTABILITY REPORTING 2019

Budget

Find  out  more  about  the  Integrated  Financial  and 
Accountability Reporting: 
http://europa.eu/!wK93Nd

 
 
 
I. The EU budget in a nutshell

SECTION I

The EU budget  
in a nutshell

9

Section titleWhat is the EU budget?

The EU budget is an investment budget, it intervenes only when it is more effective 
to spend money at EU level than at a local, regional or national level. It complements 
national budgets and implements commonly agreed priorities. It focuses on areas in 
which pooling resources can deliver results that could not be achieved as effectively 
or efficiently by Member States acting alone. Unlike national budgets it does not fund 
social protection, primary education or national defence, but invests in the key areas 
that boost growth and competitiveness.

How does it work?

LONG-TERM BUDGET
A  long-term  spending  plan,  the  multiannual  financial  framework,  is  adopted  for  a 
period of generally 7 years to ensure stability. It sets the maximum annual amounts 
(ceilings)  which  the  EU  may  spend  per  policy  area  (organised  into  a  few  broad 
categories called ‘headings’). These headings bring together EU financial programmes 
of varying size and scope.

Global Europe 
EUR 66.3

Security and 
citizenship 2%
EUR 17.7

Administration 
EUR 69.6

 6%

 6%

 13%

Competitiveness for 
growth and jobs
EUR 142.1

Total (EUR billion)
EUR 1 087

Sustainable growth: 
natural resources
EUR 420

 39%

 34%

Economic, social and 
territorial cohesion
EUR 371.4

Commitment appropriations, adjusted for 2019, in EUR billion – current prices and in percentages. 
Source: Consolidated final accounts of the European Union, financial year 2019. 

10

The EU budget in a nutshell

 
ANNUAL BUDGET
Each annual budget is adopted within the limits of the long-term budget (multiannual 
financial  framework).  It  determines  EU  annual  expenditure  and  revenue  for  all  EU 
policy areas in a given year.

How big is it?

Over the years the EU budget has remained a small part of total public expenditure 
in  the  EU.  Amounting  to  roughly  1%  of  the  EU’s  gross  national  income  (GNI),  and 
representing  around  2%  of  all  public  spending  in  the  EU,  it  aims  to  complement 
national budgets and to implement commonly agreed priorities.

1.25%

1.09%

1.12%

1.00%

Average

1993-1999

Average

2000-2006

Average

2007-2013

Average

2014-2020*

Chart: The size of the EU budget as percentage of gross national income (GNI).
*Considering the budget for the 27 Member States and adding the European Development Fund (which 
would be integrated in the budget as of 2021), the 2014-2020 EU budget represents 1.19% of the GNI 
for the EU27.
Source: European Commission.

The EU budget in a nutshell

11

How is the EU budget ﬁnanced?

The current EU budget (2014-2020) is financed from the following sources:

•  traditional own resources (mainly custom duties);

•  an own resource based on the value added tax (VAT) collected by each Member State;

•   a percentage of Member States’ gross national income (GNI);

•   other  revenue,  notably  including  tax  and  other  deductions  from  EU  staff 
remuneration,  contributions  from  non-EU  countries  to  certain  programmes, 
interest on late payments and fines, as well as a surplus from the previous year.

Where does the money go and who beneﬁts from it?

The EU budget plays an important role in shaping the future of Europe and supporting 
many EU policy initiatives that make a real difference to people’s lives.

These policy initiatives range from boosting investment (e.g. the European Fund for 
Strategic Investments (EFSI) to reforming EU laws (e.g. lower mobile phone charges, 
enhanced data protection), or undertaking non-legislative actions such as improving 
Member States’ coordination and exchange of best practices (e.g. avoiding conflicts 
of interest).

Despite its relatively small size, the EU budget shows tangible results in a broad 
range of domains, for example it:

•  supports start-ups and small and medium-sized enterprises (SMEs);

•   promotes  digital 

transformation 

(high-performance  computing,  artificial 

intelligence, cybersecurity and digital skills);

•   fosters social inclusion;

•   allows young people to benefit from an Erasmus exchange;

•   invests  in  large-scale  infrastructure  projects  such  as  EU  space  programmes, 

transport and energy infrastructures;

•   significantly steps up defence investment and capabilities, to enhance Europe’s 

strategic autonomy in protecting and defending its citizens;

12

The EU budget in a nutshell

•   supports  the  development  of  a  fully  integrated  European  border  management 

system, protecting the Union against trafficking, smuggling and fraud;

•   offers the means to act and to react quickly to unforeseen and unprecedented 

crises such as the current coronavirus crisis.

The  EU  budget  has  an  impact  on  the  daily  lives  of  every  citizen.  It  boosts 
regions  and  cities,  develops  SMEs,  supports  researchers,  protects  consumers  and 
gives broader perspectives to students, just to name a few. 

Sustainable 
growth: 
 natural 
resources

Economic, 
social and 
 territorial 
cohesion

Competitiveness 
for growth and 
jobs

Global Europe

Security and 
citizenship

EUR 59.5 
billion (37.4%)

EUR 53.8 billion 
(33.8%)

EUR 21.7 billion 
(13.7%)

EUR 10.1 billion 
(6.4%)

EUR 3.3 billion 
(2%)

6.2 million 
farms 
supported out 
of 10.5 million

Over  
400 000 small 
and medium 
enterprises 
supported, which 
has helped 
to create an 
additional  
109 000 jobs

Erasmus+ 
supported 
900 000 people 
in 2019, out of 
which almost  
360 000 
students

177 million 
people 
benefited from 
humanitarian 
aid in 2019 in 
more than 80 
countries

Since 2015, over 
2 million people 
have received 
asylum or 
accommodation 
support

s
t
n
e
m
u
r
t
s
n

i

l
a
i
c
e
p
s

d
n
a

n
o
i
t
a
r
t
s
i
n
m
d
A

i

)

%
7
6
(

.

n
o

i
l
l
i

.

b
7
0
1
R
U
E

Chart: Payments made in 2019 per MFF heading, in % and in EUR billion.
Source: European Commission.

The coronavirus crisis has also shown once more how important it is for the EU to 
be able to rely on a well-dimensioned and flexible multiannual financial framework. 
Boosted  by  the  new  recovery  instrument  Next  Generation  EU,  the  next  EU’s  long-
term budget, 2021-2027, will also be at the heart of the recovery, and will promote 
solidarity, responsibility and innovation.

The EU budget in a nutshell

13

 
 
 
 
 
 
 
   
 
Who decides on it?

LONG-TERM BUDGET
The  European  Commission  proposes  the  long-term  budget  and  the  system  of  own 
resources.  The  Council  adopts  the  long-term  budget  with  unanimity  after  receiving 
the consent of the European Parliament, as expressed by absolute majority. For the 
system of own resources, the European Parliament is consulted and, after adoption in 
the Council by unanimity, ratification by all Member States is required.

ANNUAL BUDGET
The European Commission proposes the annual budgets, which are approved by the 
European Parliament and by the Council with qualified majority (55% of Member 
States, representing at least 65% of the EU population).

European Commission  
proposes

Draﬅ Budget   
5 June

New proposal

BUDGET REJECTED

Council’s  position   
July

No joint text   
Oct-Nov

Council  and   
EP reject

Council  approves,   
EP rejects

European Parliament  
(EP) approves 
 Sept-Oct

EP Amends   
Sept-Oct

Council 
disagrees

CONCILIATION  
 21 days

Joint text  
 Oct-Nov

BUDGET 
ADOPTED

Council 
accepts

BUDGET 
ADOPTED

Chart: Approval process of the annual budget.
Source: European Commission.

When  the  European  Parliament  and  the  Council  do  not  agree  on  a  common  text, 
following  their  respective  readings  of  the  Commission  proposal,  they  engage  in  a 
negotiation process known as the conciliation procedure, which lasts 21 days. If they 
do not find an agreement within this period, the Commission needs to make a new 
proposal.

14

The EU budget in a nutshell

Who manages it?

The  EU  budget  can  be  managed:  directly  by  the  Commission;  in  a  shared  manner 
with the Member States; or indirectly by international organisations or decentralised 
agencies, amongst others.

The  large  majority  of  the  EU  budget  is  managed  together  with  Member  States  in 
shared management.

18%

74%

8%

DIRECT MANAGEMENT 
European Commission, including its delegations and  
executive agencies

SHARED MANAGEMENT 
Member States

INDIRECT MANAGEMENT 
International organisations, decentralised agencies and joint 
undertakings, national agencies, specialised union bodies, third 
countries

Chart: EU budget implementation
Average 2014-2020 of contracted amounts per management mode.
Source: European Commission.

How do we ensure the budget is well spent?

In  order  to  ensure  that  the  EU  budget  is  well  spent,  different  levels  of  control  are 
applied at all stages of implementation.

As the independent external auditor of the EU institutions and bodies, the European 
Court of Auditors checks that EU funds are correctly accounted for, are raised and 
spent in accordance with the applicable rules and have achieved value for money.

A budget year is formally closed when the European Parliament approves how the 
Commission and the Member States implemented the EU budget for that year. This 
approval  is  based  on  the  Commission’s,  the  Court  of  Auditors’  and  other  reports, 
and takes into account the Council’s recommendations. This procedure ensures that 
the management of EU taxpayers’ money is under democratic control, and that the 
Commission is always held accountable.

The EU budget in a nutshell

15

II. EU budget performance — delivering maximum results

SECTION II

EU budget performance 
– delivering maximum 
results

17

Section titleThe  EU  budget  is  key  for  implementing  European  policies  and  priorities.  It  is 
an  investment  budget  and  is  executed  together  with  the  Member  States.  Its 
programmes  are  multiannual  by  nature,  providing  a  stable  and  predictable 
framework,  which  is  ideally  suited  to  supporting  strategic  investments  over  the 
medium to longer term. It leverages national budgets and other policy instruments 
at EU level to address the many challenges and opportunities faced by the Union. 
This requires strong accountability and optimal control mechanisms to ensure that 
the budget is properly and effectively spent. 

Ensuring that the EU budget delivers on what it 
promises

The  EU  budget  has  an  advanced  framework  for  measuring  and  reporting  on 
performance. Its key elements are:

•   clear objectives for each spending programme;

•   indicators reporting progress towards the objectives;

•   monitoring, reporting and evaluation arrangements.

This performance framework is a compulsory feature in the legal bases of all spending 
programmes. It is a key pillar of the increased focus on results across the budget. 

Performance framework — transparent results

The current performance framework of the spending programmes includes indicators, 
which help measure the performance against general and specific objectives set at the 
start of the programmes. In 2019, most of these indicators have been reported upon. 
However,  not  all  of  the  indicators  measure  EU  budget  performance  directly.  Some 
provide either high-level contextual information (e.g. ‘the Europe R & D target of 3 % 
GDP [gross domestic product]’ or ‘share of researchers in the EU active population’) 
or  process-related  information  (e.g.  ‘quality  of  project  applications’  or  ‘number  of 
participants’).

For the next long-term budget, the Commission is proposing to strengthen the focus 
on  performance  across  all  programmes,  including  by  setting  clearer  objectives, 
focusing on a smaller number of higher-quality performance indicators and linking 
those directly to the objectives with a new budget nomenclature. This will make it 
easier to monitor and measure results – and to make changes when necessary.

18

EU budget performance – delivering maximum results

Key documents reporting performance information

The annual management and performance report covers the results achieved with the 
EU budget across all budget headings and policy areas. As a new feature, the 2019 AMPR 
report includes the programmes’ performance overviews as an annex. The report 
draws on information from the 2019 annual activity reports produced by all Commission 
departments, and other sources such as programme statements and evaluation reports, 
studies and implementation reports.

Delivering results for all citizens — the essence of 
the EU budget

2019 was the current multiannual financial framework sixth year of implementation. 
Important  priorities  included  providing  EU  response  to  the  new  challenges  deriving 
from  the  complex  geo-political  environment,  from  migration  management  to  the 
protection of the EU’s external borders and the security of its citizens, guaranteeing 
strategic  investment  and  sustainable  growth,  supporting  economic  cohesion  and 
creating jobs, in particular for young people.

The  European  Fund  for  Strategic  Investments  (EFSI)  triggered  more  than  
EUR  458  billion  in  investment  by  the  end  of  2019  and  supported  over  8.5  million 
jobs. It has played an important role in supporting the economy through financing key 
infrastructure investments in areas such as energy and transport and by supporting 
small  and  medium-sized  enterprises.  Thanks  to  these  investments  31 million 
Europeans benefited, for example, from better healthcare.

With regard to transport infrastructure, progress has been made in particular in the 
Baltic Sea, and on rail infrastructure across the German–Polish border. An estimated 
95 million citizens are benefiting from the improved infrastructure.

SUPPORTING INNOVATION
The Galileo programme, with 26 satellites in orbit, helps improving the accuracy 
and reliability of location services in the smartphones of more than 1 billion users 
worldwide.  In  addition,  the  European  Geostationary  Navigation  Overlay  Service  is 
playing a key role in safety critical services such as aviation safety.

To support the digital transition, Horizon 2020 resources were targeted at projects 
to build new capabilities in the area of artificial intelligence and to tackle cybercrime. 
Key projects in 2019 include Formobile, a complete end-to-end forensic investigation 
chain  targeting  mobile  devices  used  by  criminal  offenders,  and  Spider,  a  research 
project to investigate the security of 5G telecommunications networks.

EU budget performance – delivering maximum results

19

Another  example  is  the  eHealth  Digital  Service  Infrastructure:  it  facilitates 
continuity  of  care  and  patient  safety  for  citizens  seeking  cross-border  healthcare, 
allowing  health  data  to  be  exchanged  across  national  borders.  Cross-border 
ePrescriptions/eDispensations  (eP)  allow  patients  abroad  to  receive  the  equivalent 
medication that they would receive in their home country.

SUPPORTING YOUNG EUROPEANS
Erasmus+  supported  900  000  people  in  2019,  and  the  Marie  Skłodowska-Curie 
actions  continued  investing  in  European  researchers  to  enable  them  to  work  and 
collaborate in other countries.

Through  the  Youth  Employment  Initiative,  the  EU  budget  has  managed  to 
significantly reduce unemployment by providing education and training to 2.7 million 
young  participants  by  the  end  of  2018.  The  number  of  unemployed  participants 
completing the Youth Employment Initiative intervention reached 1.8 million at the 
end of 2018.

STIMULATING JOB CREATION AND SUSTAINABLE GROWTH VIA 
COHESION POLICY
EU investment in transport, with the goal of removing bottlenecks, helped to build 
4 259 km of new or upgraded roads and 938 km of railway lines in 2019 through the 
European Regional Development Fund and the Cohesion Fund.

These  two  important  funds  further  contributed  to  supporting  investment  in  over  
400 000 small and medium enterprises, which has helped to create an additional 
109 000 jobs.

Sustainability was strengthened by ensuring that 4 million people are covered by 
flood-protection systems and 10.8 million people by forest-fire-protection systems. 
Supported clean-energy projects have so far resulted in a reduction in greenhouse 
gas emissions equivalent to 1.3 million tonnes of carbon dioxide per year.

HELPING TO ENSURE SAFE HIGH-QUALITY FOOD AND 
SUSTAINABILITY
Since 2014, the European Agricultural Fund for Rural Development has helped 
train 1.5 million participants in vocational training activities in agriculture. 2.9 million 
people living in rural areas have benefited from improved access to information and 
communications  technology  services  and  infrastructure,  and  4.2  million  hectares 
have  been  placed  under  land-management  contracts  targeting  the  reduction  of 
greenhouse gas or ammonia emissions.

20

EU budget performance – delivering maximum results

ACHIEVING CROSS-CUTTING OBJECTIVES: CLIMATE ACTION AND 
BIODIVERSITY
The EU budget is also an important tool for achieving cross-cutting policy objectives 
such  as  climate  action  and  biodiversity.  In  2019,  the  amount  allocated  to  climate 
action was more than EUR 34 billion, 21.2% of the total budget, while the total 
cumulative amount (2014-2019) was more than EUR 176 billion by the end of 2019.

In  2019,  the  amount  allocated  to  actions  contributing  to  support  biodiversity  was 
more than EUR 13.4 billion, or 8.3% of the total budget, while the total cumulative 
amount (2014-2019) was more than EUR 72 billion.

Heading 4:
Global Europe
EUR 2 212
7%

Heading 3:
Security and citizenship
EUR 20
0%

57% 56%

57% 56%

44%

44%

34%

Heading 1a:
Competitiveness for 
growth and jobs
EUR 5 553
16%

34%

25% 24%

25% 24%

18% 18%

18% 18%

12%

12%

Total (EUR million)
EUR 34 389

Heading 2:
Sustainable growth:
natural resources
EUR 9 995
48%

Heading 1b:
Economic, social and 
territorial cohesion
EUR 9 995
29%

European Agricultural Fund for Rural Development
Connec�ng Europe Facility
LIFE
Development Coopera�on Instrument
Horizon 2020
Cohesion Fund
European Regional Development Fund
European Agricultural Guarantee Fund
European Social Fund

European Agricultural Fund for Rural Development
Connec�ng Europe Facility
LIFE
Development Coopera�on Instrument
Horizon 2020
Cohesion Fund
European Regional Development Fund
European Agricultural Guarantee Fund
European Social Fund

Left: 2019 contribution of climate-related expenditure by budget heading.  
Right: Climate-relevant share of the main contributing programmes in 2019.
Source: European Commission.

PURSUING THE SUSTAINABLE DEVELOPMENT GOALS
The  EU,  together  with  its  Member  States,  is  fully  committed  to  being  at  the 
forefront  of  implementing  the  2030  agenda  for  sustainable  development.  Most  of 
the  EU’s  budgetary  programmes  are  designed  to  address  multiple  sustainable 
development goals. Currently, 75% of the EU budget programmes (45 out of 60) 
contribute towards these goals.

The EU has embarked on a transition towards a low-carbon, climate-neutral, 
resource-efficient and circular economy that goes hand in hand with increased 
security, prosperity, equality and inclusion. In this light, the design and implementation 
of EU spending programmes aims at delivering on the objectives in each policy field 
while promoting sustainability through the actions and interventions of the relevant 
programmes. 

EU budget performance – delivering maximum results

21

Examples of the EU budget contribution towards the sustainable development 
goals include:

•  EUR  2.4  billion  committed  by  the  European  Social  Fund  to  projects  targeting 

gender equality by the end of 2019;

•  support from the European Fund for Strategic Investments to provide renewable 
energy  to  approximately  10  million  households  and  save  over  5  000  gigawatt 
hours of energy per year; and

•  scholarships in EU universities granted by Erasmus+ to more than 26 000 African 

students and staff from 2014 to 2019, under the Africa–Europe Alliance.

CONTRIBUTING TO MIGRATION POLICY
Since 2015, over 2 million people have received asylum or accommodation support 
and nearly 30 000 accommodation places have been funded. Notably, the Asylum, 
Migration and Integration Fund provided, together with the United Nations Refugee 
Agency, 25 000 accommodation places on an annual basis on the Greek mainland 
and the islands, as well as cash assistance to more than 90 000 asylum seekers.

In 2019, the European Border and Coast Guard Agency deployed around 7 000 
border guards and other experts to assist Member States in protecting the EU borders, 
implement the EU return policy and contribute to the rescue of over 28 600 migrants 
at sea.

The  EU  Facility  for  Refugees  in  Turkey  continues  to  deliver  much-needed 
assistance  to  refugees  and  host  communities  in  Turkey  in  all  the  priority  areas  it 
covers, i.e. basic needs, education, healthcare, protection, socioeconomic support and 
municipal  infrastructure.  Thanks  to  the  facility,  over  1.7  million  refugees  continue 
to benefit from a monthly cash allowance to help meet their basic needs. A total of  
684 919 Syrian children were enrolled in the 2019-2020 school year – corresponding 
to 63% of the total population of Syrian school-age children in Turkey.

MAKING THE EU A SAFER PLACE TO LIVE AND WORK
In  March  2019,  the  EU  reinforced  and  strengthened  disaster  risk  management 
by  upgrading  the  EU  Civil  Protection  Mechanism.  The  result  was  rescEU  and 
its  objective  is  to  improve  both  the  protection  of  citizens  from  disasters  and  the 
management  of  emerging  risks.  In  2019,  three  emergencies  in  the  EU  received 
assistance through the Civil Protection Mechanism: forest fires in Greece and marine 
pollution  in  France  and  Finland.  RescEU’s  scope  goes  beyond  forest  fires  and  it  is 
expected  to  include  responding  to  other  threats  such  as  medical  emergencies  or 

22

EU budget performance – delivering maximum results

chemical,  biological,  radiological  and  nuclear  incidents.  Now,  due  to  the  COVID-19 
outbreak, all efforts are focused on the stockpile of medical equipment.

The justice programme supports the application of many EU legal instruments in 
judicial cooperation in criminal matters, such as the European Arrest Warrant, which 
is the most successful EU instrument in criminal matters with over 10 000 cases per 
year.

The  Connecting  Europe  Facility  (telecommunication)  set  up  a  voluntary 
cooperation platform to strengthen preparedness and responses to cyberattacks. By 
doing  so,  the  EU  is  contributing  to  an  EU-wide  solution  to  a  threat  that  does  not 
respect national borders.

ACTING AS A STRONG GLOBAL PLAYER
In 2019, the EU provided over EUR 2.4 billion for humanitarian aid in more than 
80  countries,  of  which  a  significant  part  was  spent  on  supporting  conflict-affected 
populations  in  Syria  and  refugees  in  neighbouring  countries.  In  total,  177  million 
people benefited from humanitarian aid in 2019.

EU budget performance – delivering maximum results

23

24

EU budget performance - delivering maximum results

III. EU annual accounts — providing an accurate picture of EU ﬁnances

SECTION III

EU annual accounts – 
providing an accurate 
picture of EU finances

25

Section titleHighlights of the 2019 EU budget

2019 was the sixth year of the current long-term budget (MFF), which runs from 2014 
to 2020. The 2019-adopted budget focused on two main policy priorities for Europe: 
to stimulate the creation of jobs, especially for young people; and to boost growth, 
strategic investments and convergence. The EU has also continued supporting efforts 
to effectively deal with the migration challenge, both inside and outside the EU. The 
implementation of the EU budget in 2019 totalled EUR 178.8 billion in commitment 
appropriations and EUR 159.1 billion in payment appropriations. This implementation 
can  be  considered  satisfactory  with  only  minor  adjustments  made  throughout  the 
year.  After  amounts  carried  over  to  2020,  the  implementation  reached  99.4%  of 
commitment appropriations and 99.5% of payment appropriations.

•   Nearly  half  of  the  funds  (EUR  80.6  billion  of  commitments)  were  aimed  at 
supporting economic growth and reducing the economic gaps between regions 
(heading 1: ‘Smart and inclusive growth’). EU funding contributed EUR 12.4 billion 
to research and innovation under Horizon 2020, including in the field of high-
performance computing. The budget increased for education and training (20% 
more for Erasmus+ than in 2018) and transport and digital infrastructure 
(37 % more for the Connecting Europe Facility).

•   Support for agriculture and rural areas remained stable at EUR 57.9 billion, 
also  contributing  to  the  fight  against  climate  change  and  to  the  promotion  of 
sustainable growth (EUR 59.6 billion in total for heading 2: ‘Sustainable growth: 
natural resources’).

•   The 2019 budget provided the necessary flexibility to address the internal aspect 
of  migration  issues,  with  a  total  of  EUR  1.2  billion  support  from  the  Asylum, 
Migration and Integration Fund, along with EUR 533 million for border management 
and security from the Internal Security Fund. A total of EUR 5 million was also 
allocated to the creation of the new European Public Prosecutor’s Office to 
prosecute crimes against the EU budget including fraud, money laundering and 
corruption.

Implementation of the EU budget in 2019

REVENUE IN 2019
The EU budget is funded from own resources, namely contributions based on Member 
States’ GNI, custom duties and contributions from VAT. These are supplemented by other 
sources of revenue (taxes on EU staff salaries, contributions from non-EU countries to 
certain programmes, fines on companies for breaching competition laws, etc.).

26

EU annual accounts – providing an accurate picture of EU ﬁnances

Customs duties
13.03%

VAT
10.84%

Other:

7.67%

Other
11.68%

Contributions and refunds in 
connection with Union agreements 
and programmes

1.60%

Interests on late payments and ﬁnes

1.10%

Surpluses, balances and adjustments

0.96%

Revenue accruing from persons 
working with the institutions and 
other Union bodies

0.34%

Revenue accruing from the 
administrative operation of the 
institutions

Total (EUR billion)
EUR 163.9 

GNI
64.49%

Chart: EU revenue in 2019.
Source: European Commission.

EXPENDITURE IN 2019
Additional  appropriations.  After  the  final  budget  is  adopted,  some  additional 
appropriations can be added to commitments and payments. Additional appropriations 
are composed of two elements: carry-overs and assigned revenue.

Carry-overs.  Funds that could not be used in the previous financial year that are 
allowed to be ‘carried over’ to the following year. This only happens exceptionally and 
under strict conditions.

Assigned revenue. Funds received in addition to the final budget to finance specific 
expenditures.  Examples  include  financial  contributions  from  non-EU  countries  to 
programmes, such as funds from the participation of European Free Trade Association 
countries in EU actions such as the programme for the competitiveness of enterprises 
and SMEs and Erasmus+.

EU annual accounts – providing an accurate picture of EU ﬁnances

27

Commitment. Represents a legal obligation to fund the cost of projects, contracts and 
grants. Although commitments are made for the full amount of the EU contribution 
to  the  project  in  the  first  financial  year,  payments  take  place  in  instalments  over 
subsequent financial years, as the project progresses.

Security and citizenship 2.2% EUR 3.9

Administration EUR 10.4

Global Europe EUR 13.1

33.9%

36.2%

14.4%

7.3% 5.8%

Sustainable growth: 
natural resources
EUR 60.6

Economic, social and 
territorial cohesion
EUR 64.8

Competitiveness for 
growth and jobs
EUR 25.8

Special instruments 0.2% EUR 0.3

Chart: Commitments made in 2019.

MFF Heading

Final adopted
budget

Additional 
appropriations

Total 
commitment 
appropriations

Commitments 
made

Competitiveness for 
growth and jobs

Economic, social and 
territorial cohesion

Sustainable growth: 
natural resources

Security and citizenship

Global Europe

Administration

Special instruments

23.4

57.2

59.6

3.8

11.6

9.9

0.6

4.4

7.8

3.2

0.3

1.8

0.8

0.1

27.8

65.0

62.8

4.1

13.5

10.8

0.6

25.8

64.8

60.6

3.9

13.1

10.4

0.3

Total

166.2

18.4

184.6

178.8

Commitment appropriations and commitments made in 2019. All amounts in EUR billion.
All amounts in EUR billion
Source: European Commission.

28

EU annual accounts – providing an accurate picture of EU ﬁnances

Payment  appropriations.  Represent  the  actual  availability  of  funds  to  pay 
recipients  in  a  given  year.  Appropriations  are  consumed  when  the  European  Union 
pays a contractor or third party to fulfil the legal obligation.

Security and citizenship 2% EUR 3.3

Global Europe EUR 10.1

Administration EUR 10.4

37.4%

33.8%

13.7%

6.5% 6.4%

Sustainable growth: 
natural resources
EUR 59.5

Economic, social and 
territorial cohesion
EUR 53.8

Competitiveness for 
growth and jobs
EUR 21.7

Special instruments 0.2% EUR 0.3

Chart: Payments made in 2019.

MFF Heading

Final adopted
budget

Additional 
appropriations

Total 
payment 
appropriations

Payments
made

Competitiveness for 
growth and jobs

Economic, social and 
territorial cohesion

Sustainable growth: 
natural resources

Security and citizenship

Global Europe

Administration

Special instruments

20.3

47.6

57.8

3.3

9.0

9.9

0.6

5.8

8.9

3.4

0.3

2.0

1.8

0.0

26.0

56.5

61.3

3.6

10.9

11.7

0.7

21.7

53.8

59.5

3.3

10.1

10.4

0.3

Total

148.5

22.2

170.7

159.1

Payment appropriations and payments made in 2019. All amounts in EUR billion.
All amounts in EUR billion
Source: European Commission.

EU annual accounts – providing an accurate picture of EU ﬁnances

29

Consolidated ﬁnancial statements

The  consolidated  financial  statements  of  the  EU  comprise  more  than  50  entities 
(including the European Parliament, the Council, the Commission and EU agencies). 
The European Commission is the most significant entity, covering 96% of the total 
assets of the consolidated financial statements.

The  EU  accounts  are  prepared  according  to  the  highest  available  standards,  the 
International Public Sector Accounting Standards (IPSAS). Adhering to these standards 
ensures that the accounts provide relevant, reliable, comparable and understandable 
financial information for citizens. They provide information on the financial position 
(balance  sheet)  of  the  EU  as  well  as  detailed  explanations  of  its  assets,  liabilities, 
financial  commitments  and  obligations.  They  also  show  how  the  EU  budget  was 
implemented during the year.

2019

2018

(graph on page 31)

ASSETS

Financial assets

Pre-ﬁnancing

Receivables 

Cash and cash equivalents

Property, Plant and Equipment and other assets

71.2

51.4

24.0

19.7

12.6

69.4

50.0

24.7

18.1

12.3

Total

178.9

174.4

LIABILITIES

(graph on page 33)

Post-employment beneﬁts

Financial liabilities

Payables

Accruals

Other liabilities

Total

NET ASSETS

Reserves

Amounts to be called from MSs

Total

2019 balance sheet of the EU. All amounts in EUR billion.
Source: European Commission.

97.7

54.5

27.2

67.2

4.8

80.5

55.9

32.2

63.2

4.1

251.5

235.9

5.0

(77.6)

(72.5)

5.0

(66.4)

(61.5)

30

EU annual accounts – providing an accurate picture of EU ﬁnances

ASSETS
EU assets include buildings, receivables and cash, but also EU-specific items such 
as the satellites of the Galileo and Copernicus programmes, loans given to Member 
States as financial assistance and advances (pre-financing) given to recipients of EU 
funds – primarily Member States.

Property, Plant and Equipment 
and other assets 7%

Property, Plant 
and Equipment 91%
Other assets 9%

Financial assets 40%

Loans 74%
Available for sale
ﬁnancial assets 26%

Cash and 
cash equivalents
11%

Receivables 13%
Recoverables from 
non-exchange 
transactions 91%
Receivables from 
exchange 
transactions 10%

Total (EUR billion)
EUR 178.9

Pre-ﬁnancing 29%
Pre-ﬁnancing 86%
Other advances to 
Member States 13%
Contribution to 
Trust Funds 0%

Chart: EU assets in 2019 (major categories). 
Source: European Commission.

EU annual accounts – providing an accurate picture of EU ﬁnances

31

Financial assets
Loans:  The  EU  provides  financial  support  to  preserve  financial  stability  in  Europe 
and to grant financial assistance to Member States (and some non-EU countries, e.g. 
Ukraine)  in  financial  difficulties.  In  this  context,  the  EU  raises  funds  on  the  capital 
markets or with financial institutions, which are lent under the same conditions (back-
to-back operations) to the Member States and partner countries concerned.

The following graph shows the loans outstanding at 31 December 2019 by Member 
State.

Total EUR 47 billion

51.7%

47.9%

Portugal
EUR 24.3

Ireland
EUR 22.5

Latvia
0.4%
EUR 0.2

Chart: Loans for financial assistance in 2019. All amounts in EUR billion. 
Source: European Commission.

Loans granted and disbursed under EFSM and BOP in EUR billion.
Available-for-sale  ﬁnancial  assets:  The  EU  holds  available-for-sale  financial 
assets in the form of debt securities, equity instruments and other types of investment. 
These investments are made as part of the implementation of the budget to maximise 
the impact of the funds available for programmes and policy areas. The basic concept 
behind this approach is to encourage the contribution of additional private and public 
funds to the programmes in question, maximising the impact of the funds available 
(the so-called leverage effect).

Pre-financing
Pre-ﬁnancing is an essential instrument for the implementation of the EU budget, and 
it represents a cash advance given to recipients to implement a specific programme. 
The recipient is required to report eligible expenditures incurred to the EU, and any 
ineligible or unused amounts must be returned to the EU.

Total EUR 44.4 billion

56%

25%

19%

Shared 
management
EUR 25.0

Direct 
management
EUR 10.9

Indirect 
management
EUR 8.6

Chart: European Commission pre-financing by management mode in 2019.
All amounts in EUR billion.
Source: European Commission.

32

EU annual accounts – providing an accurate picture of EU ﬁnances

 
Receivables
Receivables  are  mostly  made  up  of  amounts  due  to  the  EU  arising  from  competition 
fines issued and other amounts to be collected from Member States (e.g. traditional own 
resources, the European Agricultural Guarantee Fund and Rural Development recoverables).

Property, plant and equipment — space assets
This category covers operational fixed assets related to the two EU space programmes: 
the Global Navigation Satellite Systems (i.e. Galileo and the European Geostationary 
Navigation  Overlay  Service)  and  the  Copernicus  European  Earth  observation 
programme.

Space assets at 31 December  2019 amounted to EUR 3.7 billion, with a further  
EUR  3  billion  recognised  as  assets  under  construction.  The  four  Galileo  satellites 
launched in 2018 have been declared operational, bringing the total to 26 satellites in 
2019. When completed, the Galileo constellation will comprise 30 satellites (including 
six spare satellites). Regarding Copernicus, no new satellites were launched in 2019.

LIABILITIES
EU  liabilities  are  primarily  amounts  owed  to  recipients  of  EU  funds,  as  well  as 
borrowings, pensions and other employee benefits.

Other liabilities
2%

Post-employment 
beneﬁts 39%

Accruals 27%

Accrued charges 99%
Other accruals 1%

Total (EUR billion)
EUR 251.5

Payables 11%

Chart: EU liabilities in 2019.
Source: European Commission.

Financial 
liabilities 21%

Borrowings for ﬁnancial 
assistance 96%
Other ﬁnancial 
liabilities 4%

EU annual accounts – providing an accurate picture of EU ﬁnances

33

Post-employment benefits
The  EU  grants  a  set  of  post-employment  benefits  to  employees,  which  include 
retirement, invalidity and survival pensions, as well as medical coverage. The benefits 
are  provided  under  a  defined  benefit  pension  plan  and  post-employment  sickness 
scheme.

Financial liabilities (primarily borrowings)
The  EU  borrows  money  on  the  capital  markets  so  as  to  grant  back-to-back  loans 
under the same conditions – see ‘Financial assets’ on page 32.

Payables
Payables include invoices and cost claims received by the EU but not paid at year 
end.  The  largest  amounts  mainly  concern  structural  actions  where  Member  States 
request the reimbursement of expenditure made in the current or previous years.

Accruals, constituted mainly by accrued charges
Accrued charges include estimated amounts concerning invoices and cost claims not 
yet received, i.e. where the EU estimates that beneficiaries have incurred expenditure 
that the budget will have to reimburse the following year. The largest amount at year 
end  relates  to  the  European  Agricultural  Guarantee  Fund,  where  the  amounts  are 
primarily paid from the budget in the first quarter of the following year.

Contingent liabilities

A  contingent  liability  is  an  amount  disclosed  in  the  notes  to  the  accounts  that 
represents an exposure of the EU budget to the possible risk of having to pay out 
amounts in the future. As this risk is unlikely to happen, the amounts are not treated 
as  liabilities  on  the  balance  sheet  (in  accordance  with  international  accounting 
standards).

Contingent liabilities relate mainly to guarantees covered by future budgets (including 
loans and financial assistance programmes) and to legal risks. All contingent liabilities, 
except those relating to fines and guarantees covered by specific funds, should they 
fall due, would be financed by the EU budget (and thus the Member States) in the 
years to come.

34

EU annual accounts – providing an accurate picture of EU ﬁnances

Budgetary guarantees

Guarantees relating to ﬁnancial assistance

Guarantees given for EU ﬁnancial instruments

Legal cases

Total

All amounts in EUR billion
All amounts in EUR billion.
Source: European Commission.

Budgetary guarantees
38%

Total (EUR billion)
EUR 99.2 

2019

37.6

53.3

2.4

5.8

99.2

2018

36.3

55.0

2.7

5.7

99.7

Legal cases
6%

Guarantees given for 
EU ﬁnancial instruments 
2%

Guarantees relating to 
ﬁnancial assistance
54%

Chart: Contingent liabilities in 2019.
Source: European Commission.

Contingent  liability  for  budgetary  guarantees.  The EU provides guarantees to 
the European Investment Bank (EIB) Group for their loans granted outside of the EU 
(External Lending Mandate, ELM) as well as for debt and equity operations within the 
EU covered by the EFSI guarantee. This is done to support the EIB Group’s operations. 
In order to mitigate the risk that guarantee calls by the EIB Group could have on the 
EU budget, the EU has created dedicated guarantee funds, i.e. the Guarantee Fund for 
External Actions and the EFSI Guarantee Fund.

Contingent liability regarding EU ﬁnancial assistance. The EU’s borrowing and 
lending activities for financial assistance programmes are non-budget operations (the 
EU borrows money on the capital markets to finance these loans). The Commission 
has put procedures in place to ensure the repayment of these borrowings in case of a 
loan default by the recipient. Borrowings of the EU constitute direct and unconditional 
obligations  of  the  EU  and  are  thus  guaranteed  by  the  Member  States  (budgetary 
contingent liabilities).

EU annual accounts – providing an accurate picture of EU ﬁnances

35

Long-term forecast for 2021-2025

The report on the long-term forecast of future inﬂows and outﬂows complements 
the information on budget implementation presented in the annual accounts report 
by  providing  a  long-term  forecast  for  the  next  5  years.  This  year’s  forecast  report 
covers the years 2021 to 2025. It captures the first 5 years of the proposed future 
multiannual financial framework, which is subject to ongoing negotiations at the time 
of publication of this report. The payment forecast for 2021-2025 is therefore based 
on the revised Commission proposal of 27 May 2020 for a reinforced multiannual 
financial framework (MFF) 2021-2027 and also the reinforcements of programmes 
in 2020 as provided by the Corona Response Investment Initiatives (CRII and CRII+)  
and the amending budgets of 2020 budget.

OUTFLOWS

Commitments ceiling

Payments ceiling

Commitment appropriations

Payment appropriations

Commission proposal MFF 2021-2027 
(27 May 2020)

DB2021

2022

2023

2024

2025

164.9

165.6

163.1

161.8

167.1

170.1

167.1

170.1

171.8

174.5

171.8

174.5

176.1

178.0

176.1

178.0

181.4

181.6

181.4

181.6

Total payment appropriations 
including special instruments

163.5

170.1

174.5

178.0

181.6

INFLOWS
Own resources ceiling in 
percentage of the EU GNI

Own resources ceiling expressed 
in EUR billion

1.40%

1.40%

1.40%

1.40%

1.40%

196.0

202.9

210.1

217.8

223.9

Total own resources

Total revenue

154.6

163.5

157.4

170.1

164.8

174.5

171.2

176.6

178.0

181.6

All amounts in EUR billion, current prices. 
Source: European Commission.

36

EU annual accounts – providing an accurate picture of EU ﬁnances

Based  on  these  proposals,  payment  in  the  first  years  of  the  new  programming 
period will increase compared to last year’s estimates and will reach a level above 
the  proposed  commitment  ceilings.  This  will  allow  reversing  the  trend  of  growing 
outstanding commitments (RAL). Based on the Commssion’s proposals, by the end of 
2025 the RAL would decrease by 5%.

This forecast takes into account the following: 

Payments  in  relation  to  new  commitments  (outﬂows).  The  estimates  remain 
consistent with last year’s report. An update of these estimates would only be possible 
once the negotiations are concluded.

Payments  in  relation  to  commitments  made  under  the  current  ﬁnancial 
framework (outﬂows). The forecast builds on the level of appropriations included in 
the budget for 2020 and the latest developments in the implementation of it.

Revenues  (inﬂows).  The  forecast  covers  traditional  own  resources,  national 
contributions  and  other  revenue.  The  revenue  forecast  for  2021-2025  follows  the 
principle that total revenue equals total expenditure.

Developments in the following two areas are particularly important for the payment 
forecast after 2020:

•  The  outcome  of  ongoing  negotiations  on  the  next  financial  framework  (and  in 
particular on the cohesion policy funds, where some proposals could potentially 
generate additional needs while others may delay implementation to the future 
period).

•   The evolution in the implementation of the current financial framework and the 

level of outstanding commitments at the end of 2020.

These developments will have to be taken into account in the negotiations for the next 
multiannual financial framework. The payment ceilings under negotiation may have 
to be adjusted to accommodate any additional needs resulting from the higher level 
of  outstanding  commitments  and/or  changes  in  the  Commission  proposals  for  the 
implementation of the future programmes.

EU annual accounts – providing an accurate picture of EU ﬁnances

37

Multiannual ﬁnancial framework 2021-2027

In  May  2018,  the  Commission  put  forward  its  proposal  for  a  long-term  budget, 
tightly geared to the political priorities of the Union at 27 and taking into account the 
budgetary consequences of the withdrawal of the United Kingdom.

On 27 May 2020, in response to the outfall of the COVID-19 crisis, the Commission 
proposed  to  channel  investment  quickly  to  where  it  is  needed  most,  reinforce  the 
single market, step up cooperation in areas such as health and crisis management 
and equip the Union with a long-term budget to drive the green and digital transitions 
and build a fairer and more resilient economy.

In addition, an emergency Next Generation EU instrument of EUR 750 billion will 
temporarily boost the financial firepower of the EU budget with funds raised on the 
financial markets. These funds will be channelled through EU programmes to underpin 
the immediate measures needed to protect livelihoods, get the economy back on its 
feet and foster sustainable and resilient growth.

This will be a one-off emergency instrument, put in place for a temporary period 
and used exclusively for crisis response and recovery measures. Raising funding on 
the financial markets will help to spread the financing costs over time, so that Member 
States  will  not  have  to  make  significant  additional  contributions  to  the  EU  budget 
during the 2021-2027 period.

Moreover, the Commission fully maintains its proposal of May 2018 for a regulation 
on  the  protection  of  the  EU  budget  against  generalised  deﬁciencies  in  the 
rule of law. The goal of this mechanism is to ensure sound financial management 
of  the  Union’s  budget  and  to  protect  taxpayer’s  money.  The  proposed  rules  would 
allow  the  Union  to  suspend,  reduce  or  restrict  access  to  EU  funding  in  a  manner 
proportionate to the nature, gravity and scope of the rule of law deficiencies.

In  addition,  strong  measures  to  protect  the  budget  against  fraud  and 
irregularities  are  in  place  and  the  Commission  will  strengthen  them  further.  The 
European Anti-Fraud Office (OLAF) and the European Public Prosecutor’s Office (EPPO) 
will exercise their control and investigation powers.

38

EU annual accounts – providing an accurate picture of EU ﬁnances

IV. EU budget ﬁnancial management and scrutiny — every euro counts

SECTION IV

EU budget financial 
management and 
scrutiny – every euro 
counts

39

Section titleThe  European  Commission  attaches  great  importance  to  the  sound  financial 
management of the EU budget. The assurance that the EU budget is well-managed 
is based on:

•  robust  governance  arrangements  leading  to  a  solid  chain  of  assurance 

building and accountability at department and corporate level;

•  a strong internal control framework;

•  multi-annual  control  strategies  based  on  the  prevention,  detection  and 
correction, that are designed to reduce the risks to the legality and regularity of 
transactions;

•  a multi-layered anti-fraud strategy and the implementation of a zero-tolerance 

policy to fraud;

•  the assurance obtained through the work of the Internal Audit Service (IAS);

•  the  European  Court  of  Auditors  as  external  auditor,  and  the  discharge 

procedure with the European Parliament and the Council;

•  strong correction procedures.

Robust governance arrangements

The Commission has strong arrangements in place to ensure sound financial management. 
Its system of corporate governance is based on a clear division of responsibilities between 
the political, corporate and departmental levels. The main building blocks in its solid chain 
of assurance building and accountability are presented in the chart on the following 
pages 42-43.

The  College  of  Commissioners  takes  collegial  political  responsibility  for  the  work  of 
the  Commission.  Operational  implementation  of  the  budget  is  delegated  to  directors-
general and equivalent heads of services, as authorising officers by delegation. They are 
responsible for the sound financial management of the resources. In implementing the EU 
budget they must comply with the provisions of the financial regulation and establish an 
appropriate internal control framework.

The  underlying  assurance  and  accountability  for  the  sound  financial  management  is 
decentralised  and  obtained  at  the  level  of  the  departments,  under  a  strengthened 
oversight which is carried out at corporate level.

40

EU budget ﬁnancial management and scrutiny – every euro counts

Most  EU  funds  are  either  in  cooperation  with  Member  States  under  what  is  known 
as  shared  management  (some  71%  of  the  budget)  or  entrusted  to  international 
organisations,  decentralised  agencies,  non-EU  countries,  etc.  under  what  is  known  as 
indirect management (some 7% of the budget). The authorities in the Member States 
(for instance the respective ministries for regional development, which have a first level 
of responsibility) or the entrusted entities manage the expenditure under the supervision 
of the Commission. 

When  the  Commission  departments  face  particular  challenges  or  weaknesses  in  their 
control systems or in financial management, the declarations of assurance are qualified 
by reservations. These reservations are a key element of sound financial management: 
they ensure transparency and are accompanied by action plans aimed at mitigating future 
risks  and  strengthening  the  control  systems.  In  2019,  11  of  the  50  directors-general 
issued a qualified declaration with a total of 18 reservations, mostly in natural resources, 
economic, social and territorial cohesion and other internal policies. For each reservation, 
the directors-general concerned put in place mitigating actions to address the underlying 
weaknesses and mitigate the resulting risks. The total financial impact of the reservations 
remained fairly stable at EUR 1 053 million, compared to EUR 1 078 million in 2018 and 
EUR 1 053 million in 2017.

EU budget ﬁnancial management and scrutiny – every euro counts

41

Commission’s assurance building and accountability 
for the EU budget: clear roles and responsibilities 

Commission’s assurance building and accountability for the EU budget: 
clear roles and responsibilities

Assurance Packages

Assurance 
from Member 
States and
Entrusted Entities
Shared and indirect 
management

Directors
Risk management 
and internal control

Units / Directorates
Management control

Directors-General
Authorising Oﬃcers 
by Delegation
Management 
responsibility
and accountability

Annual
Activity
Reports

College of Commissioners

Authorising Oﬃcer

Political responsibility

Integrated Financial 

and Accountability 

Reporting *

Corporate 
Management Board
Oversight

European
Commission
Central Services
Guidance 
and support

European 
Commission 
Internal Audit 
Service
Assurance and 
consultancy

European 

Commission

Audit Progress 

Committee

Assurance

Annual Report 

Statement of Assurance

Special reports related to budget

Consolidated 

annual accounts of 

the European Union

European 

Commission

Accounting 

Oﬃcer 

European 

Court 

of Auditors

Management and internal control

Internal Audit

Accountant

External audit

Timeline

year n

year n + 1

Discharge

of year n

European 

Parliament 

and Council

Discharge

Discharge

year n + 2

* Integrated Financial and Accountability Reporting:
- Consolidated annual accounts of the European Union
- Annual management and performance report
- Long-term forecast of future inﬂows and outﬂows
- Annual internal audit report
- Report on the follow-up to the discharge

Source: European Commission.

42

EU budget ﬁnancial management and scrutiny – every euro counts

Commission’s assurance building and accountability for the EU budget: 
clear roles and responsibilities

Assurance Packages

Assurance 

from Member 

States and

Entrusted Entities

Shared and indirect 

management

Directors

Risk management 

and internal control

Units / Directorates

Management control

Directors-General

Authorising Oﬃcers 

by Delegation

Management 

responsibility

and accountability

Corporate 

Management Board

Oversight

Annual

Activity

Reports

College of Commissioners
Authorising Oﬃcer
Political responsibility

Integrated Financial 
and Accountability 
Reporting *

Discharge
of year n

European 
Parliament 
and Council
Discharge

European

Commission

Central Services

Guidance 

and support

European 

Commission 

Internal Audit 

Service

Assurance and 

consultancy

European 
Commission
Audit Progress 
Committee
Assurance

Annual Report 
Statement of Assurance
Special reports related to budget

Consolidated 
annual accounts of 
the European Union

European 
Commission
Accounting 
Oﬃcer 

European 
Court 
of Auditors

Management and internal control

Internal Audit

Accountant

External audit

Timeline

year n

year n + 1

Discharge

year n + 2

* Integrated Financial and Accountability Reporting:

- Consolidated annual accounts of the European Union

- Annual management and performance report

- Long-term forecast of future inﬂows and outﬂows

- Annual internal audit report

- Report on the follow-up to the discharge

EU budget ﬁnancial management and scrutiny – every euro counts

43

Continuous improvements in ﬁnancial management

In order to maintain the highest standards in financial management, the Commission 
consistently improves its rules and procedures, organisational fitness and agility. The 
Commission also works with the Member States and other partners to enhance financial 
management and control standards. The aim is to further increase efficiency and lower 
administrative burden, shorten ‘time to grant and pay’ to recipients and protect the EU 
budget at a reasonable cost compared to the funds managed by taking preventive and 
corrective action against errors, irregularities and fraud.

In 2018, the revised financial regulation was adopted, reducing red tape for beneficiaries 
of  EU  funds  and  simplifying  each  important  phase  in  the  funding  process.  These 
simplification  measures  are  embedded  in  the  new  spending  programmes  proposed 
by the Commission for the 2021-2027 period which, by design, focus on maximising 
synergies  and  efficiencies,  as  well  as  risk-differentiated  and  cost-effective  control 
systems. The aim is to achieve both the policy/programme objectives and the internal 
control objectives, i.e. fast payments, a low level of error and low cost of controls.

2019  was  the  second  year  of  the  full  implementation  of  the  Commission’s  revised 
internal control framework. Thanks to intensive communication efforts, workshops and 
the exchange of good practices, the internal control culture has improved substantially. 
In 2019, overall, the Commission departments assessed their internal control systems 
as effective.

Reduced risk to the legality and regularity of 
transactions

The  Commission  considers  that  the  budget  is  effectively  protected  when  the  risk  to 
the legality and regularity of financial transactions, and more specifically the risk at 
closure, is below the 2% materiality threshold.

This risk (both as a percentage and as an amount) is based on the errors detected by the 
Commission’s departments and services through their control activities. It is estimated 
at two key stages in the cycle: at payment and at closure.

This is due to the fact that, EU spending programmes being multiannual by design, the 
related control systems and management cycles also cover multiple years. Thus, while 
errors may be detected in any given year, they may be corrected in the current year or in 
subsequent years until the very end of a programme’s life cycle. In 2019, the ﬁnancial 
corrections and recoveries resulting from the preventive and corrective measures 
put in place by the Commission amounted to EUR 2.9 billion implemented, irrespective 
of the year in which the initial expenditure was made.

44

EU budget ﬁnancial management and scrutiny – every euro counts

Direct Management 
European Commission 

Indirect Management 
Entrusted Entities 

Shared Management 
Member States 

All Management Modes 
European Commission 

European Commission’s  
Pillar assessments and System audits  

• Commission 

departments and 
executive agencies 

• International 
organisations 
• Third countries 
• Decentralised 

agencies 

• Joint undertakings 

• Paying agencies / 

Managing 
authorities 

• Certification bodies 
/ Audit authorities 

• Commission departments and executive agencies 

› Controls (incl. desk reviews) 
› Audits (by own auditors and/or outsourced to audit firms) 
› Studies (e.g. RER Study) 

PREVENTION

DETECTION AND CORRECTION

Ex ante controls

Ex ante 
adjustments

Payments

Ex-post controls

Recoveries
and corrections

End of 
programmes’ 
lifecycle

Risk at 
payment 

-

  2.1% 

Estimated 
future 
corrections

=

Risk at closure

  1.4%

  0.7%

Closest to the 
Court’s estimated 
level of error

Chart: European Commission’s multiannual control cycle.
Source: European Commission.

The  risk  at  payment  quantifies  those  errors  that  might  still  affect  the  payments 
after preventive controls have been carried out. These risks are detected thanks to 
controls carried out after the payments have taken place.

The risk at closure closure is the risk that will remain at the end of the programme’s 
life cycle, after all the estimated future corrections have taken place. These are 
the corrections that each department estimates they will implement as a result of 
controls carried out in subsequent years.

In 2019, the risk at payment was around 2.1%, with the estimated future corrections 
at about 1.4 %. Therefore, the risk at closure is 0.7%, which is very low and in line 
with previous years’ level (see graph on page 46). 

EU budget ﬁnancial management and scrutiny – every euro counts

45

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
y
t
i
l

a
i
r
e
t
a
M

3.4%

3.2%

3.0%

2.8%

2.6%

2.4%

2.2%

2.0%

1.8%

1.6%

1.4%

1.2%

1.0%

0.8%

0.6%

0.4%

0.2%

Risk at payment

Risk at closure

Given that the risk at closure is estimated to be 
less  than  2%,  the  Commission’s  multiannual 
control systems ensure:

•  appropriate  management  of  the  risks 
relating to the legality and regularity of the 
transactions; and

1.7%

1.7%

• 
that  the  financial  corrections  and  recoveries, 
made  over  the  entire  life  of  programmes, 
protect the EU budget overall.

2.1%

The  management  of  EU  finances  has  seen  a 
sustained  improvement  over  recent  years. 
The  structural  decrease  and  stabilisation  of 
risks  at  payment  and  closure  can  be  explained 
by  simpler  rules  and  more  effective  control 
systems  introduced  in  the  current  2014-2020 
programmes. 

0.8%

0.7%

0.6%

2017 2018

2019

Chart: Risks at payment and at closure, for the entire Commission, for 2017-2019. 
Source: European Commission annual activity reports.

The  Commission  analyses  the  risks  to  the  legality  and  regularity  of  the  financial 
transactions  not  only  for  reporting  purposes,  but  also  because  it  is  an  important 
management  tool.  This  entails  detecting  any  weaknesses  at  programme  level  and 
correcting them, identifying the root causes of systemic errors and preventing future 
errors,  and  preparing  the  next  programmes  by  considering  the  lessons  learned. 
For  instance,  for  segments  of  funding  where  the  risk  at  payment  is  above  2%, 
management actions are in place. This approach ensures the continuous improvement 
of the Commission’s financial management over the years.

46

EU budget ﬁnancial management and scrutiny – every euro counts

Zero tolerance to fraud

ERRORS VERSUS FRAUD

Errors do not mean that EU money is lost, wasted or affected by fraud. Errors mainly 
stem from misinterpretations of public procurement rules or from administrative 
mistakes in applications submitted by beneficiaries, for example when documents 
are missing. In fact, fraud affects approximately 0.2% of the total EU budget.

The Commission’s anti-fraud strategy lays down the principle of zero tolerance to 
fraud and other guiding principles, and steers services’ anti-fraud actions, based on 
fraud risks observed. The strategy is the blueprint for the Commission departments’ 
and  executive  agencies’  fight  against  fraud.  Each  director-general  and  head  of 
services  is  responsible  for  internal  control,  including  anti-fraud  controls,  and  gears 
them to the characteristics and specific challenges of their operations. Against this 
backdrop, the anti-fraud strategy provides orientation and a coherent structure, as 
one of the instruments through which the Commission ensures that the EU budget 
stays protected across the board.

The  Commission  has  recently  updated  its  anti-fraud  strategy.  To  maximise 
effectiveness  and  efficiency,  the  new  strategy  places  a  strong  emphasis  on 
methodology  and  cooperation.  Methodically,  the  Commission  must  acquire  better 
knowledge about fraud patterns and trends in order to fight fraud more effectively. 
Closer  cooperation  amongst  the  services  concerned  is  making  its  anti-fraud  action 
more consistent.

In  addition,  the  Commission  has  strengthened  the  treatment  of  conﬂicts  of 
interests  and  has  made  proposals  to  protect  the  EU  budget  against  generalised 
deficiencies in the rule of law in the Member States.

Internal and external audit

The  EU  is  one  of  the  most  transparent  institutions  in  the  world  as  far  as 
its  accounts  and  spending  are  concerned.  Every  euro  the  EU  spends  is  recorded  in 
the  books  and  accounted  for.  Controls  on  how  the  money  is  spent  are  carried  out 
both  through  internal  audits  by  the  European  Commission’s  Internal  Audit  Service 
and  through  external  independent  audits  by  the  European  Court  of  Auditors.  The 
Commission’s  Audit  Progress  Committee  oversees  the  independence  and  quality 
of internal audit work, and monitors that the improvements recommended in both 
internal and external audits are properly implemented.

EU budget ﬁnancial management and scrutiny – every euro counts

47

INTERNAL AUDIT
The Commission departments also based their assurance on the work done by the 
Internal Audit Service. An annual report of the internal auditor’s work, presenting 
a  synthesis  of  the  recommendations  of  the  Internal  Audit  Service,  as  well  as  the 
actions taken on those recommendations by the Commission’s departments and the 
executive  agencies,  is  forwarded  by  the  Commission  to  the  discharge  authority  in 
accordance with Article 118(8) of the financial regulation. The results of the work of 
the Internal Audit Service encompass the following:

•  Financial  management.  As  required  by  its  mission  charter,  the  Internal 
Audit  Service  issues  an  annual  overall  opinion  on  the  Commission’s  financial 
management.  This  opinion  is  based  on  the  audit  work  carried  out  during  the 
2017-2019 period. It also takes into account information from the reports of the 
European Court of Auditors as well as the combined impact of: (i) all amounts 
estimated to be at risk at payment as these go beyond the amounts put under 
reservation;  and  (ii)  the  estimated  future  correction.  On  this  basis,  the  internal 
auditor concluded that, in 2019, the Commission had put in place governance, 
risk management and internal control procedures which, taken as a whole, are 
adequate  to  give  reasonable  assurance  on  the  achievement  of  its  financial 
objectives. However, the overall opinion is qualified with regard to the reservations 
made by the authorising officers by delegation in their declarations of assurance 
issued in the respective annual activity reports. Overall, the Internal Audit Service 
considers that the EU budget is adequately protected in total and over time. 

•  Performance  management.  In  2019,  the  Internal  Audit  Service  made 
recommendations to help improve the overall performance of key processes in 
the areas of supervision strategies regarding the implementation of programmes 
by third parties, control strategies of selected Commission departments, human 
resources and information technology management processes, and performance-
related  aspects  of  the  implementation  of  operations  and  programmes  by  the 
Commission’s departments. For all recommendations, the auditees drafted action 
plans, which were submitted to – and assessed as satisfactory by the Internal 
Audit Service.

•  Follow-up  of  previous  internal  audit  work.  The  IAS  has  a  strict  follow-up 
policy  in  place  to  assess  whether  the  Commission  departments  and  executive 
agencies have taken appropriate action to address the issues identified. The IAS 
confirmed that 98% of its recommendations followed up during 2015-2019 were 
effectively and timely implemented by the auditees. This state of play indicates 
that the Commission services are diligent in implementing the critical and very 
important  recommendations,  and  mitigate  the  risks  identified  by  the  Internal 
Audit Service.

48

EU budget ﬁnancial management and scrutiny – every euro counts

EXTERNAL AUDIT
The European Court of Auditors examines the implementation of the budget, and 
publishes annual reports on how the budget has been spent and a number of special 
reports  on  thematic  issues,  mostly  dealing  with  the  performance  of  EU  spending. 
More particularly, every year the European Court of Auditors examines:

•  the reliability of the accounts;

•   whether all revenues has been received and all expenditure has been incurred in 

a lawful and regular manner;

•  whether the financial management has been sound.

Discharge procedure

In the context of the annual discharge procedure, various stakeholders scrutinise the 
implementation of the budget. The European Parliament grants discharge taking 
into  account  a  recommendation  from  the  Council.  By  approving  how  the  European 
Commission, in cooperation with the Member States, has implemented the EU budget 
in a given year, the European Parliament formally closes the budget year in question.

The  Commission  reports  on  how  it  followed  up  on  requests  made  by  the  European 
Parliament and the Council in the previous year’s discharge. These requests cover wide-
ranging topics relating to the management and implementation of the EU budget.

When deciding on the discharge,  
the European Parliament takes into account

accountability 
reports by  
the Commission

reports from  
the European  
Court of Auditors

replies from  
the Commission  
to questionnaires

exchanges of  
views with 
Commissioners  
about the EU budget

recommendation  
from the Council

EU budget ﬁnancial management and scrutiny – every euro counts

49

LEARNING FROM THE PAST TO PREPARE FOR THE FUTURE
The discharge procedure offers an opportunity for the EU institutions to reflect on past 
developments and to identify both good practices and weaknesses to be addressed, 
with the aim of further improving financial management and achieving even better 
results with the EU budget in the future.

The 2018 discharge procedure was notable in several aspects. It was the first 
discharge procedure in the 2020-2024 legislature with the new composition of the 
European  Parliament,  and  discharge  hearings  involved  Commissioners  from  both 
the Juncker Commission and the von der Leyen Commission. Moreover, negotiations 
on  the  next  multiannual  financial  framework  offered  a  unique  opportunity  to  feed 
lessons learned about the past from the discharge proceedings into the process of 
improving the future.

The European Parliament and the Council highlighted the importance of EU funds being 
spent in line with the objectives of spending programmes, while aiming at improving 
the sound financial management of the EU, based also on lessons learnt from the 
2014-2020 multiannual financial framework. The European Parliament and Council 
requests to the Commission in the 2018 discharge procedure focused on performance 
of policies, accountability reporting, outstanding commitments and absorption, and 
specific issues such as conflicts of interest and respect for fundamental values.

The  Commission  shares  the  main  objectives  expressed  by  the  European 
Parliament  and  the  Council  and  will  take  the  necessary  actions,  as 
appropriate. In its report on the follow-up to the 2018 discharge, the Commission 
reports  on  how  it  is  addressing  these  and  other  requests.  Where  relevant,  it  also 
explains the challenges the Commission will face in tackling some of these concerns. 
The  scope  for  action  will  naturally  also  depend  on  the  outcome  of  the  ongoing 
negotiations on the next multiannual financial framework and the economic recovery.

50

EU budget ﬁnancial management and scrutiny – every euro counts

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