REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the follow-up to the discharge for the 2019 financial year (Summary)
Date: 2021-07-09
Institutions: Directorate-General for Budget, European Commission
Subjects: EU control, EU expenditure, audit, budgetary control, budgetary discharge, budgetary resources, financial year, general budget (EU), management audit, multiannual financial framework

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 9.7.2021  COM(2021) 405 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the follow-up to the discharge for the 2019 financial year (Summary)  
 
 
REPORT ON THE FOLLOW-UP TO THE REQUESTS MADE BY THE EUROPEAN PARLIAMENT IN 
ITS DISCHARGE RESOLUTIONS AND THE COUNCIL IN ITS DISCHARGE RECOMMENDATION FOR 
THE FINANCIAL YEAR 2019 

 1.

INTRODUCTION 

On 27 April  2021, the European Parliament, based on a recommendation from the Council, 
granted the Commission discharge for the financial year 2019 by a clear majority, thereby 
acknowledging that the EU budget was overall spent well and in a proper manner. 

The 2019 discharge procedure took place in the context of the persistence of the COVID-19 
pandemic  and  in  parallel  with  the  negotiations  and  subsequent  adoption  of  the  2021-2027 
Multiannual  Financial  Framework  (MFF)  and  NextGenerationEU.  Making  sure  that 
every  euro  contributed  by  EU  taxpayers  is  well  spent  in  the  interest  of  all  EU  citizens 
continued  to  be  at  the  forefront  of  the  Commission’s  action  in  these  unprecedented 
circumstances. 

In  this  context,  the  Commission  shares  the  main  objectives  expressed  by  the  European 
Parliament and the Council in the 2019 discharge procedure: 

 o Pursuing a high standard of transparency and accountability on the way the 
EU budget is managed, through a robust management and control framework.  

 o Protecting the EU budget: the Commission is following up on allegations 
or  suspicions  of  misuse  or  mismanagement  of  EU  funds,  and  takes  all 
necessary measures to protect the Union budget, including where appropriate 
through  suspension  of  payments,  financial  corrections,  and  other  measures, 
such as the new general regime of conditionality for the EU budget. 

 o Putting performance at the heart of budget implementation: it is equally 
important that money spent actually addresses the challenges and delivers the 
expected  results  on  the  ground,  bringing  about  tangible  results  and  positive 
changes in the lives of citizens and beneficiaries. 

 o Overall,  striking  the  right  balance  between  a  low  level  of  errors,  fast 
payments, reasonable costs and burden of controls for public authorities and 
beneficiaries and value added of EU spending. 

This  report  on  the  follow-up  to  the  2019  discharge  procedure  provides,  as  part  of  the 
Integrated Financial and Accountability Reporting (IFAR), a summary of actions taken by the 
Commission  in  response  to  the  main  requests  made  by  the  European  Parliament  and  the 
Council in the 2019 procedure. When the 2020 discharge procedure begins later in the year, 
the Commission will provide more detailed and updated information on its follow-up actions.  

 2.

TRANSPARENCY AND ACCOUNTABILITY  

The presentation by the Commission of the Integrated Financial and Accountability Reporting 
(IFAR)  package  for  the  year  2019  provided  the  starting  point  of  the  2019  discharge 
procedure.  This  was  followed  by  the  presentation  of  the  European  Court  of  Auditors’ 
(ECA) 2019 Annual report, with a ‘clean’ opinion on the EU Annual Accounts for the 13th 
year  in  a  row,  as  well  as  a  clean  opinion  on  the  revenue  side  of  the  EU  budget.  The  ECA 
issued  however  an  adverse  opinion  on  legality  and  regularity  of  expenditure  underlying  the 
accounts,  rather  than  a  qualified  opinion  as  in  the  previous  three  years.  One  of  the  main 
drivers was the increased share of high-risk expenditure, often subject to complex rules and 
mainly reimbursement-based. 

1 

 
 
While  the  ECA  provides  an  annual  audit  opinion,  as  manager  of  the  EU  budget,  the 
Commission  put  in  place  multiannual  control  strategies  designed  to  prevent,  detect  and 
correct  errors  even  in  subsequent  years  after  the  year  of  the  payment.  The  Commission 
continues to take actions to reduce complexity and ensure that errors are better prevented and 
detected over time for all programmes. The Commission’s 2019 estimated levels of error were 
in  the  ECA’s  range.  As  a  result  of  the  efforts  of  the  Commission,  and  its  implementing 
partners,  the  financial  management  of  the  EU  budget  has  improved  over  time  and  the  error 
levels have decreased to ranges close to the 2% materiality threshold in recent years, except in 
some specific policy areas. 

The  control  systems  in  place  provide  the  Commission  with  a  very  granular  and  detailed 
knowledge of how systems function, including at the level of national and regional authorities 
under shared management, identifying areas where improvements are still needed and taking 
action where appropriate. Taking into account the Commission’s qualitative assessment of 
the effective functioning of these control systems, together with the multi-annual corrective 
capacity which led to an amount at risk at closure (0.7% in 2019) below the 2% materiality 
threshold,  the  Commission  considers  that  the  errors  are  not  widespread  and  not  permeating 
across the whole of the EU budget.  

This  year,  the  ECA  also  presented,  alongside  the  Annual  Report  that  includes  the  annual 
Statement  of  Assurance,  a  specific  part  of  the  Annual  Report  dedicated  to  the 
performance  of  the  EU  budget.  While  the  ECA  finds  that  the  Commission  has  solid 
procedures  for  producing  performance  reports  and  that  the  reports  continue  to  improve  and 
become  more  balanced,  it  highlights  certain  areas  for  further  improvement,  which  the 
Commission  will  address  to  better  assess  and  measure  the  achievement  of  Union  priorities, 
policies and programmes.  

The  Commission  reports  in  detail  on  all  these  issues  in  its  Integrated  Financial  and 
Accountability Reporting (IFAR), which describes how EU tax payers’ money was spent in 
2020 and the steps that 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. 

 3.

RULE OF LAW AND FUNDAMENTAL VALUES 

For the first time, the Union has a specific tool to protect its budget from breaches of the 
principles  of  the  rule  of  law  through  the  new  regulation  on  a  general  regime  of 
conditionality for the protection of the Union budget1 

This Regulation covers  the  whole  MFF  2021-2027  and  NextGenerationEU, including the 
Recovery  and  Resilience  Facility.  The  regulation  has  been  applicable  since  1  January  2021 
and  is  enforceable  from  that  date.  All  relevant  breaches  affecting  the  sound  financial 
management of the Union budget and the financial interests of the Union after that date will 
be  covered.  The  Commission  will  use  the  conditionality  when  it  considers  that  other 
instruments are not more effective to protect the EU budget. 

The Commission is currently preparing guidelines for its application. At the same time, 
the  Commission  is  actively  assessing  information  from  sources  cited  in  the  regulation  to 
identify possible breaches of the principles of the rule of law that would be relevant pursuant 
to  its  provisions.  When  concerns  arise,  discussions  with  Member  States  will  commence 
without undue delay. 

1 Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council of 16 December 2020 
on a general regime of conditionality for the protection of the Union budget. 

2 

 
 
                                                 
Regarding the setting up of an effective control  system in relation to alleged  cases  of  land 
grabbing under the Common Agricultural Policy (CAP), in shared management it is first 
and  foremost  for  the  relevant  Member  States  authorities  to  deal  with  complaints  from 
individual  beneficiaries.  Therefore,  in  the  new  CAP  Regulations,  a  provision  requiring 
Member States  to  set up  proper  systems to manage complaints about the implementation of 
the Funds has  been  agreed  by the co-legislators.  In addition,  any breach of the fundamental 
rights or general principles of Union law after approval of the CAP Plan, could be addressed 
by the Commission through the existing EU Pilot or infringement proceedings. 

The  Commission  is  monitoring  allegations  of  land  grabbing  and  request  Member  States  to 
take action if needed (for example, improving the land registry in Slovakia). However, when 
it comes to activities criminal in nature, the main competence remains with the police forces 
and  the  national  prosecutors.  If  there  are  allegations  of  fraud,  the  relevant  information  is 
transmitted to the European Anti-Fraud Office (OLAF) for follow-up in line with its mandate. 
Since  1  June  2021  there  is  also  the  possibility  to  involve  the  European  Public  Prosecutor 
Office (EPPO). 

Finally, as far as the respect of the rule of law in external aid is concerned, the Commission 
is firmly committed to the fundamental values of human rights, democracy  and rule of law, 
which  are  essential  elements  of  all  the  EU’s  partnerships  and  cooperation  agreements  with 
third countries. Cooperation with most countries includes support to a number of key sectors 
such as financial investigators and criminal investigators, prosecutors, lawyers and barristers, 
ombudsmen,  criminal  courts,  supreme  courts,  courts  of  auditors  and  substantial  support  to 
democratic governance. 

In  several  countries,  the  EU  has  been  supporting  the  justice  administration  in  its  efforts 
towards  increased  efficiency  and  inclusiveness  (Central  African  Republic,  Mali,  Niger  and 
Mauritania). The  EU  has  also contributed to strengthening the whole  chain from police and 
gendarmerie investigators up to prosecutors and judges to fight criminal action (Democratic 
Republic  of  Congo,  Guinea-Bissau).  Finally, 
the  EU  also  supports Civil  Society 
Organisations in their watch-dog role that  fosters transparency  and accountability as well as 
their  role  as  a  social  actor,  able  to  provide  legal  assistance  to  disenfranchised  or  vulnerable 
people (Democratic Republic of Congo, Central African Republic, Fiji). 

 4.

INFORMATION  ON  BENEFICIARIES  OF  EU  FUNDS  AND  ESTABLISHMENT  OF  AN 
INTEROPERABLE IT MONITORING AND REPORTING SYSTEM 

Important progress was achieved in the legislative frameworks for the Common Provisions 
Regulation  (CPR),  the  Common  Agricultural  Policy  (CAP),  the  European  Globalisation 
Adjustment  Fund  (EGF)  and  the  Recovery  and  Resilience  Facility  (RRF)  on  the  type  of 
information  to  be  collected  and  stored  by  Member  States  on  recipients  of  EU  funds, 
including  beneficial  owners  of  legal  entities  being  beneficiaries,  and  final  recipients  of  EU 
funds.  Such  data  should  allow  to  strengthen  the  control  and  audit  processes,  notably  as 
regards fraud and conflict of interest. 

The Commission also put forward proposals for the mandatory use of a single data-mining 
and  risk-scoring  tool  (for  control  and  audit  purposes)  for  the  CPR,  CAP,  RRF,  the  Brexit 
Adjustment  Reserve  (BAR)  and  EGF.  The  co-legislator  did  however  not  take  this  proposal 
forward for the CPR, the RRF, BAR and the EGF and the use of such data-mining and risk-
scoring tool by  Member  States  therefore remains voluntary. For the CAP, the final  political 
agreement reached by the co-legislators is a voluntary use of the tool with a review clause in 
2025  with  possible  legislative  proposals,  to  be  based  on  a  Commission  report  assessing  the 
use  of  the  single  data  mining  tool  and  its  interoperability.  The  Commission  shall  make  the 
tool available to the Member States from 1 January 2023 in order to assist them in ensuring an 

3 

 
 
effective protection of the financial interests of the Union. Moreover, information for all CAP 
funds on the groups which beneficiaries belong to would be collected by the Member States 
(and also published for transparency reasons). 

The Commission  will continue  to  make available to Member States  a  data-mining and 
risk-scoring tool for control and audit purposes and, in the absence of a legal obligation for 
the Member States to use it, will strongly encourage them to use it. 

The Commission is reflecting on how to further enhance the quality and interoperability 
of  the  data  on  beneficiaries  and  final  recipients  of  EU  funding  including  with  the  use  of  a 
single data mining and risk-scoring tool. It considers that any provisions in this respect should 
first be assessed in the context of the up-coming revision of the Financial Regulation as the 
overarching regulation for the implementation and control of the EU budget. 

As  far  as  the  distribution  of  CAP  funding  is  concerned,  the  Commission  has  consistently 
proposed  capping  of  direct  payments  and  degressivity  along  with  a  complementary 
redistributive income support and the application of a genuine/active farmer concept in order 
to  ensure  a  fairer  distribution  of  direct  payments.  The  co-legislators  agreed  on  possible 
capping of direct payments, as well as on mandatory redistributive payments for at least 10% 
of the Member States’ direct payment envelopes unless they can demonstrate that achieve a 
better targeting of direct payments with other means. The concept of active farmer in the CAP 
was also agreed by the co-legislators. 

 5.

THE EARLY DETECTION AND EXCLUSION SYSTEM (EDES) 

EDES is still a recent system and is continuing to develop. Initially, from 2016, EDES only 
covered  direct  management  and  very  partially  indirect  management.  As  part  of  the  last 
revision of the Financial Regulation, EDES has been extended to all indirect management and 
its scope extended. 

The number of exclusions must also be seen against the level of protection of entities and 
persons  which  is  high,  in  accordance  with  in  particular  the  EU  Charter  of  Fundamental 
Rights  and  the  principle  of  legality  and  proportionality  of  criminal  offences  and  penalties. 
Also,  the  co-legislator  decided  to  impose  restrictive  conditions  on  the  possibility  to  publish 
administrative  sanctions  by  reserving  this  possibility  to  the  most  serious  cases,  in  order  to 
reinforce the deterrent effect of the sanctions, while respecting the protection of personal data, 
the  confidentiality  of  investigations  or  of  national  judicial  proceedings  and  the  principle  of 
proportionality. 

Overall, EDES achieves a positive balance between the need to protect the EU financial 
interests  and  the  need  to  ensure  the  right  of  defence,  by  requiring  a  minimum  of 
substantiated  evidence  (established  facts)  checked  through  the  exercise  of  the  right  to  be 
heard, and respects the implications of the rule of law principle. 

Until  now,  cases  involving  more  than  90  entities  have  been  referred  to  the  EDES  Panel. 
Overall, 42 entities have been sanctioned and 13 are still under exclusion. 

As  far  as  improvements  to  the  exclusion  system  are  concerned,  the  Commission  will 
examine, in the context of a forthcoming revision of the Financial Regulation and in light of 
the first 5  years of the functioning of the system, the possibility of extending its scope and, 
where possible, enhancing the procedure.  

 6.

GUIDANCE ON AVOIDANCE OF CONFLICT OF INTEREST 

The  Commission  is  also  taking  action  in  this  domain.  Article  61  of  the  Financial 
Regulation,  as  amended  in  2018,  applies  equally  to  all  EU  funds at  all  levels,  where  the 

4 

 
 
impartial and objective exercise of the functions of a financial actor or other person involved 
in  budget  implementation  is  compromised  for  reasons  involving  family,  emotional  life, 
political or national affinity, economic interest or any other direct or indirect personal interest. 

The Commission has committed to accompany and guide the Member States in applying the 
new  rules  on  conflict  of  interest.  The  Commission  has  published  in  April  2021  a  guidance 
document on avoidance and management of conflicts of interest. This guidance is addressed 
both  to  Member  States  and  EU  institutions.  It  promotes  a  uniform  interpretation  of  the 
rules set out in the Financial Regulation across all management modes and contains practical 
examples and measures that could be put in place to avoid and manage situations of conflict 
of  interest.  Before  completion,  the  document  was  shared  with  the  European  Parliament  in 
August  2020  and  presented  to  and  consulted  with  Member  States’  authorities.  The 
Commission  has  and  will  continue  to  present  the  document  in  the  context  of  targeted 
promotion actions towards Member States, through Member State authorities’ and respective 
expert networks during 2021 and beyond.   

As regards the specific  situation  in  the Czech  Republic, the relevant Commission services 
carried out coordinated audits which, among other issues, also relate to conflict of interests. 
The  Commission  kept  the  European  Parliament  Committee  on  Budgetary  Control  regularly 
informed  of  the  state  of  play.  Considering  the  public  interest  in  these  audits,  including  a 
request from the European Parliament to make the final audit report public, as reflected in the 
discharge resolution, and a European Ombudsman recommendation along the same line, the 
final  audit  report  related  to  the  European  Regional  Development  Fund,  the  Cohesion 
Fund  and the European  Social Fund was made publicly available after deletion of  personal 
data, commercial  secrets  and other  information  subject to non-disclosure requirements. This 
was also justified by the completion of all legally required steps and respective deadlines in 
the  contradictory  procedure,  which  respected  fully  the  auditee’s  right  of  defence  and  which 
did not bear any changes to the findings of the audit report except for clarifications of some 
findings. 

 7.

OUTSTANDING BUDGETARY COMMITMENTS - RAL 

(the  Reste  à  Liquider 

The  European  Parliament  and  the  Council  expressed  concern  over  the  level  of  outstanding 
commitments 
the  outstanding 
commitments (RAL)  at  the  end  of  2020  further  increased  and  reached EUR  302.6  billion. 
The  increase  in  the  level  of  RAL  over  the  past  years  is  mainly  explained  by  the  de-
commitment  rule  in  cohesion  policy  (so-called  “N+3  rule”),  the  impact  of  inflation  and  the 
increase in the size of the EU budget as well as the interrelated gap between commitments and 
payments . 

-  RAL).  The level  of 

For the 2021-2027 period, the Commission proposed a series of simplification measures to 
facilitate and accelerate the implementation of cohesion policy. While most of those have 
been retained in the political agreement reached between the co-legislators, the Commission 
regrets  that  the  return  to  the  N+2  decommitment  rule  has  not  been  approved.  At  this  early 
stage  of  the  new  budgetary  cycle, the  Commission  considers  that  the  effects  of  keeping  the 
N+3 decommitment rule, in combination with the late agreement on the legislation governing 
most  of  the  funds  in  shared  management,  and  the  focus  of  national  authorities  on  the 
implementation  of  NextGenerationEU  in  the  next  years given  its  more  limited  time  frame, 
could lead to maintaining the trend of nominally growing RAL during the 2021-2027 MFF. 

The  Commission  actively  monitors  budget implementation  and the  evolution of  the  RAL, 
and keeps the European Parliament and the Council regularly informed, notably in the long-
term  forecast  of  future  inflows  and  outflows  of  the  EU  budget  report.  The  Commission 

5 

 
 
 
prepares  its  forecast  based  on  a  wide  range  of  available  data  (previous  years’  budget 
execution,  level  of  implementation  and  latest  developments  of  the  current  budget,  future 
needs  as  presented  in  the  following  years’  draft  budget).  In  addition,  the  Commission  takes 
into account Member States’ forecasts for the implementation of the European Structural and 
Investment funds - the main driver behind the overall payment estimates. 

The adoption of the budget lies  within  the remit  of the  budgetary authority,  which  involves 
the granting of a sufficient level of payment appropriations, and the implementation of funds 
under  shared  management  is  managed  by  national  authorities,  and  largely  depends  on  the 
rules set by the co-legislators in the relevant basic acts. In this context, the Commission will 
continue to cooperate closely with the European Parliament and the Council, as well as with 
national  authorities  in  the  Member  States  to  continue  supporting  them  in  speeding  up  the 
implementation of their programmes.  

 8.

CONTROL SYSTEM FOR THE RECOVERY AND RESILIENCE FACILITY (RFF) 

The Commission has set up the Recovery and Resilience Facility (RRF) in record time, 
with a dedicated governance structure and internal processes and control strategies tailored to 
the fact that the RRF is a performance-based instrument. Apart from an initial pre-financing, 
payments to the Member States are made upon the fulfilment of pre-defined milestones and 
targets. Payments will therefore not be subject to the costs actually incurred by the Member 
States.  Unlike  in  shared  management,  the  Member  States  are  the  beneficiaries  of  the  EU 
funds, which, once paid, become fungible in the national budgets. 

Article  22  (1)  of  the  RRF  Regulation  imposes  on  Member  States  an  obligation  to  “take  all 
appropriate measures to protect the financial interests of the Union and to ensure that the use 
of funds in relation to measures supported by the Facility complies with applicable Union and 
national  law,  in  particular  regarding  the  prevention,  detection  and  correction  of  fraud, 
corruption and conflicts of interests”, and to provide an effective and efficient internal control 
system. 

In order to build its assurance, the Commission will rely on the Member States’ controls and 
complement them with its own controls as necessary. This control framework is based on the 
following elements: 

Assessment of the plans: The Commission is responsible for the assessment of the Recovery 
and  Resilience  Plans  submitted  by  Member  States  as  regards  their  relevance,  effectiveness, 
efficiency and coherence. One of the criteria to be applied by the Commission is whether the 
arrangements  proposed  by  the  Member  State  are  expected  to  prevent,  detect  and  correct 
corruption, fraud and conflicts of interests when using the funds provided under the Facility, 
taking  into  account,  among  other  elements,  whether  the  control  system  is  based  on  robust 
processes and structures. This criterion can only be assessed as either adequate or insufficient. 
In the latter case, the Commission must conclude that the plan does not comply satisfactorily 
with  the  assessment  criteria.  However,  should  the  Commission  detect  weaknesses  in  the 
control  systems,  which  can  be  addressed,  it  will  propose  to  add  measures  necessary  for 
complying  with  Article  22  of  the  RRF  Regulation  that  need  to  be  attained  before  the  first 
regular payment can be made. This Commission assessment is subject to the approval by the 
Council. 

At  payment  stage: Member States may  submit up to twice  a  year, upon completion of the 
relevant  agreed  milestones  and  targets,  a  duly  justified  request  for  payment  of  the  financial 
contribution  and,  where  relevant,  of  the  loan.  According  to  Article  22(2)  of  the  RRF 
Regulation,  the  Member  State  has  to  accompany  the  payment  request  by  a  management 
declaration  and  a  summary  of  audits.  In  the  management  declaration,  the  Member  State 
confirms  that  the  funds  were  used  for  the  intended  purpose,  that  they  were  managed  in 

6 

 
 
accordance  with  all  applicable  rules  and  that  the  information  is  complete,  accurate  and 
reliable.  The  summary  of  audits  also  includes  the  weaknesses  identified  and  the  remedial 
actions taken. 

The  Commission  assesses  for  each  payment  request,  whether  milestones  and  targets  are 
satisfactorily fulfilled. The Commission’s audits and controls are targeted to prevent, detect 
and  correct  errors  and  irregularities  in  the  evidence  that  is  provided  to  establish  that  the 
milestones  and  targets  have  been  satisfactorily  completed.  The  Commission  may  ask  for 
additional  information  and  may  decide  to  carry  out  additional  checks  in  order  to  obtain  the 
necessary complementary assurance on the achievement of the milestones and targets before 
making the payment. 

If  some  milestones  and  targets  have  not  been  satisfactorily  fulfilled,  the  Commission  may 
partially or fully suspend, as per article 24(6) of the RRF Regulation, and then proportionately 
reduce  payments, as  per  article  24(8)  of  the  RRF  Regulation  “where  the  Member  State 
concerned  has  not  taken  the  necessary  measures  within  a  period  of  six  months  from  the 
suspension”. 

Sound financial management: The Commission will conduct systems audits of the Member 
States’ internal control set-up during the lifetime of the instrument in order to check whether 
the  Member  State  complies  with  its  obligations  under  Article  22  of  the  RRF  Regulation, 
notably  in  terms  of  prevention,  detection  and  correction  of  serious  irregularities  (i.e.  fraud, 
corruption  or  conflicts  of  interest)  and  avoidance  of  double  funding,  or  serious  breaches  of 
obligations  resulting  from  the  loan  and  financing  agreements.  Furthermore,  during  the 
implementation  of  the  plan  the  Commission  will  perform  risk-based  controls  and  audits  in 
cases  of  suspicion  of  serious  irregularities  not  corrected  by  the  Member  States  (i.e.  fraud, 
corruption  or  conflicts  of  interest)  or  serious  breaches  of  obligations  of  the  financing 
agreement or the loan agreement.    

Based on Article 22(5) of the RRF Regulation, the Commission will have the rights to reduce 
proportionately and recover amounts of the non-repayable support or ask for early repayment 
of  loans,  in  cases  of  fraud,  corruption,  conflict  of  interest  and/or  serious  breaches  of 
obligations laid down in the financing and/or loan agreement (which include double funding). 
Except  in  the  case  of  serious  breach  of  contractual  obligations,  the  Commission  can  only 
recover/reduce/ask for early repayment in case the Member States would not have corrected 
these serious irregularities itself. 

 9.

MEASURING PERFORMANCE OF EU SPENDING PROGRAMMES 

The  Commission  firmly  believes  that  ensuring  that  its  spending  programmes  are 
working  effectively  is  a  key  part  of  the  successful  implementation  of  the  budget. 
Measuring  the  extent  to  which  spending  programmes  achieve  their  stated  goals  and  thus 
advance  Union priorities,  -  i.e.  their  performance  -  is  challenging,  but  essential  to  identify 
emerging issues in a timely manner, and take corrective actions, as needed. Moreover, reliable 
performance  information  can  be  useful  when  new  priorities  require  reallocating  resources 
mid-course (of course, within the limits envisaged by the legal framework).  

The  EU  budget  already  has  an  advanced  framework  for  measuring  and  evaluating 
performance,  as  recognised  for  example  by  the  OECD.  This  relies  on  a  solid  intervention 
logic, with clearly specified objectives, and associated indicators with ambitious yet realistic 
targets.  

The Commission has adopted a Communication on the performance framework of the 
EU budget under the 2021-2027 MFF (COM(2021)366 final) detailing its commitment to 
improve  further.  Thus,  in  the  run-up  to  the  2021-2027  MFF,  the  Commission  has 

7 

 
 
streamlined  the  set  of  indicators  (to  focus  on  the  most  relevant  ones),  rendering  the 
framework more accessible and minimising its administrative burden. The key indicators have 
also been included in the legal bases of the various spending programmes.  

In  a  first,  the  Commission  has  also  published  summary  fiches  for  all  the  spending 
programmes in the 2021-2027 MFF (available at: https://europa.eu/!MQcbUC), describing the 
way  programmes  are  designed  to  work  and  summarising  both  the  indicator-based 
performance  framework  for  each  programme,  and  the  methodologies  that  the  Commission 
plans to use to set baselines, milestones and targets for the relevant performance indicators.  

As  was  done  already  in  2020,  the  Commission  has  published,  as  an  annex  to  the  Annual 
Management  and  Performance  Report,  Programme  and  Performance  Overviews  for  all 
programmes,  featuring inter alia a specific section on performance assessment, including an 
assessment  of  performance  indicators  as  well  of  the  influence  on  performance  exerted  by 
relevant  external  factors.  For  these  efforts  to  continue  and  prosper,  it  is  essential  that 
Member  States  and  other  partners  do  their  utmost  to  provide  high-quality  and  timely 
performance information. 

Work  is  also  continuing  to  integrate  crosscutting  policy  objectives  into  the  design  and 
implementation  of  the  EU  budget,  including to deliver on the Commission’s undertakings 
under the  Interinstitutional Agreement between the European Parliament, the Council of the 
European Union and the European Commission accompanying the 2021-2027 MFF (available 
at:  https://europa.eu/!mwRVHD).  This  policy  mainstreaming  involves,  as  far  as  spending 
programmes are concerned, the pursuit of crosscutting goals (e.g., fighting climate change, or 
advancing gender equality) alongside programme-specific (or sectoral) objectives.  

The main crosscutting goals informing budget design and implementation include:  

  Spending  at  least  30%  of  the  2021-2027  MFF  and  the  NextGenerationEU  on 

addressing the climate challenge, up from 20% in the previous period; 

  Supporting biodiversity with 7.5% of annual spending in 2024 and 10% in 2026 and 

2027, on the basis of an effective, transparent and comprehensive methodology;  

  Supporting investments and reforms in the field of digital transformation with at least 
20% of the total allocation of each national recovery and resilience plan dedicated to 
digital transition measures.  

The  Commission  is developing  and/or improving  suitable  methodologies  to “track”  the 
contribution  -  in  terms  of  amount  spent  -  of  individual  programmes  to  these  goals, as 
well as to gender equality and the implementation of the UN Sustainable Development Goals, 
in line with its commitments under the Interinstitutional Agreement accompanying the 2021-
2027 MFF.  

 10.

OTHER ISSUES 

10.1 REVENUE AND TRADITIONAL OWN RESOURCES (TOR) COLLECTION 

The  Commission  is  determined  to  avoid  losses  of  customs  duties.  It  acts  as  soon  as 
irregularities  are  detected  and  meticulously  follows  up  on  inspection  findings  in  order  to 
ensure  that  Traditional  Own  Resources  losses  to  the  EU  budget  are  recovered  in  full. 
However, the responsibility for collecting the customs duties is primarily that of the Member 
States, which are held financially liable to compensate TOR losses if non-recovery of customs 
duties is due to lack of diligence of their customs administrations. Therefore, the Commission 
developed  a  methodology  to  estimate  potential  TOR  losses  in  case  of  undervaluation, 
considered as the main component in calculating the customs gap.  

8 

 
 
Pending the judgement of the European Court of Justice in the case filed by the Commission 
against the United-Kingdom (C-213/19), the Commission recently notified the Member States 
of  their  preliminary  calculated  share  in  total  TOR  losses.  A  similar  enforcement 
strategy/methodology  will  be  deployed  for  TOR  losses  caused  by  evasion  of  anti-dumping 
and countervailing duties on solar panels. The calculations thereto are completed and Member 
States will be soon informed of the TOR losses they will have to compensate.  

Such  enforcement  on  specific  fraud  topics  will  continue  in  the  future  based  on  monitoring 
trade flows and in-depth import data analysis. The Commission is currently elaborating on a 
detailed description of the tasks, the role, the business model and positioning of the EU Joint 
Analytics Capabilities in order to further strengthen the efficiency and create added value to 
the  risk  management  strategy  and  customs  controls.  Pro-active  actions  such  as  monitoring 
trade  flows  and  customs  performance,  assessment  of  risks  focusing  on  TOR  and  targeted 
inspections  of  concerned  Member  States  will  significantly  contribute  to  narrow  down  TOR 
losses due to fraud and other irregularities.The Commission will keep the discharge authority 
duly and timely informed. 

10.2 RENEWAL OF THE TRIPARTITE AGREEMENT BETWEEN THE COMMISSION, THE 
ECA AND THE EIB AND ECA AUDITING POWERS OVER THE EIB 

The European Commission is working together  with the ECA and the European  Investment 
Bank  (EIB)  on  a  renewed  tripartite  agreement.  The  purpose  of  the  ongoing  revision  of  the 
tripartite  agreement  is  to  renew  the  agreement  concluded  on  26  September  2016,  which 
governs cooperation between the Commission, the ECA and the EIB with respect to the audits 
carried out by the ECA on the EIB’s activity in managing Union expenditure and revenue.  

The  Commission  notes  that  it  is  not  the  purpose  of  the  Tripartite  Agreement  to  define  the 
mandate of the ECA as concerns the EIB, which is laid down in Article 287 (3) TFEU. The 
Tripartite Agreement  governs the rights of  access to information held by the EIB in respect 
of its activity in managing Union expenditure and revenue.                                                

 11.

LOOKING AHEAD 

The  negotiations  on  the  2021-2027  MFF,  NextGenerationEU  and  the  majority  of  the 
underlying spending programmes are now concluded. Implementation will soon be starting on 
the  ground.  At  the  crossroads  between  programming  periods,  and  building  on  the  lessons 
learnt,  it  is  of  utmost  importance  to  have  the  necessary  mechanisms  in  place  for  the 
future, and that all institutions and stakeholders keep pushing in the same direction. 

The  Commission  will  therefore  continue  working  with  the  other  institutions  and  Member 
States to promote the sound financial management of the EU budget. It remains committed to 
implementing  the  discharge  authority’s  requests  and  ECA’s  recommendations  to  improve 
further  the  EU  financial  management.  The  Commission  will  continue  to  uphold  the  highest 
standards of transparency and accountability so as to ensure that the Union budget is spent 
in line with the rules and with the highest standards with regard to performance and results. 

* * * 

9